Category: Archive

Legislation signed by Virginia Gov. Tim Kaine will require group health insurance policies sold by commercial insurers to continue coverage for up to one year for dependent children under age 25 who can’t continue as full-time students because of a medical condition.

Under the new law, which will take effect July 1, coverage in such situations would remain in force for up to 12 months from the date a dependent child ceased to be a full-time student or attained age 25, whichever occurs first.

The measure is part of a trend by states to find ways to enable employees’ dependents to retain group coverage for a longer period of time, reducing the likelihood that the individuals will become uninsured.

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

A year’s supply of coveted H-1B visas disappeared on
Monday. What happened to the visas, however, is no mystery.

On the first day that applications were accepted, the number of petitions from companies applying for visas for highly skilled immigrants exceeded the government cap by nearly 100,000, U.S. Citizenship and Immigration Services announced Tuesday, April 3.

USCIS says that it received 150,000 applications for 65,000 H-1B visa slots on Monday, April 2, when the process officially began. In several weeks, the agency will dole out visas using a computer lottery to randomly select companies that filed petitions by April 3.

Corporations whose H-1B applications are not selected will have their filing fees refunded. All applications received on April 4 or later will be rejected.

The H-1B cap was hit in record time. Two years ago it occurred in August, and last year the limit was reached in May. The latest round of the visas, which allow immigrants with a bachelor’s degree or equivalent professional experience to work in the U.S., are for the 2008 fiscal year beginning October 1.

If a company doesn’t obtain H-1B visas this year, it will have to wait until October 2008 to employ foreign high-tech workers, assuming its application is accepted.

An additional 20,000 spots are available annually for foreign nationals who have advanced degrees. USCIS hasn’t determined whether those slots have been filled.

Companies clamoring to hire international talent in science, technology, engineering and computer programming say there aren’t enough U.S. candidates for those jobs.

“Our broken visa policies for highly educated foreign professionals are not only counterproductive, they are anti-competitive and detrimental to America’s long-term economic competitiveness,” Robert Hoffman, vice president for government and public affairs for Oracle and co-chair of Compete America, said in a statement.

Arbitrary visa caps drive away foreign nationals who earn degrees at U.S. colleges and universities, Hoffman argues.

“We are now in the position of graduating thousands of the world’s top innovators, engineers and scientists and telling them they cannot work in the United States,” he says.

Hoffman’s organization is urging Congress to increase H-1B caps and make other policy improvements this year. That may occur as part of comprehensive immigration reform. If a larger package fails, leaders on Capitol Hill have indicated that a measure on highly skilled immigrants may move separately.

A company can employ foreign nationals in the U.S. for only one year after they graduate if they don’t have an H-1B visa. Even if they do get an H-1B, they have just begun a long journey toward legal residence. The employment-based green card backlog stretches to back to those who applied at the beginning of the decade.

Uncertainty about the length of time that high-tech talent can stay in the country undermines business planning, says Lowell Sachs, senior manager of federal government affairs for Sun Microsystems.

“We need predictability,” he says.

Companies also want to be able to integrate top performers. “When we hire this talent, we want them to make a career with our company,” says Amy Burke, director of government relations for Texas Instruments.

If a company can’t hire high-skilled foreign workers, it may send them—and, perhaps, entire operations—to its facilities abroad. Or companies from other countries may hire foreign students once they graduate from U.S. universities.

Current immigration policies “are pushing people toward our competitors,” Hoffman says.

Help could come in the form of a comprehensive immigration reform bill introduced in the House on March 22 by Reps. Luis Gutierrez, D-Illinois, and Jeff Flake, R-Arizona. That measure would raise H-1 B caps to 115,000 annually, increase employment-based green cards to 290,000 annually from 140,000, and substantially increase the number of spouses and children who can receive green cards.

But the H-1B program also has detractors with political clout.

“Unfortunately under current law, employers, especially in the high-tech industry, are abusing these temporary visa programs by exploiting workers, driving down standards and often facilitating the displacement of domestic workers and the outsourcing of jobs,” AFL-CIO president John Sweeney said in a statement supporting a bill introduced on March 29 that targets visa fraud and abuse.

Controversy over H-1B policy notwithstanding, the queue for visas filled up instantly this year. USCIS girded for the onslaught of applications by increasing staff and space at processing centers in California and Vermont.

“We were prepared for anything,” USCIS spokesman Christopher Bentley says. “We didn’t know what to expect.”

—Mark Schoeff Jr.

A last-ditch effort to extend the life of America’s Job Bank seems unlikely to succeed.

