5 Employee Handbook Issues to Watch in 2018

The federal government’s focus on deregulation combined with active state legislatures and municipalities mean a cookie-cutter employee handbook isn’t a realistic option for employers. Handbooks should be reviewed regularly to ensure compliance with ever-changing workplace law, employment attorneys told SHRM Online.

“The end of the year is a wonderful time to assess the handbook, especially this year with changes afoot in Washington,” said Jeffrey Pasek, an attorney with Cozen O’Connor in Philadelphia.

Not a lot is happening at the federal level yet, as key agency positions still need to be filled. However, President Donald Trump’s administration will likely scale back on prior rules. In the meantime, states are moving forward with legislation and regulations to fill perceived gaps, said Bonnie Martin, an attorney with Ogletree Deakins in Indianapolis.

Companies should be particularly attentive to state and local laws on leave entitlements, background checks, and wage and hour requirements, as well as newer areas including marijuana and other drug-related laws and guns in the workplace, Martin said.

Here are some of the key issues employers should monitor in 2018 that may trigger a handbook update.

1. Workplace Conduct and Social Media

With a Democratic majority under President Barack Obama, the National Labor Relations Board (NLRB) scrutinized social media policies and other workplace conduct standards that could have limited workers’ right to engage in protected concerted activity.

The pendulum is expected to swing the other way under President Donald Trump, said Bruce Sarchet, an attorney with Littler in Sacramento.

For example, the board’s new general counsel, Peter Robb, issued a memorandum rescinding prior memos that led to the board’s close scrutiny of handbook and policy provisions.  Already, the board has overruled a previous standard striking down employer policies if they could be “reasonably construed” to curb employee discussions about wages and working conditions—even if the policies weren’t intended to do so. The board’s new standard will consider whether the employer has a legitimate justification for the rule.

“With [the] signal of a sea change in NLRB policy, employers need to pay close attention to the board’s new ‘policies on policies’ as they develop,” Martin said.

2. Arbitration Agreements

Employers should pay close attention to the pending federal cases relating to the enforceability of arbitration agreements and class-action waivers to make sure their handbooks comply with the relevant rulings, Martin said.

The law in this area is in a state of flux, but a ruling from the U.S. Supreme Court should be coming soon. Sarchet noted that revising handbook policies on arbitration now might be premature. “Employers may want to wait to see how the Supreme Court rules on the issue.”

3. Sexual Harassment

Sexual harassment news has swept across the country as leading men in Hollywood and politics have been ousted due to a flurry of allegations. Therefore, it’s a good time for HR professionals to take a look at their anti-harassment policies and procedures to make sure they’re up to par.

Policies need to adequately tell employees how to register a complaint, and they need to give workers multiple outlets for complaining, said Randi Kochman, an attorney with Cole Schotz in Hackensack, N.J. “Having a policy that requires employees to report incidents to their supervisor isn’t helpful if the supervisor is the one doing the harassing.”

State requirements must be taken into account as well. In 2017, these states revised sexual harassment training requirements:

  • California. The state has expanded current supervisor training requirements. Covered employers must add to their harassment prevention training content on harassment based on gender identity, gender expression and sexual orientation. The training and education must include practical examples inclusive of harassment based on gender identity, gender expression and sexual orientation, and must be presented by trainers or educators with knowledge and expertise in those areas. The amendments took effect on Jan. 1, 2018.
  • Maine. Effective Nov. 1, 2017, Maine’s amended sexual harassment training law requires employers in the state with 15 or more employees to use a compliance checklist provided by the state’s Department of Labor to develop a sexual harassment training program and keep a record of any training conducted for three years. The amended law also establishes the penalties an employer may face for failing to comply.

4. Parental Leave

States are starting to expand their parental leave laws. In California, for example, businesses with 20-49 employees will need to offer job-protected baby-bonding leave starting in 2018. Larger businesses already fall under the federal Family and Medical Leave Act (FMLA) and the California Family Rights Act. California also increased state paid-family-leave insurance benefits and will eliminate the one-week waiting period for claims.

In New York, many employees will be eligible to take paid family leave beginning in 2018. Even in states without generous leave laws, many businesses offer paid leave as a benefit.

Related policies shouldn’t have separate baby-bonding rules for mothers and fathers, Kochman said. She noted that employers can have separate standards for mothers during the time they are disabled by pregnancy, but parental leave policies should use terms like “primary caretaker” and “secondary caretaker.” These policies and practices should be reviewed in conjunction with FMLA guidelines for larger employers.

5. Disability and Other Accommodations

Employers need to understand that their obligation to provide leave could go beyond the 12 weeks afforded under the FMLA, Kochman said. For example, a request for intermittent leave to treat a medical condition may be a reasonable accommodation under the Americans with Disabilities Act (ADA).

The 7th U.S. Circuit Court of Appeals recently ruled that, while the ADA may require brief periods of leave, an extended leave of absence beyond FMLA time isn’t a reasonable accommodation. However, the Equal Employment Opportunity Commission and other courts disagree with the 7th Circuit. Therefore, employers should carefully review their policies and keep up with developing laws in this area.

Medical marijuana case law is also evolving. In 2017, several courts ruled that registered medical marijuana users who were fired or passed over for jobs because of their medicinal use could bring claims under state disability laws.

