Category: Benefits

Regardless of which party is in control of Capitol Hill after the November elections, retirement issues are sure to rise to near the top of the congressional agenda.

Robert Reynolds, president and CEO of Putnam Investments, said that “2011 will shape up to be a year when retirement security comes more into focus than it ever has. Retirement is on the forefront of everyone’s mind.”

It’s not surprising. With baby boomers hitting retirement age—or postponing retirement because of the weak economy—and a decline in the number of people who participate in pension plans at work, retirement policy is becoming a hot topic in Washington.

In an Oct. 7 hearing of the Senate Health, Education, Labor and Pensions Committee, Chairman Tom Harkin, D-Iowa, indicated that he was zeroing in on retirement issues.

“I am going to make retirement security a priority,” Harkin said. “Over the coming year, I plan to hold a series of hearings examining the crisis in retirement security from a number of different angles, and I look forward to working with my colleagues on comprehensive reforms to help workers save for retirement and ensure that they have a source of retirement income that they cannot outlive.”

Although Republicans may take over the House in November, it’s unlikely that they will capture the Senate, leaving Harkin in place as chairman of the panel that oversees pensions.

The gloomy retirement picture will no doubt aid Harkin’s efforts. On Oct. 13, the Employee Benefit Research Institute released a study showing that 54.4 percent of full-time, full-year wage and salary workers participated in a retirement plan in 2009.

In 1999, that figure was closer to 60 percent. And the rate of employer sponsorship of plans dropped to 61.8 percent in 2009 from 69.4 percent in 1999.

Those kinds of statistics may well propel a congressional effort to enhance workplace savings. In September, Sen. Jeff Bingaman, D-New Mexico, and Rep. Richard Neal, D-Massachusetts, introduced a bill that would require companies to take a 3 percent deduction out of the paycheck of workers who aren’t covered by a company retirement plan.

The money would be placed in individual retirement accounts for the employees. Workers would be automatically enrolled unless they opt out.

The return of Congress for a lame-duck session in mid-November provides an opportunity for the auto-IRA measure to be tacked onto another bill, such as one renewing George W. Bush administration tax cuts. Observers say that it is more likely, however, that the auto-IRA proposal will have to be reintroduced in the new Congress when it convenes in January.

When it is revived, the measure should draw support across the political spectrum, according to John Kalamarides, senior vice president of retirement strategy and solutions at Prudential Retirement.

“Both parties are interested in increasing coverage to more workers,” Kalamarides said. “The debate will be, ‘How do you do that without creating a burden for small employers?’”

Reynolds said growing concern over Social Security solvency adds to the momentum for the auto-IRA bill.

“It would address the private side of preparing for retirement,” Reynolds said. “There is bipartisan support out there for this type of legislation, especially when you talk about covering half of working Americans not covered by defined-contribution plans today.”

Harkin is hopeful that the traditional bipartisan nature of retirement policymaking will endure despite an increasingly tense political atmosphere on Capitol Hill. He is worried, though, that Republicans and some Democrats will promote defined-contribution plans over defined benefit plans.

“I am fearful that more and more, we’re going to try to put the burden on individuals and less and less on the group as a whole,” Harkin said. “I see retirement [as] a bigger pool where everyone shares the risk.”

No matter how Congress approaches the problem, concerns about retirement security are growing more urgent during a time of sluggish economic growth, according to Kalamarides. As baby boomers put off retirement because of loss of income or assets — or both, they’ll be occupying jobs that could go to younger people.

“Solving the financial and emotional gaps in retirement is critical to solving the unemployment and consumer confidence issues,” Kalamarides said.  

Filed by Mark Schoeff Jr. of InvestmentNews, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com

 

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The Internal Revenue Service announced Tuesday that it will waive for one year a health care reform law requirement that employers report the cost of coverage on employees’ W-2 wage and income statements.

Under the reform law, employers were to have given health care cost information on 2011 W-2 statements that are distributed to employees in 2012. Instead, the health care cost information will have to be reported on the 2012 W-2s, which are issued in 2013.

“The Treasury Department and the IRS have determined that this relief is necessary to provide employers the time they need to make changes to their payroll systems or procedures in preparation for compliance with the new reporting requirement,” the agencies said.