Earlier this year, a group of state administrators appealed to congressional leaders to keep the free online job site from shutting down in June. But the group’s executive director doubts Congress will heed the call.

In February, the National Association of State Workforce Agencies sent letters to Sen. Tom Harkin, D-Iowa, and Rep. David Obey, D-Wisconsin, asking for continued funding for America’s Job Bank “until a new system is implemented.”

“NASWA believes Congress should provide a ‘line item’ of $6 million for continuing AJB in a supplemental appropriation for another year starting July 1, 2007,” NASWA president Roosevelt Halley wrote in the letter.

But Rich Hobbie, NASWA’s executive director, has little hope at this point. He says the best chance for the additional $6 million was getting the request included in a military appropriations bill. But neither the House nor Senate version of the bill—both of which sparked controversy because of timetables for withdrawing troops from Iraq—include the America’s Job Bank funding, Hobbie says.

“It appears unlikely now,” he says.

Harkin did not immediately return a call requesting comment. An aide to Obey did not return a call seeking comment.

NASWA is a group of state administrators of programs and services provided through publicly funded state workforce systems.

America’s Job Bank dates to 1995, and the free site currently lists more than 2.1 million jobs and nearly 650,000 résumés. Last year, the Labor Department said it planned to phase out America’s Job Bank, arguing that maintaining and improving the site no longer makes sense “given that AJB duplicates what is already available in the private sector.”

But the decision to shutter the site has raised a number of questions, including how companies will meet compliance needs. There’s also concern about possible harm to smaller employers and lower-skilled job seekers.

At least two organizations have announced services intended to replace America’s Job Bank. One is NaviSite, a for-profit company that has operated America’s Job Bank for years as a contractor. Another is the DirectEmployers Association, a nonprofit consortium of companies.

The association’s site, dubbed JobCentral National Labor Exchange, won an endorsement in late March from NASWA. Hobbie said NASWA will play a role in governing the exchange, along with the DirectEmployers Association and participating states.

—Ed Frauenheim

The most critical factor for getting employees to consider purchasing annuities into 401(k) plans is having advisors on site at the workplace, according to a study by Cerulli Associates released Tuesday, April 2.

The Cerulli Edge, the quarterly retirement analysis, found that that only 40 percent of 401(k) plans allow advisors in the workplace.

This presents a prime opportunity to advisors because of the confusing nature of annuities.

“Offering advice at the work site can be an effective strategy that encourages participants to not only think about annuities, but also consider all of the options available to them,” the report indicates.

A provision of the Pension Protection Act of 2006 directs the Department of Labor to clear up the regulations for including annuity options within 401(k) plans.

Once this occurs, Cerulli analysts believe it will open up the window to include more annuities inside 401(k) plans.

Filed by Lisa Shidler of Investment News, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

The National Rifle Association has found a surprising partner in its support for a Florida bill that would allow employees to keep guns locked in their cars on company grounds.

At a Florida Senate committee hearing March 27, the Florida AFL-CIO came out in support of the bill.

For the union, “guns are not the issue,” says spokesman Rich Templin. “This is about protecting workers’ rights. When you drive to work, your car still belongs to you. Your privacy doesn’t end when you get to work.”

SB 2356, which was introduced earlier this year, prohibits employers or any entities from banning employees from keeping “any legal personal property” locked in their cars.

The Senate Criminal Justice Committee voted 7-1 in support of the bill, which next will go to the Senate Judiciary Committee. But a similar bill  was proposed last year in Florida and never passed into legislation.

The Florida Chamber of Commerce and others have strongly opposed the measure, arguing that it violates their property rights.

“Our principal concern is that this bill is somewhere between an attack on the employer/employee contract and on property rights overall,” says Mark Wilson, executive director of the Florida Chamber of Commerce.

And many were shocked to learn of the AFL-CIO’s support for the bill.

“As the first people in line to be shot in a workplace incident, it seems pretty ludicrous that a union organization would support arming workers,” says Brian Siebel, a senior attorney at the Brady Campaign to Prevent Gun Violence.

But Templin emphasizes that for the AFL-CIO, this is an issue of protecting workers’ rights.

“As soon as someone takes the gun out of their vehicle or makes a threat, the law addresses that,” he says. “This is about protecting workers’ rights to keep things in their cars.”

Templin notes that there have been incidents where members have been fired for having union materials in their cars, and this law would prevent such incidents.

To support the bill, the AFL-CIO in Florida is sending out e-mails to its 500,000 members encouraging them to call their senators in support of the bill, Templin says.

