For most people, the common answers will be things such as cars, homes, or maybe their 401K. However, when you consider your most important asset, have you thought about this being your ability to earn an income?
If you were sick and could not work, how long would you be able to survive without your regular income? What if you were unable to work for a long period of time such as 2 years?
We have car insurance, mortgage insurance, health insurance, and a ton of other types of policies that are geared to prevent major financial disasters from happening in ones life. However, in a study conducted by Harris Interactive, they found that only 37% of workers surveyed have some type of Disability Insurance. So what exactly is Disability insurance and is it something that may protect you?
Disability insurance is designed to replace your income in the event that you are unable to earn a living. The idea of not being able to provide your income to your family may be very disturbing, and most people do not think about their vulnerability for these situations. What are some leading causes of disability? According to Unum, the leading Disability Insurer in America, they are cancer, complications from pregnancy, back injuries, and depression. These accidents and sicknesses can happen to anyone at anytime and over 20 million Americans have a disabling accident happen to them each year!
What types of this insurance are available to you? Individual disability is often what people think about when income protection comes to mind and the reason they do not purchase it is due to the fact that they would have to medical qualify for the plan (and it is generally very expensive). So what else is available to you? Check with your employer, but a common employee benefit is Disability Insurance in the form of short and long term protection. It is typically guarantee issue (meaning that you are automatically protected) for employees, and it will replace on average 60% of their pre-tax income. Most Americans that have DI coverage have this through the workplace. On average, the premiums paid for each employee can be $4 – $10 per month and is generally tax deductible by the business.
When you consider what benefits you offer your employees, you may want to consider offering them Disability Insurance as a way to differentiate your benefits package. You offer them a regular paycheck for performing work for your company; why not also insure their ability to earn this income so that their family has a safety net if they became disabled?
May is Disability Awareness Month for the LIFE Foundation
Cut Your Payroll Taxes and Increase Employees’ Take-Home Pay
Everyone saves with an POP. POP stands for Premium Only Plan. Most employers have this added to their payroll already. I have seen some start-ups that have missed this option. There is no reason why an employer shouldn’t have a POP in place.
Any size employer can get one. It is a special provision of Section 125 (same area of Tax Code that allows FSA’s) of the IRS code. It is a IRS approved change in your payroll process that allows you to use pre-tax dollars to pay your employees’ sare of benefit premiums.
Both employees and employers profit from POP’s. Employers reduce their payroll tax because employees are reducing their taxable income. POP’s pay for themselves and they are very inexpensive to set up. They are usually around $100 to set up.
The is SO much information out there about wellness! Studies show that wellness programs work, but why?
In order to build a wellness program you must start with a specific goal. There are several focus points that you can start with such as:
Heart Disease
Diabetes
Respiratory diseases
Influenza and pneumonia
…Just to name a few…
Studies have shown that weight loss and diet go a long way in preventing Heart Disease and Diabetes. If you so choose, concentrating on fitness and diet will take care of items such as 1 and 2 listed above.
To concentrate on flu prevention and the common cold, you can base your wellness strategy around vaccines and in office sanitation.
Respiratory diseases are mainly caused by lack of exercise and smoking. Having smoking cession classes may be a focus for you and your company.
In addition, about 33% of Americans are overweight and roughly 30% are obese. Obesity is also a leading cause for too many conditions and illnesses.
Also, keep in mind that a healthy workforce will miss less work and be more productive.
So where do you start? Diet, exercise, smoking cessation…. It seems overwhelming because it is. There is a lot of information, too many statistics, and obviously a problem. On top of all of that, there is also ROI and money saving opportunities in wellness.
The key is to find someone who is an expert in wellness plans. That advisor should walk you and your company’s decision-makers through a process that will unveil a plan that will work from the top down, is customized specifically for your company culture, and strategy based. If your wellness plan doesn’t have a strategy, you don’t have a wellness plan at all.
As the job market begins to loosen up, human-resource managers might increasingly be surprised by an announcement from employees they haven’t heard in a while: “I quit.”