“HR professionals should review their drug-testing policies and practices and consider consulting counsel before taking any adverse action following a positive drug test for marijuana in a state in which medical or recreational use is legal,” said Cheryl Orr and Irene Rizzi, attorneys with Drinker Biddle in San Francisco, in an e-mail to SHRM Online.

Lactation and pregnancy accommodation requirements have also passed in some jurisdictions, such as San Francisco, Connecticut, Massachusetts, Nevada, Vermont and Washington state.

The Bigger Picture

With all the state and local changes, it may no longer be effective to have one handbook that is applied throughout the states, Pasek said. Employers don’t want a nationwide handbook that has 50 different leave laws, for example, because it’s confusing and overwhelms the process. “Now is a good time to add state supplements to the handbook that are distributed only to employees within the relevant state,” he said.

[SHRM members-only multistate coverage: Multistate Employer Resources]

HR professionals should ask themselves what the purpose of the employee handbook is and what essentials should be included. Otherwise, the handbook could start to mimic a code of regulations, Pasek said.

A solid handbook will include equal employment opportunity policies and internal complaint procedures; legally required policies, notices and disclaimers; and likely an employment-at-will statement. Other provisions may depend on the specific employer, the state and the handbook’s purpose.

Regardless of what the handbook includes, HR professionals need to be on the lookout for changes at the federal, state and local levels. “Now, more than ever, human resource professionals need to stay abreast of fast-moving changes in employment law through continuing education,” Martin said.

By Lisa Nagele-Piazza, SHRM-SCP, J.D., and Beth Zoller, J.D. Jan 2, 2018

Lisa Nagele-Piazza, SHRM-SCP, J.D., is SHRM’s senior legal editor. Beth Zoller, J.D., is a legal editor with XpertHR.


How employers can help employees take advantage of vision benefits

Open enrollment season can be hectic, and vision benefits may not always be a top priority. But that doesn’t mean the offering isn’t important for employees — or that it shouldn’t be encouraged by employers.

To help educate employees on how to make the most of their vision benefit, here are three helpful tips for plan sponsors.

[Image credit: Bloomberg]

[Image credit: Bloomberg]


Tip No. 1: Encourage use of the website for answers to questions. Most vision carriers offer an open enrollment portal on their website to let employees view vision benefit coverage options and what’s available to them. Here are some basics that will help employees take full advantage of their vision benefit coverage:

· What costs am I responsible for? 
1. Co-pay, if one applies
2. Anything over the frame allowance. Frame allowance is what the benefit pays toward eyeglass frames.
3. If contact lenses and eyeglasses are not covered during the same plan period, the employee must choose one or the other. Most choose to pay out of pocket for their contact lenses or wait for the next benefit period to purchase them.
· Is my eye doctor in the network? If not, how can I recommend the eye doctor to my vision carrier to include them in the network?
· Are there additional discounts on in-network services?
· Are there special discounts on items including laser eye surgery, contact lenses and eyeglass lenses?

Enrolled employees can find answers to these questions in their benefit brochure or on their vision carrier’s website.

Tip No. 2: Explain how flexible spending account dollars can go hand in hand with vision coverage. No one wants to lose their flexible spending account dollars at the end of the year. Employers should encourage employees to use FSA dollars toward purchases of vision care services or products such as contact lenses, LASIK surgery and eyeglasses.

Tip No. 3: Spread the word about your vision benefit.According to a new survey conducted by Namely, a human resources software company, employees feel rushed during the open enrollment process. Most vision carriers offer communication materials to share at open enrollment. A way to easily address open-enrollment frustration and confusion is to send multiple reminders out at various times through different channels, such as e-mail, the company’s intranet and paycheck inserts.

This strategy can give your employees ample time to digest the data and make an informed decision. If you need more materials, ask your vision carrier to provide you with variations of the message, as well as helpful tips to maximize benefits.

  • October 23 2017, 12:30pm EDT

David Karlin

David Karlin

David Karlin currently serves as president of National Vision Administrators (NVA), Benecard Services and Heartland Fidelity Insurance Company.

How employers can help workers best utilize an HDHP

Most employers have dipped their toes in the high-deductible health plan waters, either because they’ve implemented a plan or because they’ve considered it as part of their benefit offerings; 29% of covered workers are enrolled in HDHPs with savings options up from 4% in 2006, according to the Kaiser Family Foundation.

The goals of implementing this type of plan are twofold. First, these plans usually provide a much-needed premium savings. Second, HDHPs are designed to encourage consumerism and motivate employees to make more cost-conscious choices — for example, using urgent care over the emergency room when appropriate.

Unfortunately, high-deductible health plans may also have some unintended consequences — for instance, think about the employee who is struggling financially and perhaps even living paycheck to paycheck. Facing the reality of plunking down $100-$200 or more for a sick visit at the primary care doctor’s office or urgent care facility may preclude them from seeking care. That’s why employers must ensure they best communicate to employees the advantages of such plans.

So, how can employers help employees manage the financial equation of HDHPs that are clearly here to stay? Here are some tips.

Help them prepare for expenses. One suggestion is to propose they prepare a budget for anticipated medical expenses — such as quarterly sick visits to primary care physicians and the cost of maintenance medication. Providing a worksheet to estimate annual out-of-pocket expenses can be helpful, perhaps with common examples included.

