Report: More Large US Employers Offering HDHPs Alongside Traditional Health Plans

Report: More Large US Employers Offering HDHPs Alongside Traditional Health Plans

High-deductible health plans have emerged in recent years as an increasingly popular means of controlling the growing costs of employer-sponsored health insurance in the US, particularly for healthy employees who don’t anticipate significant health care expenditures and would prefer to pay lower health insurance premiums, even if it means paying higher out-of-pocket costs when these expenditures do arise.

The State of Employee Benefits 2018 report from the benefits technology and services company Benefitfocus indicates that the shift to HDHPs accelerated last year among large US employers, though in most cases, these plans are offered to employees as a choice alongside traditional plans like preferred provider organizations. SHRM’s Stephen Miller outlines the key findings from the report, which analyzed data from 540 large employers with over 1.3 million insured employees:

For 2018, 70 percent of large employers offered at least one HDHP—either in addition to a traditional health plan (65 percent) or exclusively as a full replacement for traditional health coverage (5 percent). … When employees at large organizations were given options, 35 percent selected an HDHP while 48 percent chose a PPO for 2018. The remainder opted for other types of traditional plans, when available, such as health maintenance organizations.

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Why Employers Are Paying More Attention to the US Child Care Crisis

Why Employers Are Paying More Attention to the US Child Care Crisis

The high cost and limited availability of child care is one of the major burdens facing working families today, particularly in the US, but also in the UK and other countries: Parents are spending a sizable chunk of their incomes on child care, making career decisions based on these costs, and sacrificing earnings by pursuing flexible schedules or part-time work in order to make more time to spend with their children.

Unable to afford full-time child care, many mothers (and it’s almost always mothers) are forced to work part-time or drop out of the workforce entirely to take care of their children, especially when they have more than one. Because responsibility for child care still falls predominantly on women, this factor contributes heavily to the gender pay gap.

In the US, a historically tight labor market is driving employers to reckon with this problem, now that they are feeling it more acutely than ever, Jennifer Levitz reports at the Wall Street Journal. Levitz hears from employers around the country that are increasingly concerned about retaining female employees amid a dearth of child care options and have begun to look for ways to expand these options for their employees, including lobbying state governments for legislative solutions. Some coworking spaces have also experimented with child care programs as a benefit for their members.

The gold standard of child care benefits are on-site facilities, such as Patagonia famously offers at its Ventura, California headquarters and its Reno, Nevada distribution center. While these services are expensive to implement, Patagonia maintains that this investment nearly pays for itself between tax incentives, better retention, and lower turnover. From an employee perspective, on-site daycare is the family benefit most preferred by employees all over the globe, according to our research at CEB, now Gartner. This is particularly true in the US, where employees are twice as likely as in other markets to say they would prefer on-site daycare over a 5 percent increase in pay.

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Fertility Benefits Continue to Grow in Popularity

Fertility Benefits Continue to Grow in Popularity

More and more employers in the US are adding fertility benefits to their rewards packages in an effort to attract and retain employees who are interested in starting families. The latest organization to do so is State Street, which has added fertility and more generous adoption assistance to its benefits package in a deliberate effort to be more inclusive of LGBT employees in particular, Amanda Eisenberg reports at Employee Benefit News:

The financial services firm consulted its employees in an effort to make a meaningful expansion to its benefits package, which now includes four weeks of fully paid leave for employees who are primary caregivers to a child born via surrogacy; $20,000 in reimbursement for fertility-related expenses beyond the firm’s medical plans, such as surrogacy; and $20,000 in reimbursement for adoption assistance (up from its previous reimbursement of $5,000). The company says the benefits can be used once per calendar year and employees are allowed up to $40,000 in lifetime financial support for these benefits combined.

State Street is by no means alone in embracing fertility benefits as a talent attractor: A Willis Towers Watson survey conducted in January found that 66 percent of US employers expect to offer these benefits by next year, compared to 55 percent in 2017. These programs are also becoming more inclusive of LGBT employees who are looking to start families: 65 percent of employers who offer fertility benefits currently provide coverage to same-sex couples, but 81 percent are expected to by 2019. Employers told Willis Towers Watson that their main motivations for providing fertility benefits were to support diversity and inclusion, to help attract and retain top talent, to be recognized as a “best place to work,” and to foster a more woman-friendly workplace.

