HR Focus - issue 57 - March 2012 v5


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HR Focus - issue 57 - March 2012 v5

  1. 1. HUMAN CAPITAL PRACTICE HRFocus March 2012 — Issue 57 www.willis.comLEGAL &COMPLIANCEDOL ISSUES GUIDANCE ONUSE OF MLR REBATESNew guidance from the Department of Labor (DOL) states that, if theinsurer providing benefits under an ERISA group health plan pays amedical loss ratio (MLR) rebate to the plan sponsor, that rebate maybe a plan asset and the plan sponsor would be required to comply withERISA’s fiduciary responsibility rules in handling the rebate. Theguidance, Technical Release 2011-04, explains whether and how therebate should be shared with participants in various situations,emphasizing that the documents explaining the plan are crucial todetermining a sponsoring employer’s obligations.BACKGROUNDInsurers are responsible for complying with the MLR provisions ofthe health care reform law. Very generally, insurers are required to file LEGAL & COMPLIANCEan MLR report with the Department of Health and Human Services DOL Issues Guidance on Use of MLR(HHS) each year, explaining the ratio of total premium collected Rebates 1compared to the cost of providing the insured benefits. If the MLR for California Amends Insurance Lawa plan year is below a specified level, the insurer must provide a rebate Affecting Domestic Partners 4to each enrollee. Satisfying the MLR requirements is based on the Illinois Tax Code Changes 4insurer’s entire book of business issued in a state. It is not based onthe MLR of an employer-specific plan. Insurance companies will have Massachusetts Releases 2012to pay rebates for 2011 by August 2012. Of course, this issue affects Individual Mandate Penalties 5only insured plans that provide health benefits. Self-insured plans Checking in on Backgrounds 5generally would not receive MLR rebates. Since You Asked 7ERISA PLANS WELLNESSIf an insurer paid any required rebate directly to enrollees (e.g., Step Up to Wellness 8participating employees), this provision would be of little concern to HR CORNERemployers. Under HHS regulations that implement the MLR The Future Lies in Flex Scheduling 9standards, however, insurers are to pay any rebates owed to enrollees Employee Loyalty Not Recession-Proof,under a group health policy to the policyholder. In the case of an Says MetLife Study 11insured group health plan, this means that the sponsoring employer WEBCASTS 13would receive the rebate payment. The insurer is allowed to enter intoan agreement with the group policyholder to distribute the rebates on CONTACTS 15
  2. 2. behalf of the insurer (although the insurer stillretains responsibility).Technical Release 2011-04 confirms that anemployer receiving a rebate payment mayincur liability under ERISA in connectionwith its handling of the rebate. In most cases,the rebate payment will be a plan asset and theemployer would be required to comply withERISA fiduciary provisions for handling thatplan asset. In other words, employersreceiving MLR rebates should not assume thatthey can just keep such amounts. It may benecessary to apply them for the benefit of planparticipants.ERISA will require the employer to apply orexpend plan assets consistent with its would be attributable to participant contributions and the rebatefiduciary duties. ERISA directs plan would be allocated accordingly.fiduciaries to act prudently, solely in theinterest of the plan participants and While a discussion of ERISA’s trust rules are beyond the scope of thisbeneficiaries, and in accordance with the article, such rules generally require that plan assets be held in aterms of the plan. In general, ERISA requires separate trust by one or more trustees. However, several exceptionsplan fiduciaries to ensure that plan assets are or non-enforcement policies regarding the ERISA trust requirementapplied exclusively for the benefit of plan apply to certain ERISA welfare plans. Due to the application of aparticipants or for defraying the reasonable non-enforcement policy (Technical Release 92-01), many insuredcosts of plan administration. The employer’s plans with participant contributions do not have a trust. Technicalfirst step, therefore, will be to determine the Release 2011-04 makes similar trust relief available in regard toextent to which any rebates are considered MLR rebates and provides that the DOL will not assert a violationplan assets. This determination will be based of ERISA’s trust requirement against plans receiving rebates thaton a variety of factors, including the terms of do not otherwise maintain a trust, as long as the rebate is used to paythe governing plan documents. This will premiums or refunds within three months of receipt of the rebate.require a careful review of the terms of the The plan sponsor may be able to avoid the trust requirement if itplan to determine to what extent rebate directs the insurer to apply the rebate against future participationpayments are addressed. If the plan contributions or benefit enhancements.documents do not resolve the issue of how toproperly allocate the rebate, the portion of a With respect to terminated ERISA plans, Technical Release 2011-04rebate that is attributable to participant advises plan sponsors to comply with ERISA’s fiduciary provisions incontributions would generally be considered the handling of rebates that it receives, including looking to the planplan assets. For example, if the participants document to determine how assets of the plan are to be allocatedand the employer each paid a fixed percentage upon termination. ERISA provides that the assets of an employeeof the cost of the insurance coverage, a welfare benefits plan that terminates must be distributed inpercentage of the rebate equal to the accordance with the terms of the plan (to the extent the plan termspercentage of the cost paid by participants are consistent with ERISA and following the terms of the plan would not violate any other applicable federal law or regulation). 2 Willis North America • 03/12