Some employers partially fund the deductible with a contribution to a health savings account. When possible, the employee should consider allocating a portion of their pay toward the remaining deductible amount. This will ease the worry of not having funds to cover the deductible, and any unused funds rollover.

HBy contributing to an HSA, the employee gets an immediate tax savings and builds up a fund to use as needed. In the event there is a medical expense that exceeds the balance in the account, encourage employees to request a payment plan equal to their HSA contribution. When the contribution goes in, they can then make the payment. Most medical providers are open to these types of arrangements. Consider a communications campaign to explain the functions of an HSA.

Encourage employees to become educated consumers. Employees are generally not thinking about their benefits everyday and need to be reminded of the value of becoming an educated consumer when they do use their benefits. Direct employees to carrier cost estimator tools for everything from MRIs to prescription drug costs. Many carrier websites provide instructional videos to demonstrate how these features work. Send the links out on a proactive basis or consider offering a healthy lunch-and-learn to discuss these resources.

Encourage lower-cost options. With any health plan there are a number of ways to save money. Encourage employees to use lower-cost options such as:

· Generic drugs over brand-name when possible
· Mail-order prescriptions for management drugs
· In-network/preferred providers versus out-of-network
· Telemedicine, if available

Take the opportunity to remind employees about these lower-cost options frequently.

Leverage employee advocacy. Even with the best efforts to educate employees, it may be difficult for them to absorb all the information. Direct employees to an employee advocacy team if it’s available. These experienced healthcare benefits professionals can assist with research and provide meaningful suggestions to help employees get the most out of their plan for the least cost.

Managing medical costs will likely remain a challenge for both employers and employees so it is important to stay informed as new cost transparency tools become available and to constantly educate employees so they can make informed choices that are also affordable for them.

  • October 19 2017, 12:24pm ED

Loretta Metzger

Loretta Metzger is a benefits consultant at Corporate Synergies.

Amazon will be in the prescription-drug market by 2019, analysts say

Amazon has a long standing interest in prescription drugs, an industry with multiple middlemen, long supply chains and opaque pricing. (Photo: Shutterstock)

Amazon has a long standing interest in prescription drugs, an industry with multiple middlemen, long supply chains and opaque pricing. (Photo: Shutterstock)

Amazon.com Inc. is almost certain to enter the business of selling prescription drugs by 2019, said two analysts at Leerink Partners, posing a direct threat to the U.S.’s biggest brick-and-mortar drugstore chains.

“It’s a matter of when, not if,” Leerink Partners analyst David Larsen said in a report to clients late Thursday. “We expect an announcement within the next 1-2 years.”

PBM threat

CVS declined to comment, and referred to remarks made by its chief executive officer, Larry Merlo, on an earnings conference called on Aug. 8. The pharmacy business has “many barriers to entry,” Merlo said at the time. Walgreens declined to comment.

Amazon could quickly grow in prescription drug sales and distribution, especially if it bought a mid-sized drug benefit manager and used it to create a more transparent pricing model, said Linda Cahn, a consultant at Pharmacy Benefit Consultants in Morristown, New Jersey.


In Start to Unwinding the Health Law, Trump to Ease Insurance Rules

Directive is expected to expand the sale of less-expensive plans with fewer benefits

President Donald J. Trump with Vice President Mike Pence after the House approved a bill to repeal most of the Affordable Care Act in May.
President Donald J. Trump with Vice President Mike Pence after the House approved a bill to repeal most of the Affordable Care Act in May. PHOTO: JIM LO SCALZO/EUROPEAN PRESSPHOTO AGENCY

President Donald Trump is planning to sign an executive order Thursday to initiate the unwinding of the Affordable Care Act, paving the way for sweeping changes to health-insurance regulations by instructing agencies to allow the sale of less-comprehensive health plans to expand.

Mr. Trump, using his authority to accomplish some of what Republicans failed to achieve with their stalled congressional health-care overhaul, will direct federal agencies to take actions aimed at providing lower-cost options and fostering competition in the individual insurance markets, according to a Wall Street Journal interview with two senior White House officials. The specific steps included in the order will represent only the first moves in his White House’s effort to strike parts of the law, the officials said.

By boosting alternative insurance arrangements that would be exempt from some key ACA rules, the change would provide more options for consumers. But health-insurance experts say it could raise costs for sicker people by drawing healthier, younger consumers to these alternative plans, which could be less expensive and offer fewer benefits.

The executive order—which Mr. Trump plans to unveil in a signing ceremony in the Roosevelt Room Thursday, surrounded by cabinet officials and employer representatives—will aim to expand access to plans that let small businesses and possibly individuals band together to buy insurance. It will also lift limits on the sale of short-term insurance, which provides limited coverage and often appeals to healthier people. And it will seek to expand the ways in which workers use employer-funded accounts to buy their own insurance policies.

It will be months, rather than weeks, for even the most simple changes in the executive order to take effect, and the order leaves key details to the Labor Department, in particular, to determine after a formal rule-making process, including the solicitation of public comment.

But taken together, the instructions will amount to a reversal of the broad ACA approach, which seeks to guarantee that insurance policies offer a minimum level of benefits to all consumers regardless of their health history. Mr. Trump and other Republicans argue that such rules must be relaxed to bring down premiums, especially for healthier people who have seen costs rise under the ACA.

