Archive for November, 2010

Congress Tackles Health Reform Issues in Lame-duck Session

Congress took aim at two contentious issues under the health care reform law in this week of the lame-duck session. One has to do with the law’s requirement that businesses file tax forms beginning in 2012 for every vendor that sells them more than $600 in goods. The other concerns “bare bones” or “mini med” plans that many low-wage employers now offer to their employees.

Lawmakers in both parties oppose the 1099 filing requirement, and in his day-after-the-midterms press conference President Obama signaled it out as one area where the law might need to be changed. Sens. Max Baucus (D-Mont) and Make Johanns (R-Neb). introduced measures to repeal the requirement, but on Monday failed to get the necessary two-thirds majority to pass it.

During a Senate hearing scheduled for Wednesday, Senate Democrats “plan to detail how restaurants, pet-store outlets and hair salons are offering workers health-insurance policies with low caps on annual benefit payouts that leave workers footing the bill for care,” the Wall St. Journal reported today.

McDonald’s HR director is also expected to testify on his chain’s mini-med plan that covers nearly 30,000 of its employees. In fact, it was McDonald’s plan that first put the spotlight on these bare-bones plans.

Democrats are concerned that such plans mislead employees in thinking they have health insurance when in fact the payouts are too low to cover employees’ costs of care.

Mini-med plans are expected to recede in importance once health insurance purchasing credits kick in under the new law in 2014, but in the meantime some members of Congress may push for more regulation on these plans.

The Obama Administration is caught in-between the competing demands of Democrats for more regulation and employers’ defense of the status quo. In recent weeks, regulators at the U.S. Department of Health and Human Services granted dozens of waivers to mini-med providers so they can keep the caps on annual payments. Last week, the administration said that mini-med plans could spend half as much as traditional carriers on medical care — rather than on administrative overhead — under new rules that take effect in 2011.

Stay tuned…

Enhanced Public Transit Benefit in Peril as 2010 Draws to Close

An enhanced transit benefit included in the 2009 stimulus law will terminate at the end of this year unless Congress renews it.  Part of the American Recovery and Reinvestment Act included an increase in the tax-free transit benefit from $120 to $230 a month, making it equal to the parking benefit that has been part of federal law for many years.

The benefit was intended to make public transportation a more appealing option for commuters as opposed to sitting in traffic. Transit systems like the Washington, D.C. Metro worry that if the benefit is curtailed, more congested roads will follow.

D.C. transit officials are lobbying Congress to extend the subsidy, and the Washington Post reported last week that Metro would launch an advertising campaign after Thanksgiving “to inform riders of the changes and their impact,” including ads in local newspapers and banners in stations where there is a high concentration of commuters who receive the tax benefit or subsidy.

Transit officials also worry about the impact of an Internal Revenue Service ruling from last year that will require transit and parking benefits to be separated on so-called Smart Benefit accounts cards. Under the plan, the customer’s card would “pull” payments from either the transit purse or parking purse automaticallly as riders used faregates, bus fareboxes or card readers at parking lots. At the end of each month, any unused benefits in the new electronic purses would be credited back to the employers.

Incentives Proposed To Keep Disabled Workers on Payroll

Employees and employers would share the cost of a modest private disability insurance package, between $150 and $250 a year, in order to keep disabled employees on the payroll and off the Social Security disability benefits rolls, a new report recommends.

The report by the Brookings Institute’s Hamilton Project and the Center for American Progress, to be released on Dec. 3, urges adding a “front end” of benefits to keep the disabled in their jobs and slow down the rapidly growing expense of the federal disability program, also known as Social Security Disability Insurance (SSDI).

Before workers could receive SSDI benefits, they would have to be approved for benefits from the private policy — benefits that would go toward rehabilitation services, partial income support and other related services.

After receiving private payments for two years, employees would be eligible to apply for SSDI benefits if they believe their disabilities are too severe for them to remain in the workplace, the records says.

“Currently, about 8.1 million former workers receive SSDI benefits, and the number of new applicants has risen sharply with the nation’s continuing economic problems,” the Washington Post reported.

Researchers are hoping that reforming SSDI will became part of the discussion about the need to rein in entitlement costs, the Post added.  SSDI reform often escapes the scrutiny of policymakers, the report noted.

Bankruptcy Filings, Credit Checks Thwart Some Job Candidates

The day after Thanksgiving a series of stories in the Wall St. Journal throws cold light on the stresses caused by the weakened economy. Under the banner headline, “Rebuilding Lives After Bankruptcy,” the writers Sara Murray and Joe Light discuss how a surge in bankruptcy filings and credit checks run by prospective employers is taking a toll on many Americans who find themselves in financial distress.

Though it can provide some needed breathing space while a debtor regains his or her financial footing, [f]iling a bankruptcy petition — which lingers on a credit report up to 10 years — can make it more difficult to find a job or rent an apartment,” Murray and White report.