  3. 3. pLans noT sUBJeCT To eRisaPlans that are not subject to ERISA are not directly affected by this DOL guidance. HHSreleased interim final regulations on MLR rebate requirements specifically for non-federalgovernmental plans. These rules provide that the policyholder must use the subscriber portionof the rebate, at the option of the policyholder, in one of the following ways:n To reduce subscribers’ portion of the annual premium for the subsequent policy year for all subscribers covered under any group health policy offered by the plann To reduce subscribers’ portion of the annual premium for the subsequent policy year for only those subscribers covered by the group health policy on which the rebate was basedn To provide a cash refund only to subscribers that were covered by the group health policy on which the rebate is basedIn all three options, the rebate is used to reduce premiums or is paid to subscribers enrolledduring the year in which the rebate is actually paid, rather than the MLR reporting year onwhich the rebate was calculated. The reduction in future premium or the cash refund, at theoption of the policyholder, may be:n Divided evenly among such subscribersn Divided based on each subscriber’s actual contributions to premiumn Apportioned in a manner that reasonably reflects each subscriber’s contributions to premiumRegarding plans that are not ERISA or non-federal government plans (e.g., church plans),HHS’ final rules on the MLR requirements provide that rebates may only be paid to thepolicyholder if the issuer receives a written assurance from the policyholder that the rebateswill be used in accordance with the rules for non-federal government plans. Otherwise, theissuer must distribute the rebate directly to the subscribers of the group health plan coveredby the policy during the MLR reporting year on which the rebate is based by dividing the entirerebate, including the amount proportionate to the amount of premium paid by thepolicyholder, in equal amounts to all subscribers entitled to a rebate without regard to howmuch each subscriber actually paid toward premiums.If the group health plan has been terminated at the time of rebate payment and the issuercannot, despite reasonable efforts, locate the policyholder whose plan participants oremployees were enrolled in the group health plan, the issuer must distribute the rebatedirectly to the subscribers of the terminated group health plan by dividing the entire rebate,including the amount proportionate to the amount of premium paid by the policyholder, inequal amounts to all subscribers entitled to a rebate without regard to how much eachsubscriber actually paid toward premiums.ConCLUsionAs the calculation of MLR will be based on an insurer’s book of business rather than aparticular group health plan’s experience, there is a good chance that an employer, particularlyin the large group market, will not receive an MLR rebate. Regardless, employers should beprepared to address the distribution of rebates. For an employer whose plan is subject toERISA, this means a careful review of plan documents. All employers, whether ERISA appliesor not, should familiarize themselves with the MLR requirements, discuss with the carrier itsprocedures for distributing rebates to policyholders and establish a process for distributingrebates to plan participants in accordance with applicable law. 3 Willis North America • 03/12
  4. 4. CALIFORNIA AMENDS BaCKgRoUnD The general rule when it comes to insurance isINSURANCE LAW that each state is given regulatory authorityAFFECTING DOMESTIC over insurance carriers licensed and doing business within the state’s borders and overPARTNERS those insurance policies that are filed with the state’s department of insurance for sale inOn October 9, 2011, California Governor Jerry Brown (D) signed the that state. A state generally would not haveInsurance Nondiscrimination Act (SB 757). The law, effective direct authority over insurer contracts thatJanuary 1, 2012, amends the state’s extraterritorial provision as it are filed for sale in another state or overrelates to state law insurance requirements for domestic partners. policies that are sitused in another state. This rule can be blurred if the policy originatingPrior to this amendment, a policy or certificate of health insurance from one state covers the residents of anothermarketed, issued or delivered to a California resident, regardless of state, which is not an uncommon occurrencethe situs of the contract or master group policyholder, was generally with group plans in today’s market. If a state’ssubject to California insurance law. However, there was an exception insurance laws are drafted to befor a policy issued outside of California to an employer whose “extraterritorial,” then the state’s insuranceprincipal place of business and majority of employees were located laws are applied to its residents regardless ofoutside of California. Due to the Insurance Nondiscrimination Act, where the insurance policy is sitused. ThisCalifornia insurance law now provides that any group health care means that if a policy is sitused outside ofservice plan contract and any group health insurance policy that is Pennsylvania but covers residents ofmarketed, issued or delivered to a California resident must comply Pennsylvania, then those residents must bewith California’s insurance requirements for registered domestic issued a certificate of insurance that compliespartners. Please note that as this is an insurance law, the obligation with the insurance laws of comply rests with the insurance carrier.Under California insurance law, registered domestic partners must ILLINOIS TAXbe provided with the same access to insurance as provided to spouses CODE CHANGES(the California Insurance Equality Act, AB 2208, was enacted in2004). The enactment of the Insurance Nondiscrimination Act On January 31, 2011, Governor Pat Quinn (D)means that an employer with an insured policy sitused in another signed the Illinois Religious Freedomstate but which covers California residents will be subject to Protection and Civil Union Act (Senate BillCalifornia’s domestic partner coverage requirements. As this is an 1716). The law, which was effective June 1,insurance law, a self-insured plan (that is governed by ERISA) will 2011, grants civil union partners in Illinois thenot be affected by this change. “same legal obligations, responsibilities, 4 Willis North America • 03/12