The order also will set the stage for potential future action, as Mr. Trump weighs whether to stop enforcing the ACA requirement that most Americans obtain insurance, for example, and whether to keep making payments that let insurers subsidize lower-income consumers.

And in a surprising move, the White House officials also said Wednesday night that the order would direct agencies to study and issue a report on federal and state policies that could contribute to rising health costs—including, potentially, the impact of health-care provider consolidation.

Health analysts predicted that Thursday’s order could tempt critics to pursue legal challenges, opening a new front in the health-care battle. But the order is likely to leave much of the implementation details to agencies, senior White House officials said Wednesday, and they said they didn’t believe the order could be litigated.

The action marks the biggest change to health care since the November election. The ACA, also called Obamacare, made sweeping changes to health insurance pricing that made insurance newly accessible for lower-income and sicker Americans, but also resulted in market turbulence and higher premiums for healthier and middle-income people, in particular.

Republicans’ effort to repeal the ACA collapsed in Congress last month, and Mr. Trump hasn’t hidden his displeasure at GOP leaders for that failure or his desire to step into the gap. The White House officials said Wednesday night that the order was specifically crafted in the context of the failure of the repeal bid.

“Since Congress can’t get its act together on HealthCare, I will be using the power of the pen to give great HealthCare to many people – FAST,” Mr. Trump tweeted this week in signaling his intent to issue the executive order.

Democrats, however, warned the order could cause turbulence in the insurance market and overlooks the complexity of the health-care system. “It has the potential to be very disruptive,” said Rep. John Yarmuth of Kentucky, the top Democrat on the House Budget Committee. “I don’t think the insurance companies are prepared to actually deal with that.”

The order will direct the Labor Department to take steps that speed the way for small businesses, and possibly individuals, to band together in arrangements called association health plans. These insurance plans would be exempt from some regulations, such as the requirement that they offer a specific set of benefits and they would likely attract those with limited health needs.

The final decision about how far to expand the definition of an association and its members will be left to the agency, after a period of public comment, the two White House officials said. The officials said they supported a more expansive view of who might be considered to be eligible to sign up, but weren’t prescribing a specific legal definition—a significant factor in determining the impact of the change on insurance markets.

Supporters say such health plans can costs less, since they wouldn’t be subject to as many regulations. But critics say that leaves consumers at risk if they wind up with expensive health conditions that aren’t covered.

Currently, these self-insured health plans are typically led by trade groups that are subject to state regulation, but agency moves following the Trump order would free them from many of those rules.

In another move, the executive order will call for expanded access to short-term health plans whose availability was curtailed by the Obama administration. These plans have more flexibility than others allowed under the ACA, such as an ability to refuse coverage to people with pre-existing conditions.

The Obama administration limited these policies to less than three months, with no ability to renew them after that time because of concerns they were siphoning off healthier people from the ACA marketplaces.

As with association plans, supporters say short-term policies provide more options and carry lower premiums, while critics say they would attract the healthy and leave higher-risk people in more traditional plans that would become more costly since the population would be older and sicker.

Finally, the order will direct agencies to rescind an Obama-era guidance on employer-funded accounts that workers use for medical costs. Employees who have these accounts, called health reimbursement arrangements, will likely be allowed to use them to buy their own insurance plans, something that is now forbidden.

The Obama administration blocked the pretax dollars from being used to buy such plans because of concerns that would prompt employers to stop offering coverage of their own.

Write to Louise Radnofsky at louise.radnofsky@wsj.com, Stephanie Armour at stephanie.armour@wsj.com and Anna Wilde Mathews at anna.mathews@wsj.com


Appeared in the October 12, 2017, print edition as ‘President To Ease Health Insurance Rules.’

Confusion about HDHPs leads to missed preventative care, researchers say

  • Patients in high deductible health plans (HDHPs) are skipping preventive care services, according to NPR affiliate WBAA, citing a study by the Fairbanks School of Public Health in Indianapolis. Researchers in the study think plan participants may not know that HDHPs cover preventive care, so they skip annual visits to their primary care physician or put off cancer screenings to avoid anticipated costs.
  • HDHPs have become more popular with consumers since introduced in 2004. A Kaiser Family Foundation survey found that 28% of respondents in employer-sponsored health plans were enrolled in HDHPs, a 9% increase over the last five-year period.
  • Nir Menachemi, a professor of public health at Indiana University – Purdue University Indianapolis, told WBAA that HDHPs have made plan participants more cost-conscious by, for example, reducing ER visits to hospitals. But he added that enrollees might be confused about the services HDHPs cover and therefore need more education about the plans.


HDHP plan participants might not only be confused about coverage — stress may play a role, too. A 2016 study from The Guardian Life Insurance Company of America concluded that HDHP participants require more support and education from employers about their plan options and long-term health risks.

​Employees sometimes think they know more about their benefits than they actually do. A separate study found that while 80% of employees tested said they understood their benefits quite well, test results showed that only about 49% did.

Open enrollment is the perfect time to educate employees about their benefits. Even so, HR should make benefits information available to employees year-round — not just during enrollment season — so that employees may be better-informed consumers when electing plans. Having it available online for viewing 24/7 empowers workers to own that knowledge, too.

Preventive care is critical to health maintenance. It can help keep healthcare costs down by preventing serious, more expensive medical treatment later on. One employer, Zocdoc, has gone so far as to allow employees an “unsick day” for medical check-ups.