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BLS: 1 in 5 US Employees Had Access to Financial Planning Benefits Last Year

BLS: 1 in 5 US Employees Had Access to Financial Planning Benefits Last Year

Just under 20 percent of American workers had access to financial planning benefits through their employer last year, the Bureau of Labor Statistics recently highlighted at its news publication, the Economics Daily. According to BLS data from last March, these benefits were more commonly enjoyed by high-earning employees, employees of larger organizations, and those in certain skilled professions:

Employees in larger establishments (100 workers or more) were three times as likely to have access to financial planning benefits as employees in smaller establishments (1–99 workers). Workers in higher wage groups were also more likely to have access to financial planning benefits as workers in lower wage groups.

Nearly half of workers in the information and finance and insurance industries had access to financial planning benefits. Fewer than one in ten workers in construction and leisure and hospitality had access to financial planning benefits.

The BLS data belies the growing interest in financial wellbeing offerings among employers in the US and globally: Surveys have found that a large and growing majority of American employers are offering some form of financial wellbeing benefit. The employer-provided or subsidized financial planning services tallied in the bureau’s Employee Benefits Survey are just one of many ways organizations can help their employees better manage their finances.

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What Employers Need to Know About the US Tax Reform Act

What Employers Need to Know About the US Tax Reform Act

The “Tax Cuts and Jobs Act,” which officially passed both houses of Congress on Wednesday, will have a significant impact on employers throughout the US, by lowering taxes on corporate profits and most employees’ salaries, as well as by changing the tax treatment of executive compensation and a number of other rewards. Here’s a quick look at how tax reform will affect employers and employees, and what HR leaders need to be thinking about right away:

Corporate Tax Reduced

The act permanently reduces the maximum corporate tax rate to 21 percent from 35 percent starting in 2018, while providing additional avenues for businesses to avoid being taxed at higher rates. It also includes a one-time tax cut for corporations repatriating cash currently held overseas, and introduces a territorial tax system that imposes a 10.5 percent tax on future foreign profits, benefiting American companies that do a lot of business internationally. This change, which the tech sector is cheering, is meant to encourage businesses to reinvest their foreign profits in the US, but others say this approach has long-term costs that outweigh the apparent immediate benefits.

Some companies announced that they were passing a portion of their tax windfall onto their employees, either with across-the-board bonuses or increases in their internal minimum wage. Moves like these will please President Donald Trump and Congressional Republicans, who have long argued that slashing corporate taxes would lead to higher employment and wages. To critics, however, these announcements look more like public relations plays or attempts to curry favor with the administration, while investors, not employees, are expected to see the lion’s share of the gains.

Payroll Scramble

The first thing employers will have to do in the new year in response to these tax changes is to make sure their payroll deductions reflect the new rate and bracket structure, which has been significantly altered. The bill also dispensed with the personal exemption employees are used to using to calculate their taxable income, while roughly doubling the standard deduction. Payroll management companies Paychex and ADP say they expect to make these changes quickly and that employees should start seeing the new rates reflected in their paychecks as early as February. However, the Internal Revenue Service must first produce new withholding tables, which could take more time than usual given the overhaul the bill made to the system of deductions and exemptions. Employers will have to await further guidance on this from the IRS.

Executive Pay

The tax reform bill removes from the tax code a controversial provision introduced in 1993 that capped the tax deductibility of top executives’ compensation at $1 million, unless that compensation was “performance-based.” Originally intended to rein in the explosion of CEO and CFO pay packages, the measure failed to do so, and critics say it actually backfired by encouraging companies to shift executive compensation into stock options and pay for performance. Although it is unclear how the new rule will affect the way top-level executives are paid in the long term, it does give boards some decisions to make right now in order to maximize their tax benefit, such as whether to shift a CEO’s bonus payment from 2018 to 2017 so that it remains tax deductible. For more details, SHRM’s Stephen Miller has a helpful breakdown of the bill’s impact on executive compensation and payroll in general.

