by GBS

The American Recovery and Reinvestment Act (ARRA) provided a COBRA premium reduction for eligible individuals who were involuntarily terminated from employment through the end of May 2010. Due to the statutory sunset, the COBRA premium reduction under ARRA is not available for individuals who experience a qualifying event of involuntary termination of employment after May 31, 2010. However, individuals who qualified on or before May 31, 2010 may continue to pay reduced premiums for up to 15 months, as long as they are not eligible for another group health plan or Medicare.

On July 6, Assistant Secretary of Labor Phyllis C. Borzi issued a statement regarding the COBRA premium reduction under the American Recovery and Reinvestment Act (ARRA): For a copy of Assistant Secretary Phyllis Borzi’s statement, click on the following link:
http://www.dol.gov/ebsa/newsroom/2010/ebsa070610.html

The Unemployment Compensation Extension Act of 2010 signed by the President on July 22, 2010, did not include an extension of the COBRA premium reduction.

A model general notice and a model election notice for individuals with a qualifying event after May 31, 2010 can be obtained from the COBRA section on the DOL’s website at:
http://www.dol.gov/ebsa/COBRA.html

These notices are virtually unchanged from the pre-ARRA models provided by the DOL in 2004.

From aarp.org

In the past few years, a growing number of employers have added automatic features, especially automatic enrollment, to their 401(k) plans.  This national telephone survey of large employers with 401(k) plans was conducted in order to better understand large employer attitudes toward and experiences with two automatic 401(k) features: automatic enrollment and automatic escalation.

The survey’s key findings include the following:

• The vast majority (94%) of employers surveyed report that they are either “very familiar” or “somewhat familiar” with automatic enrollment in 401(k) plans.   While familiarity with automatic escalation is lower than familiarity with automatic enrollment, a majority (78%) of employers also report that they are familiar with automatic escalation.
• Although nearly all large employers with 401(k) plans are at least somewhat familiar with automatic enrollment, the majority have not adopted it for their own 401(k) plan.  Specifically, less than half (42%) of respondents report that their 401(k) plan includes automatic enrollment.  Fewer (28%) report that their 401(k) plans have an automatic escalation feature.
• The majority (58%) of employers with automatic enrollment report that they automatically enrolled only new hires when they first adopted automatic enrollment.  Just over one-third (35%) automatically enrolled all non-participating employees who were eligible for the plan.
• Of those employers who automatically enrolled only new hires at adoption, only about one in ten (11%) report that they have automatically enrolled all non-participating employees at least once since adopting automatic enrollment.
• Employers were most likely to identify the following as “major reasons” that companies offer automatic features: it helps employees save more for retirement (74%), it is easier to pass nondiscrimination testing (49%), and it demonstrates that we are a socially responsible company (35%)
• When asked why they do not have automatic enrollment for their 401(k) plan, employers without automatic enrollment most frequently cited employee-related challenges such as a concern that employees would not like automatic enrollment (30%), costs (20%), contentment with the status quo (14%), and a lack of information (10%).
• When employers without automatic escalation were asked to explain their reasons for not including this feature in their 401(k) plan, the most frequent responses also related to employees and included the company thinks employees would not like it (66%) and the company thinks employees would find it confusing (52%). Additionally, one-third of employers without automatic escalation (35%) indicated that the company is concerned about matching costs.
• Employers that automatically enroll only new hires were asked why they do not automatically enroll all non-participating employees who are eligible for the plan.  As with the reasons expressed for not having automatic features, employee-related challenges were also the reasons most frequently expressed for limiting automatic enrollment to new hires.

AARP commissioned Woelfel Research, Inc. to conduct this telephone survey of 806 large employers with 401(k) plans.  Partial funding was provided by Retirement Made Simpler, a coalition formed by AARP, the Financial Industry Regulatory Authority (FINRA), and the Retirement Security Project (RSP).  For more information, visit www.RetirementMadeSimpler.org.  The survey was fielded from December 15, 2009, to February 24, 2010, and results were weighted by company size.  For more information on the survey, please contact S. Kathi Brown of AARP Research & Strategic Analysis at 202-434-6296.

More Information at http://www.aarp.org/work/retirement-planning/info-06-2010/auto401k.html

from HRBenefitsAlert

Wellness programs come in all shapes and sizes. But regardless of plan design there are five common components that set the successful programs apart from the rest.