Oct. 6, 2017

How employers can protect themselves from hacks

Companies including Equifax, Target and JP Morgan Chase have been susceptible to large-scale data hacks in the past few years, which has a number of other employers concerned if they are the next target.

Epstein Becker Green attorneys Robert Hudock, a member in the Health Care and Life Sciences practice in Washington, D.C., and Brian Cesaratto, a member in the Employment, Labor & Workforce Management practice in New York City, spoke with Employee Benefit News to discuss the latest hacks, how employers can protect themselves from internal and external threats, and why the benefits department should be involved.

This conversation has been edited and condensed.

Employee Benefit News: How employers are feeling in this climate?

Robert Hudock: When I’m talking with an executive or board of directors or general counsel, they just don’t want to be that person next to be affected by a significant breach. Is this a problem that I need to worry about? What can I do to prevent this from happening to my organization? It’s fear and then looking for an answer to solve this problem. When they look for that answer to solve this problem, there are lots of people out there saying buy this tool. With the Equifax breach, you saw some of the bigger tools. The reality of this is a lot of this is human, human issues. The tools aren’t going to solve a lot of these things.

EBN: Is it worth paying for them? Should these companies be buying cybersecurity tools?

Hudock: What you need to do is you need to think about the risk profile of your organization and what are the key vulnerabilities and threats to our mission or my mission in order to say,
“Should I buy this tool? Should I not buy this tool?” What we try to do is every time a breach happens, we develop a library of cases so we can say when we’re working with executives: This is the type of situation that happened. This is how it happened. What if this happened to your organization? How would this be handled? And then try to estimate the likelihood that this could happen, and then you get into the tools.

Brian Cesaratto: The tools are one technique of part of a larger strategy for insiders like employees. You’re talking about policies, hiring, system use. In the benefits area, employers maintain benefits. That’s very sensitive data. Social security numbers, health information. What we see happening more and more with what’s happening in the news with the breaches, is that there’s an increased awareness that you need to look at, like your key data. Benefits information is one component of that. How do we safeguard it? What do we put in place? As Robert said, it’s the human element too, which is personnel. Looking at your personnel and putting in place policies and techniques to try and prevent it in the first instance.

EBN: Who should be coordinating efforts to prevent hacks?

Cesaratto: Our approach is that it should be a coordinated effort — HR, benefits, IT and legal coming together with a strategy that looks to prevent in the first instance, then to detect and respond in a way that’s appropriate. [They need to] be prudent and to take prudent precautions ahead of time because the consequences are so dire.

EBN: What’s the best strategy for an employer to implement before a hack occurs?

Hudock: Developing a good incident response plan for likely scenarios is key. The next step is to go through a tabletop exercise, which is sort of a high-level process of saying, “Pretend this happens. Who do we communicate with?” It’s about understanding those communication pathways so that we’re ready to address a breach when it does occur.

At the next level up from that, you begin to simulate the breach. You create the artifacts that the system has been compromised and we see this evidence. What are we doing? In a more technical level, integrating all the different pieces together because what people sometimes fail to realize, incident response is just not about IT. It’s about IT interacting with the executives and having a proper communication pathway. If you don’t have that, you potentially have someone in IT making a decision that binds the organization to a particular pathway that they may not want. What we recommend is building out an incident response plan similar to this, then going through tabletop exercises.

EBN: I know with hospitals in particular, that’s been a big target for breaches because there’s so much data available. Have you been working with hospitals and health systems?

Hudock: Yes.

EBN: What are they doing to avoid a hack?

Hudock: I actually have one example that may be very relevant to the employer space, and that is 401(k)s. We actually see a large number of incidents where an insider potentially tries to cash out a 401(k) of employees. In that type of situation, you’re putting in place monitoring. You have only certain numbers of people that have access to that information to begin with. You also compartmentalize. If someone takes this information, then we have a good indication of specifically who that person was.

Taking a step back and talking about hospitals, hospitals have some additional problems to worry about. It’s not just monitoring when information is being taken. Because yes, we see medical identity theft where gangs come into the organization and bribe nurses to steal sheets for certain patients. Patients that are very old, disabled, have severe mental disabilities, are much less likely to detect that their identities have been absconded. Those particular people are very valuable for medical identity theft.

EBN: Do you find that employees or customers will have less of an incentive to work or shop at a hacked company? Have you seen an impact on the consumer/employee level?

Hudock: With Target, you had some specific issues in the short term around people trusting Target. People’s memories are short. With the Equifax breach, that will be an interesting case because the product they sell, that was compromised here, was central to the organization’s purpose. Target wasn’t a credit card company. Target is a retail company. Equifax, they’re in the business of identity theft prevention. Now they themselves have become the weakness.

Cesaratto: Absolutely. The other thing on the malware piece where they lock you down and demand money, it’s the same type of analysis for benefits or payroll. If they lock down your payroll, can you keep your company going? And thinking about that and how you protect that. In the event that that happens, do you have another place to go to restore that data, keep your payroll going until you fix the problem.

EBN: Is cybersecurity something employers are regularly talking about with counsel or is this a reactionary process once a hack occurs?