  5. 5. protections, and benefits as are afforded or recognized by the law of federal poverty level ($16,755). For individualsIllinois to spouses.” with incomes between 150.1% and 300% of the federal poverty level, penalties increase withSoon after Illinois began allowing civil unions, the Illinois increasing incomes. Penalties for marriedDepartment of Revenue (DOR) released an announcement that said couples who can afford health insurance butthat the law made no changes to Illinois income tax laws and that who lack coverage will equal the sum of thesuch laws conformed to federal law for purposes of determining an penalties for each spouse. Information aboutindividual’s taxable income. This meant that the state tax code did the 2012 tax penalties can be found here.not confer any tax benefits to civil union partners. For example, thevalue of employer-provided benefits for civil union partners would The Massachusetts HCRA was a model for thebe taxable under state income tax laws to the same extent as under federal health care reform legislation, thefederal income tax laws. This ruling would appear to contradict the Patient Protection and Affordable Care Actintent of the Illinois civil union law to be read very broadly. (PPACA). PPACA also has an individual mandate requiring individuals to maintainThe DOR has recently changed how Illinois treats same-sex civil unions minimum essential coverage each month orfor tax purposes. Civil union partners are now treated as married for pay a penalty. This requirement is effectiveIllinois state tax purposes. The DOR’s announcement provides that if January 1, 2014. Under PPACA, the annuala taxpayer was in a same-sex civil union as of December 31, 2011, he penalty for not having minimum essentialmust file Form IL-1040 using either the “married filing jointly” or coverage will be the greater of a flat dollar“married filing separately” filing status. Since a same-sex civil union amount per individual ($95 in 2014; $325 incouple may not file a federal return using a married filing status, the 2015 and $695 in 2016) or a percentage of theDOR provides the following instructions: individual’s taxable income (1% in 2014; 2% in 2015; 2.5% in 2016). After 2016, the flat dollarn If the taxpayer and his same-sex partner choose to file a joint amount is indexed to inflation. Generally, the Illinois return, the taxpayer must complete a federal “as-if- annual penalty is capped at an amount equal married-filing-jointly” return, for Illinois purposes only. to the national average premium for qualifiedn If the taxpayer and his same-sex partner choose to file separate health plans which have a bronze level of Illinois returns, the taxpayer must complete federal “as-if- coverage available through the state exchanges. married filing separately” returns, for Illinois purposes only. In March 2012, the U.S. Supreme Court will hear oral arguments on the legal challengesThe Illinois announcement can be found here. brought against PPACA’s individual mandate.MASSACHUSETTS CHECKINGRELEASES 2012 INDIVIDUAL IN ONMANDATE PENALTIES BACKGROUNDSThe 2012 penalties for non-compliance with the individual mandate Many employers do background checks onunder the Massachusetts Health Care Reform Care Act (HCRA) have current employees and job applicants.been released. Penalties accrue for each month that a taxpayer fails Background checks can be a simple andto comply with the state’s individual mandate. A lapse in coverage of effective screening tool in a market floodedno more than 63 days is permitted. (This 63 day rule corresponds with job seekers. At the same time, they canwith federal HIPAA portability standards for maintaining valid become troublesome if all of the rules“creditable coverage.”) regarding background checks are not followed. Unfortunately, many employers doThe maximum penalty for tax year 2012 will be $105 a month ($1,260 not realize that they must comply with thefor an entire year of non-compliance) for a person 27 or older with Fair Credit Reporting Act (FCRA) wheneverincome over 300% of the federal poverty level ($33,510 or more for obtaining a background report prepared by asingles in 2012). For 2011, the penalty was $101 a month or $1,212 reporting agency.annually. For individuals up to age 26 with income over 300% of thefederal poverty level, the penalty will be $83 a month ($996 annually). The Fair Credit Reporting Act (FCRA) imposesPenalties are waived for individuals with incomes up to 150% of the a number of requirements on employers that 5 Willis North America • 03/12