One example they cite is that of Tamara Ricks of Sunset, Utah, who was offered a billing position by the municipal water, sear and garbage department in nearby Washington Terrace, contingent on a credit charge. Ms. Ricks and her husband filed a Chapter 7 pettion in February 2010 after their ice-cream parlor failed and her husband’s construction work dried up. She disclosed the bankruptcy during her job interview. The interviewer said that would be a problem, and shortly afterward Ms. Ricks received a letter saying she had been turned down – with no reason stated.

Ms. Ricks is certain that the couple’s bankruptcy was to blame, and Washington Terrace’s treasurer, who also oversees human resources, all but confirmed that it was. It’s the city’s policy, she said, to require credit checks for employees who deal wth finances or consumer information. “It’s a way we protect our citizens,” she said.

General bankruptcy laws prohibit refusal of employment based on the fact that the candidate has filed for bankruptcy protection. That doesn’t mean such refusals don’t happen; it just means that the applicant may not be told straight up that this was the reason.

Compounding the outlook for job applicants who are in bankruptcy is the upsurge in the number of employers reported to have run credit checks. Sixty percent of employers surveyed run credit checks on at least some job candidates, according to a survey from the Society for Human Resource Management. One quarter of them said that bankruptcy could make them unlikely to extend a job offer.

The Fair Credit Reporting Act establishes rules for how employers and others requesting credit checks can use the information obtained.

Until we get sustained economic growth and consumers dig themselves out of the financial holes many find themselves in, however, bankruptcies will continue to be drag on job growth.

Teach Employees About Dependent Coverage – It Can Save You Money

Maybe it’s time for HR to have a sitdown with employees to discuss who is or is not a “dependent” eligible for enrollment in group health insurance.

The Wall St. Journal reported Monday that more employers are having audits performed on their health insurance plans “in order to weed out ineligible beneficiaries.” Employers have a clear economic incentive to do so. According to Aon Hewitt, employers in 2011 will pay an estimated $7,612 in health care premiums on average per employee — a 7.8 percent increase over 2010. Meanwhile, dependent coverage costs employers an average of $2,1000 annually, according to HR consulting firm Mercer.

Some employees cheat and knowingly enroll nondependents, but sometimes its just an honest error, like forgetting to remove chidren who graduate from college or are too old to be covered under the parents’ plan (under health care reform, that now means children who are age 27 or greater).

So why not use these audits as a learning opportunity to teach employees about what the term “dependent” means? For that, consult Section 152 of the Internal Revenue Code, which contains the definition.

The bottom line: A dependent is a child or “qualifying” relative (sibling, in-law, step relative) who receives over half of their support from the taxpayer, or a nonspouse who lives in the taxpayer’s home for the taxable year (that’s a way to get coverage for domestic partners).

There are some definitional tweaks having to with multiple support agreements and child custody arrangements.

But there you have it. You’ve got to include it in the summary plan description, but why not discuss the topic openly with employees during an open enrollment session rather than make them wade through the SPD?

Have a Happy Thanksgiving. Look for more blogging later in the week.

HHS Issues “Medical Loss Ratio” Rules Under Health Care Reform Law

The U.S. Health and Human Services Department issued new rules Monday implementing a major provision of the health care reform law requiring health insurance companies to spend significantly more of the premiums they take in on providing medical care rather than on salary and other overhead.

Under the “medical loss” ratio rules, 85 percent of the premiums collected by insurers of large employers will have to be devoted to providing care. For insurers of small employers, the figure is 80 percent.

Here are other highlights of the new rules:

  • health plans will have to disclose details about how they allot their money, calculate the portion of their spending that promotes good health and refund customers their money if they devote too much income to nonhealth purposes;
  • some spending to prevent fraud or review the necessity of medical treatments will be considered administrative and can’t count toward the medical cost;
  • “mini-med” plans, typically offered by low-wage employers such as McDonalds, which cap benefits at a low level, in 2011 may spend half as much of their premiums on medical care as most other insurers; the same goes for plans sold to Americans living overseas;
  • insurers may deduct their taxes from their total premium before they calculate the ratios.

The rules are effective as of Jan. 1, 2011, but the public will have 60 days to comment on them once they are published in the Federal Register. To read the rules in full, click on this link.

Nearly Half of CIOs Plan to Restrict Cyber Holiday Shopping

With Cyber Monday a week away, employees may want to rethink where and when they do their online holiday shopping, in light of a new survey indicating that many employers frown on employees doing their cyber shopping during the work day.

Forty-eight percent of 1,400 chief information officers interviewed by Robert Half Technology said they intend to block access to online shopping sites on Cyber Monday, the Dallas Business Journal reported.

Another 34 percent said they will allow access, but will monitor employees for excessive use.

CIOs who allow shopping online expect their employees will spend three hours per week on that activity.