Cesaratto: I certainly think that the awareness is increasing and the education level is increasing, in part because of [the Russian hacking scandal during the 2016 election]. It’s front and center in the news every day. It wasn’t like that a few years back. People are thinking about it more and at least considering what they should do and what to put in place to protect themselves, to protect their company.

  • October 04 2017, 12:53pm EDT

9 benefit trends to watch in 2018

Picture a bevy of meaningful employee benefit offerings that largely fall under the financial-wellbeing umbrella and a sunny forecast may be in store for 2018, predict several industry leaders and practitioners.

The need for a more holistic view of financial security in the workplace is so critical that the industry’s premier benefits researcher, which was founded nearly 40 years ago, hopes to finally establish a beachhead for this hot topic. While the chief target appears to be younger employees who are faced with enormous debt from student loans – a related key trend – the benefit is said to have wide appeal. It also dovetails into yet another major development, which is the long-simmering convergence of healthcare and retirement benefits.

Consider how and why the benefits landscape is shaping up this way:

1) Financial wellness

Evren Esen, research director at the Society for Human Resource Management, notices that more organizations are offering programs that help employees with their finances. Roughly half of the SHRM members polled in the latest annual employee benefits survey she has overseen for the past decade say they offer investment planning, 48% offer individual retirement planning and 44% offer retirement-preparation advice. One noteworthy development is that financial advice of any type increased to 49% from 37% five years ago, Esen says.

The issue resonates so much that the Employee Benefit Research Institute hopes to open a financial wellbeing research center in response to this trend, with backing from a critical mass of organizations. More rigorous data collection and surveys on financial wellbeing priorities will not only deepen employer understanding of critical issues in the space, according to Harry Conaway, EBRI’s president and CEO, but also help them attract and retain top talent. One challenge is that there’s no agreement or consensus about how to even measure this area, he cautions.

“I think financial wellness is huge,” says Sylvia V. Francis, total rewards manager for the Denver-based Regional Transportation District who’s also a member of SHRM’s Special Expertise Panel. To capitalize on that benefit trend, RTD this year began offering money management expert Dave Ramsey’s Smart Dollar program, which has helped some participants pay off more than $60,000 in debt. It costs RTD about $125 per employee per year, which Francis deems well worth the investment “because financial upset causes a lot of problems in the workplace.”

While these programs often appeal to older employees, Francis believes millennials also crave this knowledge because many of them would like to retire in their 60s and may be more financially savvy than their elders think. After the Great Recession of 2008, she says many of them saw their parents struggle and would like to learn how to hold onto their money. There’s also a growing sense of pragmatism whereby she believes many of them are electing to attend less expensive community colleges to load up on prerequisites before transferring to a four-year college.

2) Student loan assistance

“More employers are looking at how they can help employees deal with student loan debt,” reports Jim Klein, president and CEO of the American Benefits Council. He believes the issue has crossed into the public policy realm because it’s imposing on the ability of younger employees to participate in a 401(k) plan or deepen that commitment.

It shows just how many components to financial security there are beyond having adequate funds in a retirement plan, according to Klein, who also points to the importance of disability insurance and long-term care. Together, he says they’re part of a much larger tapestry requiring a more holistic view of benefits from a recruitment and retention standpoint.

One idea Klein says is being considered on Capitol Hill is for employers to contribute into a retirement savings plan an amount that would match what employees pay each month in terms of their student loans. “It’s indicative of thinking in creative ways about how to not only help people with their student loan debt, but also see the value of retirement savings,” he says.

While Francis sees student loan reimbursement programs gaining traction even among smaller companies, she offers up a caveat. “We’re finding that millennials, and to a lesser extent, Generation X, don’t stay with jobs as long as boomers do,” she says. Therefore, employers will need to assess whether the looming threat of turnover is worth the cost of providing this benefit.

Only 4% of SHRM benefits survey respondents provide student loan repayment programs. “It’s not something I would anticipate that organizations across the board would necessarily take on, even over time, just because it is a high-cost benefit and it really has to fit with the organization’s strategies,” Esen predicts. She says the benefit appears to be confined to the finance and tech sectors, as well as larger employers.

3) Cadillac-style health coverage

By postponing the proposed 40% excise tax on Cadillac-style health plans under the Affordable Care Act, lawmakers preserved a competitive balance in tight labor markets, observes Doug Hessel, a partner with Johnson & Dugan Insurance Services Corporation, which is part of the United Benefit Advisors network of companies.

Many of his clients are based in the San Francisco Bay Area where it’s difficult to keep up with Google, Apple, Facebook and others. As a result, he says they’re more comfortable about moving forward with augmenting their plans, including health reimbursement accounts and medical expense reimbursement accounts. “The gold-plated or platinum-plated types of plans are alive and well in our market,” he reports.

4) Convergence of healthcare and retirement

Another way employers are thinking about employee benefits in a more unifying way is to use health savings accounts to pay for healthcare needs in retirement. Klein says it reflects a need to be “more vigilant about monitoring investments or seeking investment options with lower fees in light of a lot of the increased scrutiny around the fiduciary issue.” There also could be more opportunities within a retirement savings plan to provide for healthcare needs, with Klein citing the idea of retiree healthcare accounts within 401(k) plans or more favorable tax treatment for investments made in lifetime-income products.