At their core, wellness programs require constant monitoring and periodic adjustments. The programs that get mediocre results are the ones that are left to run on autopilot. That’s why it’s crucial to:

1. Know thine enemy. You have to know what’s driving your biggest claim costs on your healthcare plan – both among employees and their dependents.
2. Create realistic expectations. With wellness, what an employer gets will almost always depend on how much it spends, how well it plans and how well it sustains communications with participants and the vendor.
3. Maintain strong communications. The wellness initiatives that achieve the greatest success are those which are communicated aggressively from the get go and are sustained. Repetition is your friend when doing employee education.
4. Integrate wellness with other benefits. Real-life experience has shown that you should consider your employee assistance programs (EAPs) an extension of the wellness program. You should also consider issues like absenteeism, disability and worker’s compensation to be pieces of the wellness puzzle.
5. Practice what you preach. The key to ensuring employee buy-in is for management to lead the program by setting a positive example. If senior managers are unwilling to participate and address their own health issues, don’t expect many employees to take the program seriously.

The U.S. Department of Labor (DOL) recently issued an Administrative Interpretation (AI) clarifying its opinion that employees are entitled to take Family and Medical Leave Act (FMLA) leave for birth, bonding or to care for the child of a domestic partner or same-sex domestic partner, as well as other children for whom an employee has responsibility for day-to-day care or financial responsibility, even though the employee has no biological or legal relationship with the child. According to the DOL, the AI was issued in response to numerous inquiries from employers regarding when an employee with no legal relationship to a child is considered to be standing “in loco parentis” under the FMLA and, accordingly, entitled to leave. (The AI does not address an employee’s entitlement to take military-related leave under the FMLA, which is governed by different definitions.)

Although the DOL states that it is clarifying the definition of when an employee is considered to stand “in loco parentis,” this is the first time the agency has specifically stated that otherwise covered employees are entitled to take FMLA leave to care for the children of same-sex domestic partners.

Background

The FMLA allows an eligible employee to take up to 12 weeks of leave for the birth or placement of a child, to care for a newborn or newly placed child, or to care for a child with a serious health condition. The FMLA defines a “son or daughter” as a “biological, adopted or foster child, a stepchild, a legal ward, or a child of a person standing in loco parentis.”

The AI explains that Congress intended the definition of “son or daughter” to reflect the reality that many children in the Unites States today do not live in traditional “nuclear” families with their biological father and mother. Congress further stated that the definition was intended to be construed to ensure that an employee who has day-to-day responsibility for caring for a child is entitled to leave even if the employee does not have a biological or legal relationship to the child. Accordingly, Congress included the term “in loco parentis,” which is defined as “in the place of the parent” within the definition of “son or daughter.” The key in determining whether someone is “in loco parentis” is the intention of the person to assume the status of parent toward a child.

Interpretation

The DOL stated that whether an employee stands “in loco parentis” to a child is a fact issue dependent on multiple factors including:

• the age of the child;
• the degree to which the child is dependent on the person claiming to be standing “in loco parentis”;
• the amount of support, if any, provided; and
• the extent to which duties commonly associated with parenthood are exercised.

Further, the FMLA regulations define “in loco parentis” as including those with day-to- day responsibilities to care for and financially support a child. The AI interprets this regulation to require either day-to-day responsibilities for care or responsibility for financial support, but states that an employee is not required to show both factors to be considered standing “in loco parentis” for a child.

Thus, the AI states that employees with no legal or biological relationship to a child may nonetheless stand “in loco parentis” to a child and be entitled FMLA leave. Examples of persons who might fit the definition of “in loco parentis” include:

• an employee raising a child with the biological parent;
• same sex partners raising a child where the employee has no legal or biological relationship with the child;
• an employee who requests leave to bond with the adopted child of a same sex- partner; and
• a grandparent or other relative who has taken on the responsibility to raise a child but has not legally adopted the child.

It should be noted that the fact that a child has biological parents does not prevent a finding that the child is the “son or daughter” of an employee who lacks a legal relationship with the child because “neither the statute nor the regulations restrict the number of parents a child may have under the FMLA.” However, an employee who cares for a child while the child’s parents are on vacation would not be considered to be “in loco parentis” to the child. According to the Administrator, an employer who is not sure whether the employee is entitled to leave as standing “in loco parentis” should be satisfied with a simple statement asserting that the requisite family relationship exists.