  6. 6. wish to investigate applicants for employment through the use of consumer credit reports or criminal records checks. This law requires the employer to advise the applicant in writing that a background check will be conducted, obtain the applicant’sFurthermore, written authorization to obtain the records and notify the applicant that a poor creditemployers should not history or conviction will not automatically result in disqualification from fooled intothinking that the Furthermore, employers should not be fooled into thinking that the FCRA is only applicable to background checks on credit. The law is applicable whenever anFCRA is only employer obtains a report concerning the individual’s credit, character, reputation,applicable to personal characteristics or mode of living. Background checks most familiar to employers include criminal and civil records, credit reports and driving records.background checkson credit. The law is Outlined below are summaries of some key steps an employer must take to ensure compliance with the FCRA.applicable wheneveran employer obtains n Disclose in writing in a stand-alone document to the employee that he or she will be the subject of a background report as part of the employment process.a report concerning n Obtain the employee’s signed authorization to prepare the background report.the individual’s FCRA permits this authorization to be combined with the written, character, n Upon receipt of the reporting agency’s background report, review and determine whether any “adverse actions” will be taken based on the report.reputation, personalcharacteristics or l Adverse actions can include but are not limited to not hiring an applicant, not promoting an employee, not retaining an employee, or any other action whichmode of living. has a negative impact on an individual’s employment.Background checks l If an adverse action is considered, provide a “pre-adverse action notice” informing the employee that the employer is considering adverse action basedmost familiar to on the background report.employers include l Provide the employee with a copy of the background report, a copy of the FCRA document entitled “A Summary of Your Rights under the Fair Credit Reportingcriminal and civil Act” and a reasonable period of time to dispute the information in the report.records, credit An employee may contact the reporting agency to dispute any information in thereports and driving background report. The reporting agency is responsible for re-investigating anyrecords. disputed items and issuing an updated report to both the employer and employee. Once an updated report is issued, an employer must again review the updated report before making a final employment decision. If the employer determines that an adverse action is still appropriate, the employer must send a notice of adverse action to the employee. In it, the notice must state: (1) that the adverse action is based on information in the background report; (2) that the reporting agency did not make the adverse decision and does not know the basis for the decision; (3) include the name, address, and toll free number of the reporting agency; and (4) that the employee has the right to obtain another free copy of her background report within the next 60 days. The FCRA’s rules are only applicable when an employer uses a reporting agency for background checks. Thus, an employer who performs background checks on its own is not affected by the FCRA rules. Additional information on the FCRA rules governing employee background reports can be found at the Federal Trade Commission’s website. 6 Willis North America • 03/12
  7. 7. SINCE YOU ASKED:HeaLTH Fsa annUaL saLaRYReDUCTion ConTRiBUTion LimiTs anDnon-CaLenDaR YeaR pLansCurrently, the law does not limit how much can be contributed to ahealth flexible spending account (FSA) on an annual basis. Suchlimits are determined by the plan sponsor and set forth in the plandocument. Effective for tax years beginning after December 31, 2012(i.e., January 1, 2013), however, the Patient Protection and AffordableCare Act (PPACA) imposes a $2,500 limit on annual salary reductioncontributions to health FSAs. The limit is indexed for inflation for taxyears beginning after December 31, 2013.Please note that the limit only applies to employees’ pre-tax salary in regard to amending the plan document andreduction contributions made to a health FSA (through a cafeteria communicating changes to employees. Anplan). Non-elective employer contributions to health FSAs, such as employer with a non-calendar year plan whomatching contributions, are not subject to the limit. In order for the waits until January 1, 2013 to impose the limithealth FSA to be considered a qualified benefit under the cafeteria may experience problems with the uniformplan, the cafeteria plan must provide for the annual limit. availability rule given that it could result in employees having been reimbursed more thanWHaT aRe non-CaLenDaR YeaR pLans they contributed at the time the plan is amended.To Do?The National Legal & Research Group has previously communicated Employers could also comply with thethat the $2,500 limit applies on a tax-year basis (i.e., calendar year) requirement by amending the health FSA, priorrather than plan year (the law’s references to “taxable year,” which for to the commencement of the plan year startingmost employees is the calendar year, appears to make this a calendar in 2012, to make it a calendar year plan andyear limitation). impose the $2,500 limit as of January 1, 2013. Changing to a calendar year plan would resultFor calendar year health FSAs that currently allow employees to elect in a short plan year for the health FSA (the planmore than $2,500 on an annual basis, addressing the change in the year would end December 31, 2012). Employersannual limit should be fairly easy to do. However, this raises more should clearly communicate to participants thesignificant issues for non-calendar year health FSAs that start in 2012 change in plan year prior to conductingand end in 2013 (i.e., April 1, 2012 to March 31, 2013). Unfortunately, enrollment to ensure that they take the shortthere is currently no guidance from the Treasury/Internal Revenue plan year into consideration when determiningService on how to administer this change. how much to contribute to the health FSA.Employers with non-calendar year health FSAs, who will need to Plan documents will need to be amended tomonitor compliance with the annual limit on a calendar-year basis, incorporate changes made to the annualshould decide how to address the annual limit prior to the start of the contribution limit and plan year, and a newplan year that includes the law’s January 1, 2013 effective date. Doing summary