5) Handholding guidance

Conaway is anticipating regulatory or legislative clarification on whether certain pro-retirement plan designs and features are acceptable. Examples include a stretch match, which raises up to 12% the threshold for matching deferred pay, and changes to preretirement distributions aimed at reducing so-called leakage. He believes “handholding guidance” from the IRS, Treasury and Labor Departments or in any tax-reform bill will encourage employers to pursue more aggressive strategies to boost retirement savings. Such action also would enjoy bipartisan support, he notes.

6) Workplace wellness

An emphasis on healthier living dates back about five to seven years in SHRM’s annual benefits survey, according to Esen. “There is an increase in wellness-type of benefits,” she reports, noting a desire to manage rising healthcare costs as the primary motivator.

Nearly a quarter of participants in SHRM’s latest benefits survey plan to increase their wellness benefits, whose percentage Esen said was a higher than other categories such as professional and career development, flexible work schedules, retirement and family-friendly policies. One unusual offering, workstations that allow people to stand, soared to 44% from just 13% in 2013 when the data was first tracked. While only 7% of organizations offer meditation and mindfulness programs to help reduce stress, Esen expects the number will grow.

7) Flexible work schedules

Francis notes a movement toward more flexibility in the workplace. One key component includes a “9/80” schedule featuring nine hours a day for the first week and then nine hours for four days that amounts to an extra day off every other week. She believes these compressed workweeks largely appeal to millennials and startups.

“I think companies that are sort of died in the wool, blue chip or like us, transportation, have to change their mindset” about flexible schedule to compete for talent, Francis says. The thinking is that employees can work just as hard or harder at home, Starbucks or wherever they might be than those in an office. RTD employs about 3,000 people.

More employees are expecting greater flexibility in their work schedules, Esen says. Telecommuting on an ad hoc basis rose to 59% in 2017 from 45% in 2013, while flextime benefits have remained stable during that time frame at 57%. The number of companies offering a compressed workweek, however, fell to 29% this year from 35% in 2013.

8) Paid leaves of absence

Francis predicts more paid leaves of absence related to maternity and paternity benefits as part of a more family friendly approach to recruitment and retention. This can come in handy for employees who haven’t been able to accrue six to 12 weeks of paid time off. However, she cautions that the arrangement can cause problems in other areas. For example, what happens to employees who are diagnosed with cancer?

Another challenge for employers is complying with local or state mandates for paid leave, which Francis describes as “a nightmare” scenario for multi-state employers. She lauds SHRM for advancing the notion of mandated paid leave at the federal level so that it supersedes the regulatory patchwork that ties the hands of these larger employers.

9) Flat fees for brokers

Hessel believes broker commissions will continue to be squeezed in the small-group health benefits marketplace — and rightfully so. “If the premium is going up, why should brokers get increases for not doing increased work for their clients?” he asks. A fee-based approach that includes a strategic scope of services better defines the deliverables timeline and makes for a more rewarding client relationship, he adds.

Employer-provided benefit costs vary widely by industry

The cost of offering healthcare and retirement benefits varies widely by industry, with retirement benefits experiencing the greatest variation.

In new analysis, Willis Towers Watson finds that healthcare costs, as expected, are the largest cost across all industries, ranging from 10.4% of pay in the retail sector to 12.7% in the oil, gas and electric sector.

Total retirement benefits, which include defined benefit, defined contribution and post-retirement medical programs, range from 5.5% of pay in the healthcare, high tech, general services and retail industries to 12% of pay in the oil, gas and electric sector.

Marina Edwards, senior retirement consultant at Willis Towers Watson, says that the disparity across the industries for retirement benefits can be traced back to the closing down of company pension plans.

Funding still goes into those plans, but employers must also funnel dollars into their defined contribution plans, she says. All of that counts toward an employer’s total benefits package spending, which also includes healthcare premiums, some subsidized by the employer.

“Total employer spend can be quite high in some cases,” Edwards says.

As far as defined contribution plans go, employers in different industries must contend with the shortfall that employees are feeling in their paychecks because of increased medical costs. Many workers are feeling stressed at work and feeling the effects of tighter paychecks so employers have worked toward addressing that problem, Edwards says. That’s causing more companies to redesign their retirement plans and stretch the employer match to a higher percentage to encourage employees to put more money into the plan.

“This doesn’t solve the paycheck pinch, if you will, but it makes the employer’s dollars go further,” she says.

The oil and gas industry is unique in that it usually matches dollar for dollar, up to 15% of pay, any contributions made by employees into their employer-sponsored 401(k) plan. The catch is those funds are matched with company stock. There is no cash outlay, Edwards says.

“It is still a benefit to employees but it costs them less to do it,” she says.

That explains the large deviation between what the oil and gas industry puts toward retirement benefits and what other industries are contributing.

Because certain industries are more competitive, these types of benefits become more important in attracting and retaining top talent, she says, especially for skilled workers who are specific to that industry, such as nurses in healthcare and oil and gas engineers in the oil and gas industry.

“I think most employers know their healthcare costs are expensive, but there is less disparity on the healthcare side of things,” Edwards says. “The numbers and percentages are pretty tightly bundled. We see a bigger spread on the retirement side.”

According to Willis Towers Watson’s most recent Global Benefits Attitudes Survey, 62% of employees say they would be willing to pay a higher amount out of their paycheck each month to have a more generous retirement benefit, and 63% say they would pay a higher amount to have access to a guaranteed retirement benefit.