Employers’ Bottom Line

Whether an employee’s relationship to a child is covered under the FMLA must be analyzed on a case by case basis. The fact that an employee provides either day-to-day care or financial support may be sufficient to establish an “in loco parentis” relationship where the employee intends to assume the responsibilities of a parent. Therefore, it is important to be aware of the broad interpretation the DOL gives this term and carefully analyze every request under the FMLA for leave to care for a child.

by MetLife

The findings from the 8th Annual Study of Employee Benefits Trends point to the apparent resilience of workplace benefits in this recession, and reveal that, as employers and employees continue to deal with the effects of the economic downturn, they are focused on the long term. Most employers have not reneged on their benefits commitments and employees continue to depend on their workplace benefits for protection and stability.

However, this year’s Study also reveals a benefits landscape that has been altered as a result of the recession experience. Employees must deal with the financial risks that were exposed when their 401(k) balances precipitously declined and their jobs became uncertain. Employers must seek ways to maintain a competitive advantage for their benefits programs in the context of greater focus on employee productivity and cost control.

Despite these challenges, employers and employees appear to be working toward a common goal: Securing financial health & wellness. Through employer-sponsored wellness programs, automatic enrollment features for retirement savings plans, voluntary benefits and protection products, employers are taking steps to help their employees act on their best intentions.

This year’s Study provides new insights that can help employers identify opportunities to realize the full potential of their benefits programs and to maximize the return on their benefits investment.

Key Highlights from the Study.

Employers Say That:

1. The importance of controlling costs has increased and is now their most important
   benefits objective.
2. The focus on employee retention is somewhat reduced, but is still the second most
   important objective despite the weak job market.
3. Employee productivity remains the third most important objective, but the steady
   increase in importance since 2007 continues.
4. Programs that help foster employee health & wellness and financial security are
   effective in improving employee productivity.
5. Active employer engagement in their qualified retirement plans is increasing and is
   necessary to help employees realize adequate income in retirement. There is emerging
   interest in automatic enrollment, automatic escalation and default annuitization in larger
   companies to help employees act on their intentions to save.
6. They have not increased their focus on providing financial advice, guidance and
   retirement education, despite employee interest, perhaps reflecting the economic
   pressures of the last year.
7. Voluntary benefits can cost-effectively enhance a benefits program, yet few are increasing
   the number offered or prioritizing this as a strategy.

Employees Say That They:

1. Intend to delay retirement. A full 59% of employees now plan to work past age 65.
2. Did not cut back on their benefits participation in the workplace, despite tight budgets.
   They value benefits as part of their financial safety net, and the workplace is the primary
   source for obtaining those benefits.
3. Are more satisfied with their benefits than at any time since 2007, before the recession,
   and they accept that they may need to pay more to get more in the new economy.
4. Feel hopeful about their short-term financial outlook, but still have significant concerns
   about their personal financial situations and admit that those concerns affect their
   workplace productivity.
5. View wellness programs as very worthwhile and connect successful participation to
   better health and productivity.
6. Remain very interested in having their employers provide financial advice, guidance and
   retirement education as they seek ways to realize predictable income for retirement.
7. Are more cautious, and have an increasing appetite for investment options that offer
   more safety than the potential of high returns, at least for now.

Full study can be found here: http://www.metlife.com/assets/institutional/services/insights-and-tools/ebts/Employee-Benefits-Trends-Study.pdf

by MHA

When it comes to plan-related document storage, remember that your primary goal should be to preserve materials in a format allowing for quick and easy retrieval. It’s appropriate to store plan records electronically whenever possible. Also, be sure to retain an executed copy (or countersigned copy, as applicable) of each record, not the unsigned original that may have been sent to you for signature.

We encourage you to follow your company’s internal procedures for disaster recovery for your plan documentation. Disaster recovery plans may include protocol for offsite backup storage, retrieval, and inputting and tracking each document’s retention requirements.

While most vendors can provide reports and current plan documents, the plan administrator ultimately remains responsible for retaining adequate records that support the plan document reports and filings. In addition, you are required to maintain records sufficient to determine the amount of benefits accrued by each participant.