plan description or summary ofthis will help prevent an employee from inadvertently exceeding the material modification describing the changeslimit for the 2013 calendar year and beyond. Given the unique to the plan should be distributed to participants.requirements that apply to health FSAs, such as the uniformavailability rule (the employee’s total election must be available at all ConCLUsiontimes during the coverage period) and the use-or-lose rule (elected Please note that this article is not intended toamounts must be used by the end of the plan year or forfeited), it is address every potential way that could be usedimportant for employers to decide how to address this issue sooner to comply with the annual limit requirement.rather than later. Other options may be available to employers, particularly once guidance is provided, andOne way to comply with this new requirement is to implement the should be discussed with legal counsel. Willis isdollar limit as of the first day of the upcoming 2012 plan year. monitoring this issue closely and should guidanceEmployers may find this option the easiest to administer, particularly become available we will provide an update. 7 Willis North America • 03/12
  8. 8. WELLNESSSTEP UP TO WELLNESSThe spirit is willing, but taking that first step is hard. This is especially true when applied toimplementing a worksite wellness program. Often, employers have a sense that they “shoulddo something about wellness” but they don’t know what that something should be. Or,perhaps you’ve been given a directive from senior leadership to start a wellness program, butyou have no idea where to begin. Sound familiar? Fear not – here are some simple and time-proven strategies that will help you get started on the road to a healthier workforce.1. TAKE STOCK OF YOUR RESOURCES. What does your carrier partner offer? Do you have a local wellness council? What chapters of non-profit health agencies are in your community (American Heart Association, Diabetes Foundation, etc)? Are there any internal resources you can access: a fitness center, a training department, employees with special skills, a cafeteria with healthy menu items? Take a few minutes to think through what resources are readily available to support your program.2. CONSULT YOUR EMPLOYEES. The best way to find out what people are interested in is to ask them. Consider implementing a needs & interest survey, a focus group or other method to collect associate input. When getting started with worksite wellness it is important to appeal to what people like, as well as what they need. Engaging your employees at the onset can set the tone that the program will be customized to employee interests and your organizational culture.3. CONSIDER NATIONAL STATISTICS. In the absence of specific data about your population, you can often start by defaulting to population data, or local/regional published health statistics to guide your efforts. The Centers for Disease Control and Prevention, The World Health Organization or your local health department can be good sources of population health statistics.4. FOCUS ON THE “BIG 3.” All organizations can benefit by improving levels of physical activity, encouraging healthier eating habits and supporting tobacco cessation. These three behaviors drive the majority of chronic conditions that result in health claims. Get ’em moving, show them how to choose healthy food options and support their efforts to stop tobacco use of all types.5. THINK FUN! Most people love to win prizes, and many enjoy some healthy competition with their co- workers. Sponsoring teams in community fun runs/walks is a relatively easy way to get started. Many packaged incentive programs are available in ready-to-use kits to make it easy to plan and implement a behavior change challenge in your organization. Willis offers many ideas for clients in our “Getting Started with Your Wellness Program” and “Building a Culture of Health in Your Organization” Employer Guides.Just do it! Pick one of these ideas and take that first step toward implementing your worksitewellness program today. You may access the employer guides mentioned on your WillisEssentials portal, or please contact your Willis Client Advocate® for more information. 8 Willis North America • 03/12
  9. 9. HR CORNERTHE FUTURE LIES IN FLEXSCHEDULINGWould you be surprised to learn that the vast majority of employers in a recent surveyreported offering at least one workplace flexibility program? In WorldatWork’s survey, 98percent did so. WorldatWork® is a nonprofit membership organization focused oncompensation, benefits, and work/life balance, and survey respondents were nearly 550 ofits members.WHaT KinDs oF FLeXiBiLiTY?The survey covered 12 different types of programs: The most commonly used by employersare flexible start/stop times, part-time schedules (with or without benefits), and ad hoc oroccasional teleworking (to meet a repair person, care for a sick child, etc.). Each of thesethree programs is offered to some or all employees in more than 80 percent of surveyedcompanies, and they are also the most popular among employees, with flex-time ranking infirst place.On average, organizations use 6 different programs simultaneously. Which programs areused by which employers turned out to depend heavily on what sectors the organizations fellinto: For example, compressed workweeks are more prevalent in the public sector (68percent); part-time schedules are more common among nonprofits (90 percent); andtelework is more frequently offered by publicly traded companies. The least popularprograms among employees are phased return from leave, phased retirement, career on/offramps, and job sharing. Overall, there were two big survey surprises: (1) no correlation wasfound between the number of programs offered and turnover rates; and (2) a whopping 37percent, or more than one-third, of organizations offer full-time telework, and one-half offerit