In February, the number of employees voluntarily quitting surpassed the number being fired or discharged for the first time since October 2008, according to the Bureau of Labor Statistics. Before February, the BLS had recorded more layoffs than resignations for 15 straight months, the first such streak since the bureau started tracking the data a decade ago. Since the BLS began tracking the data, the average number of people voluntarily leaving their jobs per month has been about 2.7 million. But since October 2008, the average number dropped to as low as 1.72 million. In March, it was about 1.87 million.
And recent sentiment indicates that the number of employees quitting could continue to grow in the coming months. In a poll conducted by human-resources consultant Right Management at the end of 2009, 60% of workers said they intended to leave their jobs when the market got better. “The research is fairly alarming,” says Michael Haid, senior vice president of global solutions for Right Management. “The churn for companies could be very costly.”
Adecco Group, a world-wide staffing firm based in Zurich, has seen several of its clients ask for candidates for key positions after employees made surprise departures, says Vice President Rich Thompson. Although so far there haven’t been widespread departures, Mr. Thompson says his company is readying itself for large-scale changes within the next few months. “We’re preparing for a massive reshuffling of talent at all job levels in all industries,” he says, noting that the recession earlier this decade was so short and shallow that the turnover this time around is likely to be much greater.
Recruiters and human-resource experts say the increase in employees giving notice is a product of two forces. First, the natural turnover of employees leaving to advance their careers didn’t occur during the recession because jobs were so scarce. This created a backlog of workers waiting for better times to make a move to better jobs. The median monthly voluntary turnover rate in 2009 was 0.5%, half of the rate in 2008, according to the Bureau of National Affairs, a specialized news publisher for professionals.
During the recession, even if they heard of an opening, employees were reluctant to switch employers, says Peter Cappelli, director of the Center for Human Resources at the University of Pennsylvania’s Wharton School of Business. “The idea of moving when the world was already in uncertainty was quite scary,” he says. But those hang-ups are disappearing, and employees are becoming more receptive to recruiter calls and beginning to tap their networks again for signs of opportunities, he says.
Another factor making it harder for companies to retain employees is the effect of the heavy cost-cutting and downsizing during the downturn on workers’ morale. A survey conducted last summer for the Conference Board, a management research organization, found that the drivers of the drop in job fulfillment included less satisfaction with wages and less interest in work. In 2009, 34.6% of workers were satisfied with their wages, down more than seven percentage points from 1987. About 51% in 2009 said they were interested in work, down 19 percentage points from 1987.
“Employees feel disengaged with their jobs, which is going to lead to a lot of churn as we come out of the recession,” says Brett Good, a district president of Southern California for Robert Half International (NYSE: RHI – News), an executive recruiting firm.
Mr. Good, who worked for Robert Half in the San Francisco Bay Area earlier this decade,says his company saw a “tremendous amount” of departures from technology companies that needed to be refilled when the dot-com recession ended. Already, Mr. Good says he’s received calls from executives who nine months ago felt trapped because of economic conditions and didn’t want to lose sure-thing positions, but now feel they’re able to move on. “They feel like ‘a bird in the hand’ isn’t good enough anymore,” he says.
An increase in turnover can be costly for companies. It typically costs a company about half of the position’s annual salary to recruit a person for that job, but the cost can run up to several times that if the position requires rare skills, says Right Management’s Mr. Haid. Convincing employees to stay might not be cheap either. Nearly 5,400 members of TheLadders.com, a job board for positions that pay $100,000 or more, responded to an April survey that asked how much more money it would take to convince them to stay if they wanted to leave. More than 20% said it would take a raise of more than $25,000. In all, about 50% of respondents said it would take more than $15,000.
To re-engage employees, Robert Half International is advising clients to hold town hall meetings and one-on-one sessions with employees to hear grievances and try to rekindle interest in the company among workers, Mr. Good says. Some clients had made broad-based cuts in departments based solely on salary or without regard to employee tenure, damaging the trust of the employees who survived, Mr. Good says.