Document Type Retention Requirements:

• Plan Documents (including Basic Plan Document, Adoption Agreement, Amendments, Summary Plan Descriptions and Summary of Material Modifications). Should be retained for at least six years following plan termination.
• Annual Filings (including 5500, Summary Annual Reports, plan audits, distribution records and supporting materials for contributions and testing). Should be retained at least six years.
• Participant Records (including enrollment, beneficiary and distribution forms; QDROs). Should be retained at least six years after the participant’s termination.
• Loan Records should be retained at least six years after the loan is paid off.
• Retirement/Investment Committee meeting materials and notes should be retained for at least six years following plan termination.

by The Associated Press

Here are some of the features of the legislation.

HOW MANY COVERED: 32 million uninsured. Major coverage expansion begins in 2014. When fully phased in, 94 percent of eligible non-elderly Americans would have coverage, compared with 83 percent today.

COST: $938 billion over 10 years, according to the Congressional Budget Office.

INSURANCE MANDATE: Almost everyone is required to be insured or else pay a fine, which takes effect in 2014. There is an exemption for low-income people.

INSURANCE MARKET REFORMS: Starting this year, insurers would be forbidden from placing lifetime dollar limits on policies, from denying coverage to children because of pre-existing conditions, and from canceling policies because someone gets sick. Parents would be able to keep older kids on their coverage up to age 26. A new high-risk pool would offer coverage to uninsured people with medical problems until 2014, when the coverage expansion goes into high gear. Major consumer safeguards would also take effect in 2014. Insurers would be prohibited from denying coverage to people with medical problems or charging them more. Insurers could not charge women more.

MEDICAID: Expands the federal-state Medicaid insurance program for the poor to cover people with incomes up to 133 percent of the federal poverty level, $29,327 a year for a family of four. Childless adults would be covered for the first time, starting in 2014. The federal government would pay 100 percent of costs for covering newly eligible individuals through 2016.

If the Senate approves a package of changes this week, a special deal that would have given Nebraska 100 percent federal financing for newly eligible Medicaid recipients in perpetuity would be eliminated. A different, one-time deal negotiated by Democratic Sen. Mary Landrieu for her state, Louisiana, worth as much as $300 million, remains.

TAXES: To make up for the lost revenue, the bill applies an increased Medicare payroll tax to the investment income and to the wages of individuals making more than $200,000, or married couples above $250,000. The tax on investment income would be 3.8 percent. If the Senate follows through, it would impose a 40 percent tax on high-cost insurance plans above the threshold of $10,200 for individuals and $27,500 for families. The tax would go into effect in 2018.

PRESCRIPTION DRUGS: Gradually closes the “doughnut hole” coverage gap in the Medicare prescription drug benefit that seniors fall into once they have spent $2,830. Seniors who hit the gap this year will receive a $250 rebate. Beginning in 2011, seniors in the gap receive a discount on brand name drugs, initially 50 percent off. When the gap is completely eliminated in 2020, seniors will still be responsible for 25 percent of the cost of their medications until Medicare’s catastrophic coverage kicks in.

EMPLOYER RESPONSIBILITY: Employers are hit with a fee if the government subsidizes their workers’ coverage. The $2,000-per-employee fee would be assessed on the company’s entire work force, minus an allowance. Companies with 50 or fewer workers are exempt from the requirement.

SUBSIDIES: The aid is available on a sliding scale for households making up to four times the federal poverty level, $88,200 for a family of four. Premiums for a family of four making $44,000 would be capped at around 6 percent of income.

HOW YOU CHOOSE YOUR HEALTH INSURANCE: Small businesses, the self-employed and the uninsured could pick a plan offered through new state-based purchasing pools called exchanges, opening for business in 2014. The exchanges would offer the same kind of purchasing power that employees of big companies benefit from. People working for medium-to-large firms would not see major changes. But if they lose their jobs or strike out on their own, they may be eligible for subsidized coverage through the exchange.

GOVERNMENT-RUN PLAN: No government-run insurance plan. People purchasing coverage through the new insurance exchanges would have the option of signing up for national plans overseen by the federal office that manages the health plans available to members of Congress. Those plans would be private, but one would have to be nonprofit.

ABORTION: The bill tries to maintain a strict separation between taxpayer dollars and private premiums that would pay for abortion coverage. No health plan would be required to offer coverage for abortion. In plans that do cover abortion, policyholders would have to pay for it separately, and that money would have to be kept in a separate account from taxpayer money. States could ban abortion coverage in plans offered through the exchange. Exceptions would be made for cases of rape, incest and danger to the life of the mother.

GOP HEALTH CARE SUMMIT IDEAS: Following a bipartisan health care summit last month, