Category Archives: Benefits

9th Annual Study of Employee Benefit Trends

Source: MetLife, March 2011

From the summary:
The 9th Annual Study of Employee Benefit Trends delivers a clear message to employers: Bolster employee loyalty and satisfaction or economic recovery may arrive with unanticipated setbacks for retention and productivity.

This year’s findings reveal a workforce that has grown more dissatisfied and disloyal, to the point where one in three employees hopes to be working elsewhere in the next twelve months. Yet employers do not appear to be tuned in to this potential flight risk. Focused on the challenging business environment, employers remain confident of strong levels of employee job satisfaction and loyalty. A loyal and satisfied workforce is part of the foundation of business growth. Widening cracks in this foundation may force employers to pay a price in reduced retention and productivity when the job market improves.

Employer and Worker Contributions to Account-Based Health Plans, 2006-2010

Source: Paul Fronstin, Employee Benefit Research Institute, EBRI Notes, Vol. 32, No. 3, March 2011

Employers have been interested in bringing aspects of consumerism into health plans for many years. As far back as 1978, they adopted Sec. 125 cafeteria plans and flexible spending accounts. More recently, employers have been increasingly turning their attention to consumer engagement in health care. In 2001, they introduced account-based health plans–a combination of health plans with deductibles of at least $1,000 for employee-only coverage and tax preferred savings or spending accounts that workers and their families can use to pay their out-of-pocket health care expenses. A few employers first started offering account-based health plans in 2001, when they began to offer health reimbursement arrangements (HRAs). In 2004, they started offering health plans with health savings accounts (HSAs). By 2009, 15 percent of employers with 10-499 workers and 20 percent of employers with 500 or more workers offered either an HRA or HSA-eligible plan. Employers have also taken a broader approach to consumer engagement through various other initiatives.

Private Health Insurance Premiums and Rate Reviews

Source: Mark Newsom, Bernadette Fernandez Congressional Research Service, R41588, January 11, 2011

In general, the premiums charged by health insurance companies represent actuarial estimates of the amount that would be required to cover three main components: (1) the expected cost of the health benefits covered under the plan, (2) the business administrative costs of operating the plan, and (3) a profit. The final premium calculation often is adjusted upward or downward to reflect several factors, such as making up for a previous financial loss. Health insurance premiums have been trending up, while the value of coverage has trended down. Available data indicate that both administrative and medical costs continue to rise, but the rate of growth in these expenses slowed between 2008 and 2009. The data also suggest that the rise in medical costs is primarily attributable to the price of services, not increased utilization.

The rise in the cost of health insurance has received considerable attention by Congress and resulted in calls for more regulation. The regulation of private health insurance has traditionally been under the jurisdiction of the states. Most states have used their regulatory authority over the business of insurance to require the filing of health insurance documents containing rate information for one or more insurance market segments or plan types. With the enactment of the Patient Protection and Affordable Care Act (P.L. 111-148, PPACA) on March 23, 2010, and subsequent amendments, the federal government will assume a role in private health insurance rate reviews by providing grants to states and requiring health insurance companies to provide justifications for proposed rate increases determined to be unreasonable. This report provides an overview of the concepts, regulation, and available public data regarding private health insurance premiums.

A snapshot of state and local government benefits

Source: Bureau of Labor Statistics, Program Perspectives, Vol. 3 no. 1, 2011

State and local government employees typically have access to a number of major benefits in their compensation packages, including health care, retirement and savings, and paid leave. In many cases, State employees have similar or more generous benefits when compared with local government workers, but differences in occupational employment can have an impact on some benefits.

This issue of Program Perspectives reviews occupational distribution between State and local government sectors and examines data on benefit availability and participation in each section.

2010 Study of State Employee Health Benefits

Source: Segal, Winter 2011

From the abstract:
The following are among the key findings of The Segal Company’s 2010 Study of State Employee Health Benefits:

* Preferred provider managed medical plans continue to be the predominant type of coverage offered by states, regardless of region.
* For all medical plan types, cost sharing is greater for family coverage than for employee-only coverage.
* There is a general trend towards greater cost sharing for all plan types with dramatic regional variations. Once rare, a growing number of states are pushing into the 40 percent-or-more cost-sharing category.
* Annual per-person deductibles continue to increase, with nearly one-third of plans reporting deductibles of $500 or higher.
* Lifetime maximums for medical coverage are now uncommon and becoming more so as plans change to comply with new Affordable Care Act requirements.
* For prescription drug coverage, copayments paid by employees continue to increase for both brand-name and generic drugs.

Mandatory Automatic Enrollment: Smart First Steps

Source: Deloitte, Issue Brief # 25, January 12, 2011

From the summary:
Employers with more than 200 full-time employees that are subject to the Fair Labor Standards Act (FLSA) will have to establish an automatic enrollment program for their group health plans. The automatic enrollment program will be used to enroll new full-time employees and to continue the enrollment of current employees who do not affirmatively opt-out of coverage.

There will be a notice requirement that must be satisfied by each automatic enrollment program. Additionally, each automatic enrollment program will have to include an option for individuals to opt-out of coverage in which they have been automatically enrolled. The Department of Labor is expected to issue detailed guidance on these and other requirements.

State wage-garnishment and similar payroll-related laws are preempted to the extent they otherwise would preclude an employer from implementing an automatic enrollment program.

Roads to Reform: Changes to Public Sector Retirement Benefits Across States

Source: PEW Center on the States, November 2010 (revised 12-17-10)

From the summary:
As states face declining revenue, they are also grappling with the ongoing cost of public employee pensions and retiree health care benefits. Many states have recognized the challenges ahead and taken steps to address them.

View our interactive map or download the full brief to learn how states have worked to reform their pension systems. Stay tuned for further updates in January 2011 and in spring 2011.