The alliance could make it particularly difficult for employers, many of whom are already trying to fight this bill, says Mark Neuberger, a labor lawyer at Buchanan Ingersoll in Miami.

“Employers are already fighting this to protect the security of their workplaces,” he says. “But now this could become a bargaining issue with the union.”

—Jessica Marquez

General Motors highlighted yet again the erosion of retiree health benefits among U.S. employers when the automaker disclosed in its recently filed annual report that reducing retiree health costs was critical to its turnaround plan.

In the report filed with federal regulators, GM called its $68 billion employee and retiree health care obligations “the source of our largest competitive disadvantage.” In January, the company joined other Detroit automakers by capping retiree benefits. GM also is seeking additional concessions from the United Auto Workers union, whose contract expires in September.

The promise employers once made new employees to pay for retiree health benefits continues to disappear, according to a new study published by Watson Wyatt and the National Business Group on Health. Less than one in five employers today offer a defined retiree health care benefit to new employees, the study notes. And just 15 percent of employers plan to follow General Motors and offer limited financial assistance to new hires when they retire, the report states.

“Large companies have been eliminating retiree medical benefit coverage for new employees at an accelerated rate for a number of years,” says Ted Nussbaum, director of health care consulting in North America for Watson Wyatt, “to the point that only 18 percent of companies that provide retiree health benefits do so for new hires.”

The promise of retirement with secure health care instead has morphed into an offer by employers to help retirees pay for health insurance, give them access to cheaper premiums or do nothing for them at all. Thirty percent of employers said they would offer no financial support to future retirees but would provide access to less expensive group coverage premiums that individuals would otherwise be unable to secure.

Meanwhile, 37 percent of the 573 companies representing 11 million employees interviewed for the study said they plan to provide no financial help to new hires during their retirement.

CNH Case New Holland, a Racine, Wisconsin-based heavy equipment manufacturer, is among the employers that have eliminated retiree health care benefits for new hires and instead restructured their current health benefits to allow employees to save money for retirement health care costs using a combination of health reimbursement and health savings accounts.

If a person saves the maximum annual amount under current law—$2,850—and earns 7 percent annually, they will only save $155,000 in 20 years. Retirement health costs are formidable, says Jay Savan, a senior health care consultant with Towers Perrin, and most people aren’t prepared.

“You will need $600,000 if health care costs grow at the rate they are growing now,” he says.

Other employers, like Cleveland-based financial services firm National City, also have eliminated defined health benefits in favor of capped financial assistance that would help retirees eligible for Medicare to supplement their coverage, says David Repko, health and welfare manager for National City. Soon more retirees will rely on Medicare, as will employers who want to stop covering their retired population.

The Medicare trust fund is expected to be drained by 2018, according to the U.S. Government Accountability Office. Repko puts total Medicare obligations at $30 trillion and growing.

“It’s a number that’s going to come home to roost,” he says, “on us and on our children.”

Such a time could come sooner as more employees face a retirement without company-provided health care.

Jeremy Smerd

Enrollment in health savings accounts linked to high-deductible health insurance plans grew last year among large U.S. employers at nearly three times the rate of small employers, a survey shows.

In fact, the fastest-growing market for HSA/HDHP products is large-group coverage, which has grown from 19 percent of the market in March 2005 to almost 50 percent of the market as of January, according to the survey conducted by the Washington-based trade association America’s Health Insurance Plans.

The survey, which was released Monday, April 2, found that more than 2 million employees of large companies were enrolled in HSAs in January of this year, up from 679,000 a year earlier and just 162,000 in March 2005, the first year that HSAs were widely available.

Although growth wasn’t as strong in the small-group and individual markets, enrollment still surged there. Enrollment in small-group HSA plans more than doubled to 1.1 million in January from 510,000 a year earlier. By comparison, individual market plans gained just 29 percent, with enrollment growing to 1.1 million from 855,000 a year earlier.

Altogether, about 4.5 million people were covered by HSA/HDHP products, according to the AHIP census, a 43 percent increase since last year.

“When you have in the large-group market a tripling in a year,” it shows that HSA plans “are quickly becoming a mainstream option,” said Michael Tuffin, a senior vice president at AHIP.

He also said the growth rate is phenomenal given the fact that the product is little more than two years old. While HSAs were authorized by Congress under a 2003 law and have been available since January 1, 2004, many employers waited to offer the plans until the Treasury Department issued guidance in August 2004 that resolved many of the operational concerns that had been raised about HSAs.