Employers need to understand that this disparity across industries exists, says Edwards, because many local employers compete for talent with employers in different industries than themselves. For instance, a software company in Madison, Wis., may compete for top tech talent with the local university hospital system, so it is up to both industries to know how much these other industries are willing to pay for the same job title.

“If you find your benefits fall short, you can use non-qualified plans as a way to entice individuals to join your firm or retain them,” she says. Companies should consider offering an enhanced compensation structure, beef up their bonus or pay higher wages to remain competitive.

“Focus on the total benefits value and communicating that total value: cash plus healthcare plus retirement,” she says. “Many companies don’t have retiree medical anymore but if they did it would be another level.”

Benefits information is included in the Department of Labor’s Form 5500. Many companies don’t realize that they can do a bit of sleuthing through the Form 5500 filings to see what their competition is offering for retirement benefits to their employees, she adds.

“It is surprising to us that companies don’t know who their competitors are,” she says. “They don’t have a formal list but if they do have a list, they don’t know what industries they are in and what that industry is paying.”

  • September 27 2017, 6:17pm EDT

How employers are preparing for the Cadillac tax

Although the Cadillac tax isn’t set to go into effect until 2020, employers are already adjusting their health plans in an effort to avoid the added expense.

The 40% excise tax on high-cost healthcare, which was created to help fund parts of the Affordable Care Act, has long been one of the most controversial aspects of the law for employers, because it could ultimately impose significant costs.

Lawmakers discussed delaying the tax to 2025 or 2026 as part of the healthcare debate in Congress over the summer, but for now, the tax remains slated to go into effect just over two years from now.

“The timeframe for plan changes at big companies is easily 18 months — and we’re not that far away,” says Jim Klein, president of the American Benefits Council.

[Image credit: Bloomberg]

[Image credit: Bloomberg]

A survey published last month by the National Business Group on Health found that uncertainty surrounding the surcharge is influencing efforts to control healthcare costs for about 8% of large employers surveyed, looking out over the coming year.

Still, while the majority of employers said they are maintaining their strategies to rein in costs regardless of the tax, Steve Wojcik, vice president of public policy for NBGH, says that the issue remains a “top priority” for many employers.

“Although our data show that the uncertainty about it isn’t having a huge influence on healthcare strategy, it’s definitely top of mind,” he says.

Kim Flett, compensation and benefits services managing director at accounting firm BDO, says that she advises clients to form internal committees of benefits experts to discuss employer options for tweaking healthcare offerings, in light of the upcoming tax, in addition to consulting with health insurance providers and accountants.

As part of that process, employers are considering certain tradeoffs across their benefits package — for example, whether cuts in retirement contributions might be required to maintain high-priced plans that could trigger the tax.

“Now that it’s looming, we’re seeing a lot more concern from employers,” she says.

Observers say there are a number of changes employers can make to their health plans to help reduce the cost of coverage and avert the tax, at least temporarily. Those include efforts to shift healthcare costs onto employees, through raising deductibles and increasing co-payments or co-insurance rates. Such changes face some statutory limits, however, as the ACA requires all out-of-pocket expenses to be capped at $7,150 for individuals and $14,300 for families in 2017.

More employers also are considering the move to high-deductible plans. The NBGH survey found that the vast majority (90%) of large employers are likely to offer consumer-driven healthcare plans by 2018, with 39% of employers offering only higher deductible plans by that time. Consumer-driven healthcare plans are most commonly designed as high-deductible plans paired with a tax exempt health savings account, and the plans have been shown to help reduce healthcare costs.

While many employers were already moving toward offering high-deductible plans, the threat of the tax has “really turbo-charged the growth” of the plans, says Christopher Beinecke, a Dallas-based lawyer at law firm Haynes and Boone, who specializes in employee benefits issues.

NBGH’s Wojcik says that employers also are exploring improvements to their healthcare offerings in an effort to reduce coverage costs. Some are looking to provide tele-health options and worksite or nearby clinics to manage primary and preventative care. Other employers are partnering with accountable care organizations, which are networks of doctors and hospitals that provide coordinated care to patients.

“You’re paying for better delivered care that costs less,” Wojcik says of the efforts.

Experts said that the pacing of any changes to reduce healthcare costs is likely to be spread out based on an employer’s specific needs. Some companies already began making plan adjustments in the years following passage of the ACA in 2010, because the tax was initially designed to go into effect in 2018. (It was delayed for two years in December 2015.)

Other employers are likely to make changes based on when their plans are expected become subject to the tax. The tax is projected to go into effect for plans in excess of $10,800 for individual coverage and $29,050 for family coverage in 2020. Those figures will adjust each year with inflation.

“Employers by and large, if they haven’t already, will probably begin to make their gradual changes two or three years out from hitting the excise tax,” Beinecke says.

NBGH found last year that 53% of large employers expected at least one of their health plans will exceed the tax threshold in 2020, while 56% estimated that their most popular health plan will hit the threshold by 2022. By 2030, 95% of employers estimated that their highest enrollment health plan will be subject to the tax.

That’s why many employers are starting to make changes gradually over time in advance of those dates.

“The fact of the matter is you cannot make drastic changes to benefits overnight without causing a fiasco,” says James Gelfand, senior vice president of health policy at the ERISA Industry Committee.

  • September 20 2017, 11:07pm EDT