The one-year delay “will be welcomed by employers due to the big administrative effort they face in meeting the new requirement. It is a good move by” regulators, said Frank McArdle, a consultant with Aon Hewitt Inc. in Washington.

The IRS also noted that the W-2 reporting requirement is only for informational purposes and the amounts that are reported will not be taxable. Some health care reform critics have erroneously reported that the reporting requirement changed the tax status of employer-provided coverage.

That coverage is tax-free, though starting in 2018 a 40 percent excise tax will be imposed on health insurance premiums that exceed a certain amount.

 

Filed by Jerry Geisel of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

 

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The widow of a worker whose murder on his employer’s premises remains a mystery is not entitled to workers’ compensation death benefits, Tennessee’s Supreme Court ruled.

The Oct. 6 ruling in Ana R. Padilla vs. Twin City Fire Insurance Co. stems from the July 13, 2007, death of Jose Sanchez, a mill worker who generally began work each day long before other workers arrived at Xelica in Nashville, Tennessee, court records state.

The owner of the business found Sanchez that day shot to death. But with few clues, the unsolved murder eventually was turned over to a police department’s homicide cold-case unit.

Padilla sued for death benefits for herself and her daughter, presenting evidence that the shop was in a high-crime area. She argued that the only reasonable conclusion is that Sanchez was killed during a burglary and the assault was therefore connected to his job, court records show.

But a trial court concluded that there was not enough evidence to establish that burglary was a motive for the murder as nothing was taken from the premises and there was no sign of a forced entry. The court also concluded that there was no evidence the murder was related to Sanchez’s private life.

It therefore concluded the murder resulted from a “neutral assault.” The court also declined to apply Tennessee’s “street risk” doctrine, because the employer’s premises were not open to the public.

The street risk doctrine applies in cases where an employer exposes a worker to street hazards that could cause an injury, court records state.

The trial court dismissed Padilla’s complaint, and a Special Workers’ Compensation Appeals Panel affirmed the trial court’s dismissal. The Supreme Court then agreed with the panel’s finding.

 Filed by Roberto Ceniceros of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

 

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President Barack Obama’s spokesman has defended the decision to approve waivers for 30 sponsors of “mini-med” plans that allow them to continue to offer the arrangements temporarily.

“The waivers are about ensuring and protecting the coverage that people have until there are better options available to them in 2014,” White House press secretary Robert Gibbs said Oct. 7 during a briefing.

His comments responded to questions about why the Department of Health and Human Services had granted the one-year waivers.

Without such waivers, it would be difficult or impossible for the plans, which typically have low annual dollar limits, to meet a key health care reform requirement. In 2014, all plans are barred from imposing annual limits. Until then under previously issued regulations, the minimum annual limit is $750,000 in 2011, $1.25 million in 2012 and $2 million in 2013.

In all, nearly 1 million people are enrolled in mini-med plans offered by the 30 organizations that have received waivers.

In 2014, many mini-med plan enrollees, who often are low-wage, part-time workers, will be eligible for government-subsidized coverage in state health insurance exchanges.  

Filed by Jerry Geisel of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

 

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The Department of Health and Human Services now is updating weekly the online list of organizations that have been approved to receive government reimbursement for health care expenses of early retirees and their dependents.

Some 3,000 employers, unions, state and local governments and other early retiree health care plan sponsors already have been approved to receive reimbursement.

Now, the department said Oct. 5, an updated list will be posted once a week. The latest approvals include pharmaceutical giant Abbott Laboratories in Abbott Park, Illinois; the California Institute of Technology in Pasadena; and construction equipment manufacturing giant Caterpillar Inc. in Peoria, Illinois.

The list of organizations and employers approved since Oct. 1 is available online.

In addition, a list of approved organizations by the state in which they are based is available at www.healthcare.gov/law/provisions/retirement.

Under the program, the government will reimburse employers and other sponsors of early retiree health care plans for a portion of claims incurred starting June 1 by retirees who are at least 55 but not eligible for Medicare, as well as covered dependents, regardless of age.

After a participant incurs $15,000 in health care claims in a plan year, the government will reimburse plan sponsors for 80 percent of claims up to $90,000. In general, the reimbursement must be used to reduce employers’ and/or retirees’ health care costs.