“The first real shot that employers had to offer this was 2005, and here we are January of ’07 with these numbers. That’s not insignificant,” Tuffin says.

He said the findings should assure other employers that are thinking about adding HSAs to their health plan options.

“Employers large and small are incorporating health savings account plans into their offerings for employees,” he says.

While the growth rates for large employers and small-group employers were exceptional, the tempering of enrollment gains experienced by the individual market slowed the overall growth rate for January to less than half that seen between March 2005 and January 2006.

Tuffin attributed the slowdown to “natural maturing of a marketplace.”

“I think 43 percent growth by any definition is robust and indicative of success,” he says. “Nothing’s going to grow at 200 percent forever.”

Moreover, “in a market that has a very low growth rate as a whole, to have one aspect of that market grow by 43 percent in a year shows that something’s happening,” Tuffin says.

Among other notable findings of AHIP’s 2007 HSA/HDHP census:

• Enrollment in HSA/HDHPs topped 100,000 lives for 11 large employers in January, up from seven employers in January 2006 and just two in March 2005.

• Large employers’ average annual premium for family coverage was $6,963 in January, while single coverage averaged $2,796.

• Annual deductibles in the large-group market averaged $3,996 for families and $1,952 for individuals.

• Eighty-six percent of HSA/HDHP enrollees had average annual balances of $2,500 or less at year-end 2006, while 4 percent had average annual balances exceeding $5,000.

• More than 90 percent of employers included in the survey offer HSA plan options with preventive benefits that are covered outside of the deductibles.

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

 Six years ago, Argentina was in the throes of a financial crisis so deep that the government had to devalue its currency just to stay afloat. The effects, of course, were widespread, but an immediate consequence was that a budding young workforce abandoned school simply to help their struggling families survive.

Today, Argentina is recovering from the economic disaster that pushed it to the brink of ruin, and the South American nation’s employment base is quickly making up for lost time. Young, energetic workers are drawing the attention of multinational companies seeking an educated workforce at a relatively reasonable price. And it appears Argentina is willing and able to deliver.

Many of the labor market’s newest entrants were influenced by Argentina’s 2001-2002 financial meltdown.

“It made them learn that they need experience and they need to be prepared for the changing world of work,” said Jorgelina Calvente, director of corporate communications for Manpower South America, in an interview at the company’s Buenos Aires office.

The experience drove home the importance of education, as well as the need to learn English.

“We’d better integrate ourselves with the rest of the world, or this is it for us,” says Marina Santangelo, a 22-year-old staffer at Next Level, a company that markets Intel products. “People who speak English, people who have an open view of the world, can get better jobs here.”

It also helps that public universities in Argentina are free. With a higher literacy rate and more university students per capita than Brazil or Mexico, Argentina is setting itself apart among Latin American nations.

“I see Argentina becoming a more attractive country as it relates to other emerging markets,” says Gary Coleman, global managing director for manufacturing for Deloitte Touche Tohmatsu in New York.

In 2003, Intel turned to Argentina for its talent pipeline, establishing a software manufacturing operation in the province of Cordoba, which is about 500 miles from Buenos Aires. Motorola, EDS and Siemens also have operations there.

“Argentina’s educational system has traditionally been one of the strongest in the region,” said Luis Blando, the general manager of Intel Software of Argentina, in an e-mail interview. “The country’s past industrial and scientific successes have created a latent talent population that’s characterized by above-average levels of experience in management and leadership.”

Cordoba has become Argentina’s Silicon Valley, largely through a public-private partnership that builds on its university network. The government also provides tax breaks and other incentives.

With government help, Intel established the Argentina Software Development Center, which produces Internet processing software and is projected to employ 400 engineers by 2011. “Inside of a year since the center was inaugurated, it has contributed substantially to worldwide products,” Blando says.

Cordoba is carrying out its vision without spending a lot of money on infrastructure.

“All the added value is the mind,” says Daniel Luaces, manager of professional services at Manpower. “The most important part of the IT business is the human resources.”

Argentina is capitalizing on offshoring and business process outsourcing trends in part because of the quality of education and a high level of English proficiency among the population, Luaces says.

It also benefits from being in roughly the same time zones as the United States, as well as cultural affinity with its Western Hemisphere neighbor, according to Luaces. Like other developing markets, Argentina provides workers at low wages. But unlike some countries, it also has fairly relaxed labor laws.

“There’s greater freedom by the employer to move people around, cross-train them and dismiss them if they’re not the best,” Coleman says.

Mark Schoeff Jr.