part-time.LeT’s TaLK moRe aBoUT pRogRam meTHoDoLogYThe majority of organizations, 60 percent, reported that programs are offered veryinformally—without employer policies or forms, and at the discretion of individualmanagers. Based on lots of other survey findings, it’s difficult to tell whether that’s good orbad. What seems to be good is that many organizations say flexibility is embedded in theircultures, and that a stronger culture of flexibility does correlate with lower voluntaryturnover rates. As WorldatWork practice leader Rose Stanley says, “When it comes toworkplace flexibility programs, culture trumps policy. It’s not about the quantity or formalityof programs offered; it’s about how well supported and implemented the programs are acrossthe organization.”Note, however, that pitfalls lurk if flex programs are done ad hoc without policies. Wherenonexempt employees work remotely, for example, they must accurately reflect their hoursworked, electronically or on time sheets, and supervisors must trust that those records areaccurate and pay overtime when due. Will employees working at home use their own 9 Willis North America • 03/12
  10. 10. equipment, or will the company provide it? If the equipment belongs to the company, what guidelines exist for its uses and care? Are workers using furniture that’s ergonomically sound? Employers should strive to protect proprietary information to which remote workers have access, with firewalls and other measures. Remember that if an employee works part-time while away from the office on Family and Medical Leave, work time cannot count against the individual’s 12-week allotment. aDVanTages oUTWeigH RisKs Stanley believes in flex programs; especially that, if they are part of a company’s culture, they can significantly enhance recruitment,Note, however, that pitfalls retention, and employee engagement. Given this sort of freedom, employees are notably more satisfied, motivated, and loyal to theirlurk if flex programs are done employers. Moreover, stresses Stanley, as work becomes increasinglyad hoc without policies. Where global, flex scheduling is growing indispensable. How, for example,nonexempt employees work are employees to connect with colleagues or clients in Europe or Asia if all U.S. workers are stuck with a 9-to-5 schedule?remotely, for example, theymust accurately reflect their In addition to the pitfalls mentioned earlier, Stanley believes there’s another big drawback to informal programs without policies: Thehours worked, electronically or employers who use them will be unable to measure their success;on time sheets, and supervisors their return on investment. Given good metrics that would quantifymust trust that those records and prove the value of flex, more employers would no doubt enthusiastically offer more such programs.are accurate and pay overtimewhen due. Will employees Stanley says the best place to start flex programs, or to add to thoseworking at home use their own you already offer, is to survey your employees about their needs and wishes. Everyone’s got a different reason for wanting flexibility, sheequipment, or will the company points out: Your youngest workers may want it to performprovide it? If the equipment community service, the next-older cohort may want it for childcare, another age group may need it for elder care, and your oldest workersbelongs to the company, what may want to phase gradually into retirement. “And,” she adds, “Flexguidelines exist for its uses programs can widen your candidate pool by including people withand care? Are workers using disabilities that restrict their ability to work in an office setting.”furniture that’s ergonomically BUT TRaining is TRULY BeneFiCiaLsound? Another finding in the WorldatWork survey is that, just as employers approach flex programs informally, few of them offer training in using and managing programs. Training need only be very basic, Stanley advises, mostly focused on how to maintain good communication among remote workers and their colleagues and managers. This article provided by BLR. 10 Willis North America • 03/12
  11. 11. EMPLOYEE LOYALTY BaLanCing THRee BeneFiTs oBJeCTiVesNOT RECESSION- The study found that employers’ top threePROOF, SAYS METLIFE benefits objectives remain the same as last year: 1) controlling health and welfare benefit costs, 2)STUDY retaining employees, and 3) increasing employee productivity. However, declining employeeAccording to MetLife’s 9th Annual Study of Employee loyalty indicates that, without careful evaluation,Benefits Trends, 47% of employees report feeling very steps to achieve one objective may negate effortsstrong loyalty to their employer, down from 59% just in another area.3 years ago. Yet many employers may be caughtunaware by this downward trend since they believe “Achieving all three benefits objectives is atheir employees feel the same loyalty toward them skillful juggling act, but an effective balance cantoday as they did several years ago. About half (51%) be found. Employers need to look at theirof surveyed employers today believe that their benefits offerings differently – through a newemployees have very strong loyalty to them, and half holistic lens – in order to maximize theirbelieved the same in 2008. effectiveness as a retention tool for their unique workforce while meeting other businessWhile employers of all sizes saw productivity gains objectives,” said Dr. Ronald S. Leopold, viceover the past 12 months, proving that many were able president, U.S. Business, “do more with less,” this short-term gain may havecome at the expense of employee loyalty. While 43% The study found that employees who report thatof larger employers (with 500 or more employees) they are very satisfied with their workplaceand 38% of smaller employers (with fewer than 500 benefits are about three times as likely toemployees) reported productivity gains in 2010, more indicate that they are highly satisfied