Florida Hospital Flagler, an 850-employee hospital in northern Florida, faced a 30% turnover rate in 2008, almost double the average for area hospitals, says Alyson Parker, director of human resources. That dipped to 20% in 2009 as the economy suppressed voluntary departures, but the hospital still spent $3 million in 2009 on covering open positions, and finding and training new employees. The average search for a new nurse, for example, costs the hospital between $52,000 and $60,000, Ms. Parker says. This year, the hospital implemented regular town hall and department meetings, and one-on-one “stay” interviews for employees to air grievances and give ways to improve the work environment. So far, the measures have helped the hospital to lower its turnover rate by about 2 percentage points. “We’re trying to catch people before they even start looking for a new job, which will become even more important as the economy improves and more opportunities at competitors open up,” Ms. Parker says.
Human-resource managers often have trouble getting resources from top management until employees actually start to leave, says Mr. Cappelli. In the late 1990s, companies that were losing employees started to offer concierge services, discounted lunches, and hiring bonuses in a mad scramble to keep employees and recruit new ones, a trend Mr. Cappelli says could come back if the job market continues to improve. But this time around, Mr. Cappelli says companies might try to deal with more nuanced employee requests, such as lowering stress at work, improving work-life balance, and creating more opportunities for career advancement within the company.
For some employees, it might be too late. Dice.com, a job board for tech professionals, asked members what could persuade them to stay in their jobs if they found another opportunity. More than 57% of the 1,273 surveyed said nothing could persuade them to stay. Of those who said they could be persuaded, 42% said they wanted a higher salary and 11% wanted a promotion.
Employees also say they work harder, perform better and miss fewer days of work
Press Release Source: Principal Financial Group On Thursday January 14, 2010, 10:12 am EST
DES MOINES, Iowa–(BUSINESS WIRE)–Forty-five percent of Americans working at small to medium-sized companies said that they would stay at their jobs longer because of employer-sponsored wellness programs, according to the latest Principal Financial Well-Being IndexSM.
The survey also found that as a result of workplace wellness programs, 40 percent of workers say they are encouraged to work harder and perform better and 26 percent miss fewer days of work by participating in such programs. As in previous years, 51 percent of workers believe wellness programs are very or somewhat successful in reducing health care costs.
The index, which surveys American workers at growing businesses with 10-1,000 employees, is released by the Principal Financial Group® and conducted by Harris Interactive®. These findings focusing specifically on wellness attitudes and behaviors among American workers were taken from the fourth quarter 2009 Index.
“Wellness programs are clearly a win-win, especially at a time when employers and their employees are more budget conscious,” said Lee Dukes, president of Principal Wellness Company, a subsidiary of the Principal Financial Group. “Employers benefit by retaining top talent, energizing their employees and reducing the number of sick days. Employees benefit from improved physical health, reduced stress in the workplace and the financial benefits of a healthy lifestyle.”
While not all employers offer wellness programs, the survey found nearly half (47 percent) of workers surveyed would participate or do participate in wellness programs to achieve better overall physical health. Other top reasons for participation include:
Reduced personal health care costs (30 percent)
Greater chance of living longer and healthier lives (30 percent)
Receiving employer incentives for participation (28 percent)
Reduced stress (28 percent).
Fitness Tops Workers’ Wish List as Worries about Changing Health Plans Mount
The survey found most workers are interested in wellness programs that improve their physical fitness, with 27 percent saying they would like in-office fitness facilities, 23 percent citing fitness center discounts and 19 percent expressing interest in weight management programs. For some, these wishes came true last year, as significantly more workers (15 percent) have access to fitness facilities in fourth quarter 2009 compared to 11 percent in fourth quarter 2008.
As workers seek ways to improve their health, they are concerned about potential changes in their health insurance. Significantly more workers, 34 percent, expect their medical plan options to change in 2010 compared with only 23 percent in 2009, the survey found.
“While uncertainty over the future health care system mounts, more Americans are taking charge of their own health by focusing on preventive care and living a healthy lifestyle now to lead a longer, more quality life,” said Dukes.
