Source: Bart L. Weathington, Employee Responsibilities and Rights Journal, Volume 20, Number 4, December, 2008
With continuing increases in the cost of medical insurance and other “fringe” benefits, payroll cost for monetary and non-monetary aspects of compensation is a significant factor for most organizations. While this is not a new phenomenon, relatively few studies in the empirical literature have examined the role of fringe benefits in employee compensation plans. Especially in under researched areas, it is imperative that researchers utilize ideas and theories from other disciplines to further our knowledge. Accordingly, this paper borrows the concept of elasticity from the economic literature to help explain and understand employee perceptions of two of the most common, costly, and important benefits–medical insurance and retirement plans. Specifically, the relationship between the current income of employees is analyzed in relation to employee perceptions of the value and importance of benefits. Results suggest that employees do not value medical insurance and retirement plans in the same manner. This result is interpreted in terms of the change in the marginal utility of the specific benefit.
Source: John Sanchez, John Marshall Law Review, Summer 2008
New accounting rules being phased in between 2006 and 2008 will require state and local governments, for the first time, to report the full cost of public retiree health benefits (“PRHBs”) for both current employees and retirees. … While strictly speaking the case narrowly involves public pension plans, any decision is likely to influence all public employment retirement benefits, including health benefits that offer different benefits packages for different age groups. … On the minus side, some public employers fear that pre-funding will change the nature and status of retiree health benefits from unvested to vested. … But in the public sector, what if a statute forbids the vesting of PRHBs but the contract includes a promise of lifetime retiree benefits? … An oversight board arbitration award aimed at altering retirees’ medical benefits was challenged as: 1) a breach of contract; 2) an ultra vires act; 3) a taking under the state and federal constitutions; and 4) an impairment of contract rights in violation of the federal constitution. … While nothing in the new accounting rules forces states to switch from pay-as-you-go financing, several factors will exert pressure on states to increasingly pre-fund PRHBs: (1) failure to pre-fund may result in a downgrading of a state’s creditworthiness, making it more expensive to borrow money; (2) the decreasing ratio between the numbers of active employees to retirees will increase the cost of PRHBs; (3) the aging workforce and financial incentives to retire at younger ages will increase the cost of PRHBs; and (4) if recent trends in the development of medical technology continue, the costs of healthcare will continue to outstrip inflation for the foreseeable future.
Source: Employee Benefit Research Institute, EBRI Issue Brief #325, January 2009
From the press release:
The nonpartisan Employee Benefit Research Institute (EBRI) today published a detailed study of the implications for employers and workers involved in capping the tax exclusion for employment-based health coverage, an issue that could come up during this year’s expected debate over overhauling the nation’s health care system.
Changing the tax treatment of employment-based health coverage has been a policy goal of both parties as far back as the 98th Congress (when Ronald Reagan was president), writes Paul Fronstin, director of the EBRI health research and education program and author of the study in the January 2009 EBRI Issue Brief.
He also notes that because employment-based health coverage is by far the most common source of health coverage in the United States, proposals to change the way coverage is taxed could have “far-reaching implications” for employers and workers.
Source: Employee Benefit Research Institute, Fast Facts #112, January 27, 2009
Employers spent nearly $8 trillion on total compensation for workers in 2007. Where was that money allocated?
As the chart below shows, wages and salaries accounted for the largest share, $6.4 trillion (or 81.4 percent), while benefits made up the remainder, $1.5 trillion (or 18.6 percent). Also, total employer spending on health benefits is beginning to approach the amount spent on retirement benefits. The chart also contains similar data for selected years going back to 1960.
Source: Alicia H. Munnell and Dan Muldoon, Center for Retirement Research at Boston College, Issue in Brief, IB#8-16, October 2008
The brief’s key findings are:
• Over the past year, equities in pension plans dropped $4 trillion.
• The decline was split equally between traditional pensions and 401(k)s/IRAs.
• Individuals in traditional pensions were sheltered, but those in 401(k)s/IRAs experienced a direct hit.
The Benefit of Defined Benefits
Source: David Madland, Center for American Progress, October 22, 2008
Source: U.S. Department of Labor, Press release, 08-1345-NAT, September 22, 2008
The U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) today announced new online tools to give workers access to financial information and an improved calculator that makes it easier for employers and plan administrators to pay online civil penalties for delinquent filings of annual reports under the agency’s Delinquent Filer Voluntary Compliance Program (DFVCP).
The Pension Protection Act of 2006 required the department to post on its Web site actuarial information of pension plans filed with the Form 5500 annual reports. The site provides user friendly ways for workers and plan officials to search for plan information by such categories as plan name, employer identification number or date.
The DFVCP encourages plan administrators to file already overdue annual reports required under the Employee Retirement Income Security Act. Delinquent filers can avoid potentially higher civil penalty assessments by satisfying the program’s requirements and voluntarily paying a reduced penalty amount.
Employers and plan administrators can access the new feature that allows them to electronically pay civil penalties. The calculator uses the Department of the Treasury’s pay.gov financial management system. Users now can accurately and simply calculate the amount of civil penalties and pay those penalties online with a credit or debit card as an alternative to paying by check.
Source: Vision Council, Fall 2008
The Vision Council has compiled Vision Care: Focusing on the Workplace Benefit to explore the value of vision benefits for both employees and employers. Healthy vision for employees means better quality of life while for employers it can mean a healthier workforce, higher productivity and fewer absences. Offering vision coverage can be an additional way to attract quality employees.
Source: Elise Gould, Economic Policy Institute, Economic Snapshot, October 9, 2008
The health coverage most Americans receive is becoming harder to find. Since 2000, workers and their families have become uninsured at alarming rates: there were over 4 million more uninsured workers in 2007 than in 2000. A new EPI Briefing Paper by Elise Gould finds that employer-sponsored health insurance coverage has declined for the seventh year in a row. Between 2006 and 2007, public insurance was the only reason that more Americans did not become uninsured as coverage fell through work. This week’s Snapshot is illustrated by an interactive map that shows the loss in employer-sponsored health insurance coverage in all states and the District of Columbia within the under-65 population, workers, and children from 2000 to 2007.
Source: Employee Benefit Research Institute, Vol. 29 no. 9, September 2008
How widespread are domestic partner benefits? New updated research by the Employee Benefit Research Institute shows that 17% of organizations provided domestic partner coverage to same-sex couples only, while 1% offered coverage to opposite-sex couples only, and 32% offered coverage for both same-sex and opposite-sex couples.
Source: Center for State and Local Government Excellence, September 2008
From the summary:
The Center for State and Local Government Excellence and researchers from North Carolina State University’s School of Public and International Affairs and College of Management have established a partnership to focus on state and local government retiree health care issues.
This report shines a light on differences and similarities in state health plans in a quick reference format. It includes such details as eligibility requirements for coverage and the cost to employees and to state governments for the benefit.