with theirthan one-third (36%) of employees hope to work for current job and feel more loyal toward theira different employer in the next 12 months. employer compared with those who are very dissatisfied with the benefits program."Worker loyalty has been slowly ebbing over the lastseveral years, and it is important that employers take Among employees who are highly satisfied withaction to turn the tide around. The short-term gains their benefits, 76% report being satisfied withemployers realized from greater productivity appear to their jobs and 71% report feeling loyal to theirbe short-lived and now pose bottom-line challenges as employers, compared to only 24% and 25%,key talent considers other employment opportunities respectively, for employees who are verythat have arisen as a result of the improving economy,” dissatisfied with their benefits.said Anthony J. Nugent, executive vice president, U.S.Business, MetLife. “There is no doubt that the Understanding some of the factors motivatingrebounding economy will bring more opportunities for employee loyalty is key. Salary and wagesemployees, especially the high performers. A well- continue to be the most important drivers ofarchitected benefits offering will play an increasingly employee loyalty, which employers recognize,important role in retaining employees and positioning but there is significant lack of awareness of howorganizations for future growth.” other benefits are also driving loyalty. 11 Willis North America • 03/12
  12. 12. For example, while 38% of surveyed use social media plan to implement use in the comingemployers believe retirement benefits year—barriers seem minimal. Only:are important loyalty drivers, 64% ofsurveyed employees say they are. n 37% of employers said they did not have the resourcesSimilarly, 37% of employers said non- to implement social media communicationsmedical benefits such as dental, n 25% of employers did not think employees would use itdisability, and life insurance are n 23% of employers said they had legal concernimportant factors in employee loyalty, n 15% of employers said they would have technicalwhile 59% of employees said they are. support challengesCommUniCaTions anD “While a third of employers in the study said that changingTHe geneRaTions employee communications is simply not a current priority,Employees have disparate preferences effective communications can make the difference betweenwhen it comes to benefits benefits that are understood and valued, and benefits thatcommunications, indicating a need for a are overlooked and underutilized.multi-faceted approach. According to thestudy, more than half (55%) of all Communicating effectively is related to improved benefitsemployees do not find their benefits satisfaction, job satisfaction and loyalty,” said Dr. Leopold.materials to be clear and comprehensive, “Efforts do pay off. Among employees who said that theirand only about one in four is satisfied employer improved communications over the past year,with his/her benefits communications. 65% felt their employer was loyal to them, compared to 33%Employees say they would like to see: of employees overall.”n More frequent communications HoLisTiC HeaLTH: FinanCiaL (34%); WeLLnessn Information tailored to life events Since employee lifestyle choices contribute significantly to (39%); and healthcare costs, disability costs and productivity, it is notn Benefits information on the internet surprising that the number of employers offering wellness (44%). programs continues to grow. Overall, surveyed employers offering wellness programs climbed from 37% in 2009 toWhile 70% of employers say they do not 45% in 2010. Among larger employers (500 or moreuse social media, there is an appetite employees), that percentage has grown from 61% in 2009 toamong younger employees for receiving 72% in 2010. Nearly three out of four employers (72%) thatinformation in this way. The study found offer wellness programs say they are effective at reducingthat 42% of Gen Y employees and 38% of medical costs.Gen X employees would be interested inaccessing/receiving benefits information Taking a holistic approach to employee health is a way tothrough social networking sites (as address financial health as well. The recession has leftcompared to one in 10 Baby Boomers). symptoms of “financial illness” in its wake. The stress of struggling with financial concerns can take a physical tollSimilar percentages of Gen Y and Gen X on employees, contributing to health-related costs, andemployees are interested in having decreases in employee productivity. The study shows thatinformation available through mobile employees who say they are not in control of their financesdevices. Although social media use among are more likely to report poor health.employers seems slow in adoption—only8% of employers who do not currently For instance, 68% of employees who say they are in very good or excellent health say they are also in control of their 12 Willis North America • 03/12
  13. 13. finances, compared to just 7% of employees in fair orpoor health. Employees are clamoring for help; 52%report being interested in receiving financial adviceand guidance through the workplace, and this increasesto 81% among those who acknowledge that financialconcerns have impacted their workplace attendanceor productivity.ReTiRemenT: empLoYees neeDa map, DiReCTionsWhen it comes to retirement planning, both now and inthe future, employees need both guidance and access to WEBCASTSprotection. Over 60% of Baby Boomers indicate they arebehind in saving for retirement. Only one in five youngerBoomers (ages 46 to 54) and one in four older Boomers ANNUAL HEALTH &(ages 55 to 65) say they have achieved, or are on track toachieve, their retirement savings goals. Over half of PRODUCTIVITYemployees, including those on the cusp of retiring, arenot confident that they know how much annual income SURVEY FINDINGS:their savings will generate once