Methodology
This Principal Financial Well-Being IndexSM survey was conducted online within the United States by Harris Interactive on behalf of the Principal Financial Group® between Oct. 20, 2009, and Oct. 30, 2009, among 1,120 employees and 602 retirees. Results were weighted as needed for age by gender, education, race/ethnicity, region and household income. Propensity score weighting was also used to adjust for respondents’ propensity to be online. No estimates of theoretical sampling error can be calculated; a full methodology is available.
This is one in a series of quarterly studies to identify and track changes in the workplace of small and midsize (growing) businesses. The first Principal Financial Well-Being IndexSM survey was conducted in the United States in 2000.
About the Principal Financial Group
The Principal Financial Group® (The Principal ®)1 is a leader in offering businesses, individuals and institutional clients a wide range of financial products and services, including retirement and investment services, life and health insurance, and banking through its diverse family of financial services companies. A member of the Fortune 500, the Principal Financial Group has $280.4 billion in assets under management2 and serves some 18.6 million customers worldwide from offices in Asia, Australia, Europe, Latin America and the United States. Principal Financial Group, Inc. is traded on the New York Stock Exchange under the ticker symbol PFG. For more information, visit www.principal.com.
About Harris Interactive
Harris Interactive is one of the world’s leading custom market research firms, leveraging research, technology, and business acumen to transform relevant insight into actionable foresight. Known widely for the Harris Poll and for pioneering innovative research methodologies, Harris offers expertise in a wide range of industries including healthcare, technology, public affairs, energy, telecommunications, financial services, insurance, media, retail, restaurant, and consumer package goods. Serving clients in over 215 countries and territories through our North American, European, and Asian offices and a network of independent market research firms, Harris specializes in delivering research solutions that help us – and our clients – stay ahead of what’s next. For more information, please visit www.harrisinteractive.com.
1 “The Principal Financial Group” and “The Principal” are registered service marks of Principal Financial Services, Inc., a member of the Principal Financial Group.
According to Blue Shield of California: higher utilization of medical services, a cycle of dropping coverage, and demographic changes. All health insurance carriers are conservative in there outlook of the financial future. They take everything into consideration where they are projecting future costs. They also must assume that the client they have will only be with them for the next 12 months (most medical insurance plans only have a guaranteed rate for 12 months).
Higher Utilization of medical services: Not only are medical costs rising faster than inflation, the utilization rate is outpacing population growth. According to the Centers of Medicare & Medicaid Services, while healthcare spending increased more than 92% – or $1.15 trillion – between 1998 and 2008, the population grew only 10%.
A costly cycle of dropping coverage: When a disproportionate number of small businesses drop their coverage, a small population of people is left, which drives up the cost of health care. Since the economy turned, small businesses were forced to lay off workers and/or stop offering health insurance altogether. This decreased the number of people insured. This impacts costs because the pot of money that the insurance companies expected to collect, will not be met and they must increase rates to compensate.
Demographic changes that all add up: Numerous changes to the U.S. population contribute to the rising cost of health care. Our population is aging as well as growing, which increases the overall demand for healthcare services. Costs to care for chronic diseases are rising while people are living longer and needing more care. The number of people with preventable chronic conditions – obesity, type 2 diabetes, hypertension, etc. – continues to rise. Nearly half of all Americans are expected to have at least one chronic condition by 2020.
To say that subject of healthcare costs has been in the media a lot over the past year or so is an understatement. As a country, we should have been reviewing this problem in more detail years ago. But, as always, coulda woulda shoulda is not going to get us anywhere.
Just sit back and try to put yourself in the shoes of an insurance actuary. You have less money to pull from as the number of insured decreases, costly preventable disease are on the rise, you have an aging population, and prescription drug costs are skyrocketing. Wow! That’s a lot to consider (and I am still leaving some things out here). So, lets just take a moment and dig a little deeper into prescription drug costs.