Unless Congress authorizes additional funding—considered unlikely—the program will run out of money sometime in 2011, long before its Dec. 31, 2013, expiration, according to the Employee Benefit Research Institute in Washington.  

Filed by Jerry Geisel of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

 

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Health insurance premiums for the program that covers federal employees and retirees will increase an average of 7.3 percent next year, according to the U.S. Office of Personnel Management.

The increase for the Federal Employee Health Benefits Program—the nation’s largest group plan that covers about 8 million people—is about the same as this year.

Like the private sector, the federal program also will expand coverage next year to meet mandates in the new health reform law. Those enhancements will boost premiums an average of 1.7 percent and are included in the overall 7.3 percent increase, the agency says. That is in line with increases that private sector employers are expecting as a result of the health reform law.

The requirements include extending coverage to employees’ adult children up to age 26 and full coverage of preventive care and services.

The average 7.3 percent premium increase for federal employees, though, is somewhat less than increases private sector employers are expecting. A Hewitt Associates Inc. analysis has projected an 8.8 percent average increase in 2011 based on a study of health plans sponsored by 325 large employers.

An Office of Personnel Management question-and-answer sheet says the federal program “uses private-market competition and consumer choice to provide comprehensive benefits at an affordable cost to enrollees and the government.” In addition, the agency said, “We use firm negotiations with health carriers to keep cost increases as reasonable as possible.”

Next year, just over 200 health plans will be offered to federal employees and retirees, about the same as this year. Many plans, though, operate only in specific geographic areas.

Federal employees, who can make their 2011 health plan selections between Nov. 8 and Dec. 13, on average pay 30 percent of the premium, while the federal government picks up the remaining 70 percent.  

Filed by Jerry Geisel of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

 

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Federal regulators have provided an initial list of health care services that are excluded from a program to partially reimburse employers for claims by early retirees and their dependents.

The Department of Health and Human Services released the excluded-service list September 29, calling it only a “general guide” and saying additional guidance may be issued as the program is implemented.

Under the Early Retiree Reimbursement Program established as part of the health care reform law, the federal government will reimburse employers for claims incurred by retirees at least age 55 and not yet eligible for Medicare as well as their dependents, regardless of age.

After a participant incurs $15,000 in health care claims in a plan year, the government will reimburse early retiree health care plan sponsors for 80 percent of claims up to $90,000.

The reimbursement applies to claims incurred June 1 or later. In general, the reimbursement must be used to reduce employers’ and/or retirees’ health care costs.

However, certain health care services that are not covered by Medicare will not be credited toward the $15,000 threshold or reimbursed under the program, HHS said.

Some of the excluded services are:
• Custodial care, such as personal care by individuals who are not medically trained.
• Routine foot care, such as orthopedic shoes.
• Personal comfort items, such as a television in a hospital room.
• Hearing aids and auditory implants.
• Cosmetic surgery, except when required to quickly repair an accidental injury or improve function of a malformed body part.
• Routine dental service.
• In vitro fertilization and artificial insemination.
• Abortions, except if the pregnancy resulted from rape or incest or endangers the woman’s life.

Currently, more than 2,000 organizations have been approved for the program to which
Congress allocated $5 billion. The Employee Benefit Research Institute in Washington has estimated that the money will run out next year.  

Filed by Jerry Geisel of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

 

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New York awarded a combined $109 million in health information technology grants to promote medical homes to 11 hospitals, health information exchanges and other health care organizations, the state’s health department announced.

The grants will focus on coordination of mental health, long-term care and home health care, according to a news release. The New York City Health and Hospitals Corp. received a $10 million grant for a project that focuses on schizophrenia patients.

The term “medical home” broadly refers to improvements in primary care and the coordination of specialty medical care through a team approach that engages patients to take control of their health.

New York Presbyterian Hospital’s project to work with patients with depression and diabetes was awarded $10.8 million. The Long Island Patient Information Exchange, which includes 1,096 mental health providers, was awarded $20 million for a project to work with schizophrenia and other psychotic disorders among patients.

The grants were awarded through New York’s Health Care Efficiency and Affordability law and the Federal State Health Reform Partnership, the release said.  

Filed by Melanie Evans of Modern Healthcare, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

 

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