Other Employee Benefits

The bill changes the tax treatment of a variety of employee benefits, such as adding a new credit for wages paid to qualifying employees on leave under the Family and Medical Leave Act, but cutting the deduction for commuter benefits. SHRM’s Stephen Miller also provides a comprehensive explanation of these effects here.

Impact on ACA and Health Insurance Market

While Congressional procedure prevented Republicans from using the tax bill to formally repeal the mandate for individual health insurance coverage created under the Affordable Care Act, the bill takes the teeth out of the mandate by zeroing the tax penalty for failing to obtain coverage. This change will have major implications for the individual insurance market, potentially driving up premiums as healthy individuals exit the market, no longer fearing a tax penalty. The bill does not address other aspects of the ACA to which businesses have objected, such as the employer mandate and the so-called “Cadillac tax” on high-value health plans, but has emboldened business groups to push for more changes to these controversial policies in the coming year. As health care policy expert Timothy Jost explains in detail, scuttling the individual mandate will have some consequences for the employer-sponsored insurance market as well.

How the New US Tax Reform Bills Would Affect Employers

How the New US Tax Reform Bills Would Affect Employers

Late last week, Republicans in the US Senate and House of Representatives both passed versions of a comprehensive tax reform bill whose signature feature is a hefty cut in the corporate tax rate, from 35 to 20 percent. The bill, which received no Democratic votes in either house of Congress, now goes to conference, where lawmakers from both chambers will attempt to reconcile the two bills. Significant differences still exist between the two versions, however, and the Senate bill underwent a number of hasty revisions at the last minute before being passed in the middle of Friday night. It is therefore still uncertain whether Republican lawmakers will be able to agree on an identical bill that can pass both the Senate and the House.

Both versions of the bill have major implications for employers, beyond the tax breaks for businesses. Together, the bills touch on health insurance, retirement plans, and other employee benefits, but do so in different ways. SHRM’s Government Affairs team prepared a handy chart comparing the bills’ employer implications side-by-side, while Stephen Miller gives a comprehensive rundown of the differences:

Tuition Benefits: The House bill would eliminate the employer-provided education assistance deduction under Internal Revenue Code Section 127, which allows employers to provide up to $5,250 of tax-free tuition aid to an employee per year at the undergraduate, graduate or certificate level. The Senate version does not eliminate the education assistance deduction. …

Individual Health Coverage: The Senate’s bill would effectively repeal the Affordable Care Act’s (ACA’s) individual mandate, which requires most Americans to have health insurance, by reducing to zero the tax penalty for going without coverage. The House bill leaves the individual mandate in place.…

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What Will the CVS-Aetna Deal Mean for Employer-Provided Health Care?

What Will the CVS-Aetna Deal Mean for Employer-Provided Health Care?

The pharmacy giant CVS announced on Sunday that it had made a deal to buy the health insurance company Aetna for $69 billion. Analysts told the Boston Globe’s Janelle Nanos that the company had two goals in making this major acquisition:

The first is to accelerate the transformation of its 9,700 retail stores into health care supermarkets with wellness clinics for preventive care, vision and hearing services, telemedicine connections with doctors, and on-site nurse practitioners to assist with chronic conditions. The second is to fortify its business of managing pharmacy benefits, which oversees drug plans for employers and insurers, against a widely expected incursion by Amazon.com Inc.

The combination would also allow CVS and Aetna to make a more serious run at the insurer UnitedHealth Group, which has more than three times the revenues and customers of Aetna. United has a number of subsidiaries, including its own pharmacy-benefits manager, and one of its subsidiaries is in the process of acquiring a doctors group in Central Massachusetts, Reliant Medical.

Because most Americans get their health insurance through their employer or the employer of a family member, an event of this magnitude in the health care and insurance market is bound to have some consequences for employer-sponsored health plans, but as Andie Burjek finds out at Workforce, there’s some debate over how significant those consequences will be, or whether they will be positive:

David Henka, CEO of RxTE Health, a health care company that works with employers to implement reference pricing, does not believe that employers will see any material change in prices, services or outcomes due to the acquisition. “This is about consolidating internal administrative processes and creating more efficient and profitable merged companies,” he said. …

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