Brand-name and non-formulary drug costs are at an all time high and have been breaking records year after year. With that said, we also have the most amazing prescription drugs available to us than ever before as well. These medications are very expensive.
I have had a lot of clients over the years who take injectable medications. Two conditions treated with injectable medications include RM (Rheumatoid Arthritis) and MS (Multiple Sclerosis). (These are just examples, I just picked two). 10 years ago, these clients were slaves to there disease. Perhaps they couldn’t work full-time jobs or could go on long distant walks and today, because some new wonder drug, they are able to do so. Did you know that these wonder drugs cost $1500 to $2000 per month? Roughly 1.3 million people in America have been diagnosed with RM and 400,000 have been diagnosed with MS.
So, lets do some math, 1.7 M times $1800 (rough estimated cost per month for injectable medication) = 3,060,000,000 (over $3 billion dollars). This is just the cost in medication that these people NEED to function and lead lifes as close to normal as possible. This is not including doctors visits, surgeries, and other conditions that may appear as a side effect of having such a diagnosis.
ATTENTION: Participants in Flexible Spending, HSA and HRA Plans:
Over-the-Counter Drugs & Medicines will no longer be reimbursable effective January 1, 2011.
The recently-enacted Patient Protection and Affordable Care Act of 2010 significantly alters the rules for the purchase of Over-the-Counter (OTC) products using funds from Flexible Spending Account (FSA), Health Reimbursement Arrangement (HRA) and Health Savings Account (HSA) pre-tax funds, effective January 1, 2011.
If you are currently enrolled (or are re-enrolling) in one of the above-mentioned plans, please note that, at the end of the current calendar year, OTC drugs and medicines will no longer be reimbursable using funds from your account, UNLESS you have a “Statement or Note of Medical Necessity” from your doctor/health care provider.
Common items that are currently purchased OTC using FSA/HAS/HRA funds include: Ibuprofen, Acetaminophen, day/night-time cold medicine, allergy pills, etc. However, “medical” items that are NOT categorized as “drugs or medicines” –such as bandages, contact lens solution, and eye drops – are still eligible for payment using HRA/HAS/FSA funds. A more comprehensive list of OTC drugs/medicines that are no longer reimbursable will be provided after the HHS has provided additional guidance.
In the interim, the following are action-items to consider:
· Any funds that you have set-aside for OTC drugs/medicines should be used BEFORE January 1, 2011.
· If you are enrolling or re-enrolling in an HRA/HAS/FSA for a new plan year, you should NOT include OTC drugs/medicines when estimating your future plan year expenses.
· If you are taking an OTC under the direction of your doctor or other medical professional, you may wish to request a “Note or Statement of Medical Necessity” from said provider. Please be aware that Third-Party Administrators (the organizations that manage your FSA/HSA/HRA) will no longer be reimbursing OTC drugs/medicines that do NOT have an accompanying “Note or Statement of Medical Necessity.”
· Any debit card that is tied to your FSA/HSA/HRA will no longer allow you to pay for OTC drugs and medicines beginning January 1, 2011 (as previously mentioned, however, you may still use the card for OTC supplies, such as bandages and eye drops).
We will keep you apprised of this situation as more guidance is issued; in the interim, please do not hesitate to contact us with questions regarding this (or any other benefits-related) matter!
NOTICE: Nothing contained within this post should be construed, in any manner whatsoever, as binding legal advice.
In the employee benefits world, POP stands for Premium Only Plan. A POP is a simple, IRS-approved change in your payroll process that allows you to use pre-tax salary dollars to pay your employees’ share of benefit premiums. Any size employer can take advantage of a POP, Section 125 of the IRS code.
Both employers and employees benefit from this arangement. Employees reduce their taxable income, this lowers their taxes and increases their take home pay (in comparison to the employee paying premiums post-tax). Employers win by reducing payroll taxes by decreasing the total taxable payroll. It is a win-win.