they retire and many are WORK & LIFE –not doing the calculations to find out. THE DELICATEWhy? Many fear the news will not be positive; four out of BALANCING ACTten Boomers don’t think they will have the money theywill need. Three in ten Boomers say they don’t know how maRCH 20, 2012to determine the figure needed. Nearly three-quarters of 2:00 pm easTeRnemployees across all generations (73%) are interested inreceiving help from their employers in the form of presented by:retirement and financial planning advice. Jennifer C. Price, MS, RD, CWPC, Regional Wellness Consultant,The study also found that approximately half of Human Capital Practiceemployees who are behind in saving for retirement areinterested in their employer automatically enrolling Try as we might, it is impossible to completelythem in a savings program such as a 401(k). disconnect from our lives outside of work when we arrive at work each day. As a result,In addition, employees have expressed an interest in many employees come to work struggling withreceiving some, or all, of their retirement income in issues such as finding or affording reliablethe form of guaranteed income; 69% would like their child care, managing financial strains andemployer to offer an annuity as part of their 401(k) plan. dealing with aging parents or grandparents.However, only 15% of employers said they currently We set out to uncover how employers areoffer annuities. helping workers balance work & life in a special focus section in our most recentThe 9th Annual MetLife Study of Employee Benefits Annual Health & Productivity Survey. JoinTrends is available at, us for an updated look at worksite wellnessalong with a wealth of other related benefits resources trends, a discussion of work/life balance and a peek at how multinational employers areThis article provided by BLR. expanding their program efforts outside of the United States. participant access Advance reservations are required to participate. Click here to RSVP for this call. 13 Willis North America • 03/12
  14. 14. WEBCASTSWILLIS HUMAN CAPITAL PRACTICEANNUAL LEGISLATIVE & REGULATORYUPDATE TELECONFERENCEFOR EMPLOYERS SPONSORING GROUPHEALTH PLANSTUesDaY, apRiL 17, 20122:00 pm easTeRnpresented by:Elizabeth Vollmar, Vice President and Principal Employee Benefits AttorneyNational Legal & Research GroupWillis presents our annual webcast on legislative and regulatory developments.2012 promises to be another challenging year for employers that sponsor group health plans,with implementation of health care reform requirements continuing. In this teleconference,Willis’ National Legal & Research Group (NLRG) will review the items that most employerswill be implementing during 2012, including:n Preparing and distributing 4-page uniform summaries of benefits and coverage (SBCs)n Women’s preventive care benefits (including the scope of the contraceptive exception)n Restrictions on use of medical loss ratio (MLR) rebatesn $2500 limit on employees’ pre-tax health FSA contributionsn W-2 reporting of health coveragen $1 per capita feeThe program will also review a timeline of health care reform provisions becoming effectiveafter 2012 and some of the recent developments relating to those provisions. The program isslated for one hour with additional time reserved at the end for Q&A.participant accessAdvance RSVP is required to participate in this call. Click here to register. 14 Willis North America • 03/12
  15. 15. KEY CONTACTSU.S. HUMAN CAPITAL PRACTICE OFFICE LOCATIONSNEW ENGLAND Wilmington, DE Jacksonville, FL 302 397 0171 904 355 4600Auburn, ME207 783 2211 ATLANTIC Marietta, GA 770 425 6700Bangor, ME Baltimore, MD207 942 4671 410 584 7528 Miami, FL 305 421 6208Boston, MA Bethesda, MD617 437 6900 301 581 4261 Mobile, AL 251 544 0212Burlington, VT Knoxville, TN802 264 9536 865 588 8101 Orlando, FL 407 562 2493Hartford, CT Memphis, TN860 756 7365 901 248 3103 Raleigh, NC 704 344 4856Manchester, NH Nashville, TN603 627 9583 615 872 3716 Savannah, GA 912 239 9047Portland, ME Norfolk, VA207 553 2131 757 628 2303 Tallahassee, FL 850 385 3636Shelton, CT Reston, VA203 924 2994 703 435 7078 Tampa, FL 813 490 6808NORTHEAST Richmond, VA 813 289 7996 804 527 2343Buffalo, NY Vero Beach, FL716 856 1100 Rockville, MD 772 469 2842 301 692 3025Cranford, NJ MIDWEST908 931 3005 SOUTHEAST Appleton, WIFlorham Park, NJ Atlanta, GA 800 236 3311973 410 4622 404 224 5000 Chicago, ILMorristown, NJ Birmingham, AL 312 288 7700973 829 6374 205 871 3300 312 621 4843973 829 6465 312 348 7678 Charlotte, NCNew York, NY 704 344 4856 Cleveland, OH212 915 8802 216 861 9100 Gainesville, FLNorwalk, CT 352 378 2511 Columbus, OH203 523 0501 614 326 4722 Greenville, SCRadnor, PA 704 344 4856 East Lansing, MI610 254 7289 517 349 3226 15 Willis North America • 03/12
  16. 16. Grand Rapids, MI San Antonio, TX248 735 7249 210 979 7470Milwaukee, WI Wichita, KS414 203 5248 316 263 3211414 259 8837 WESTERNMinneapolis, MN763 302 7131 Fresno, CA763 302 7209 559 256 6212Moline, IL Irvine, CA309 764 9666 949 885 1200Pittsburgh, PA Las Vegas, NV412 645 8506 602 787 6235 602 787 6078Schaumburg, IL847 517 3469 Los Angeles, CA 213 607 6300SOUTH CENTRAL Novato, CAAmarillo, TX 415 493 5210806 376 4761 Phoenix, AZAustin, TX 602 787 6235512 651 1660 602 787 6078Dallas, TX Portland, OR972 715 2194 503 274 6224972 715 6272 Rancho/Irvine, CADenver, CO 562 435 2259303 765 1564303 773 1373 San Diego, CA 858 678 2000Houston, TX 858 678 2132713 625 1017713 625 1082 San Francisco, CA 415 291 1567McAllen, TX956 682 9423 San Jose, CA 408 436 7000Mills, WY307 266 6568 Seattle, WA 800 456 1415New Orleans, LA504 581 6151 The information contained in this publication is not intended to represent legal or tax advice andOklahoma City, OK has been prepared solely for educational405 232 0651 purposes. You may wish to consult your attorney or tax adviser regarding issues raised in thisOverland Park, KS publication.913 339 0800 16 Willis North America • 03/12