Employers who have the following benefits will benefit from having a POP:
Medical
Dental
Vision
Disability
Life
POP Employer Advantages:
Lowers payroll taxes
Increases employee satisfaction
Simple and quick to set up
Employee Advantages:
More take-home pay
Reduces taxes
Tax savings pays for a portion of the premium
If you are an employer and do not have a POP, you need to get one. It is a no brainer.
One area of the recently-passed Patient Protection and Affordable Care Act of 2010 that we wanted to call your attention to was the requirement that, beginning for tax-year 2011, employers will be required to report the “aggregate cost of applicable employer-sponsored coverage” on all employees’ W-2 forms.
In practical terms, this means that:
1. At the end of each tax-year, you will need to determine what “applicable employer-sponsored coverage” was provided to each of your employees;
a. “Applicable employer-sponsored coverage” is defined as health insurance coverage, offered under any group health plan that is offered by the employer to the employee, irrespective of contribution levels. Dental and vision plans also count towards “applicable employer-sponsored coverage,” unless these dental and vision plans are “stand-alone” plans. Amounts contributed under Flexible Spending Accounts (FSA), Health Savings Accounts (HSA) and Health Reimbursement Accounts (HRA) are NOT to be included under this definition.
2. Also at the end of each tax year, you will need to calculate the “aggregate cost” that each employee has received in coverage;
a. For instance, for most plans, you would simply calculate the amount of premiums that you have paid during that tax-year to your group health plan’s insurance carrier.
3. Once the “aggregate cost” is determined for each employee, that amount will need to be listed on that employee’s W-2 form. NOTE: As of 2011, this amount will NOT be part of the employee’s taxable income; it is to be used to verify medical coverage.
Please also be advised that you may wish to begin to begin implementing this change very soon, as payroll systems will need to be updated by January 2011. Further information regarding this matter is available at the following link: http://www.mondaq.com/unitedstates/article.asp?articleid=99922
We also strongly encourage you to consult with a qualified tax or legal professional should you require assistance in updating your payroll system(s). In the interim, please feel free to contact us should you have further questions relating to this (or any other benefits-related) matter!
NOTICE: Nothing contained within this post should be construed, in any manner whatsoever, as binding legal advice.
May is Disability Awareness Month for the LIFE Foundation
What are your most important assets?
For most people, the common answers will be things such as cars, homes, or maybe their 401K. However, when you consider your most important asset, have you thought about this being your ability to earn an income?
If you were sick and could not work, how long would you be able to survive without your regular income? What if you were unable to work for a long period of time such as 2 years?
We have car insurance, mortgage insurance, health insurance, and a ton of other types of policies that are geared to prevent major financial disasters from happening in ones life. However, in a study conducted by Harris Interactive, they found that only 37% of workers surveyed have some type of Disability Insurance. So what exactly is Disability insurance and is it something that may protect you?
Disability insurance is designed to replace your income in the event that you are unable to earn a living. The idea of not being able to provide your income to your family may be very disturbing, and most people do not think about their vulnerability for these situations. What are some leading causes of disability? According to Unum, the leading Disability Insurer in America, they are cancer, complications from pregnancy, back injuries, and depression. These accidents and sicknesses can happen to anyone at anytime and over 20 million Americans have a disabling accident happen to them each year!
What types of this insurance are available to you? Individual disability is often what people think about when income protection comes to mind and the reason they do not purchase it is due to the fact that they would have to medical qualify for the plan (and it is generally very expensive). So what else is available to you? Check with your employer, but a common employee benefit is Disability Insurance in the form of short and long term protection. It is typically guarantee issue (meaning that you are automatically protected) for employees, and it will replace on average 60% of their pre-tax income. Most Americans that have DI coverage have this through the workplace. On average, the premiums paid for each employee can be $4 – $10 per month and is generally tax deductible by the business.
When you consider what benefits you offer your employees, you may want to consider offering them Disability Insurance as a way to differentiate your benefits package. You offer them a regular paycheck for performing work for your company; why not also insure their ability to earn this income so that their family has a safety net if they became disabled?
May is Disability Awareness Month for the LIFE Foundation
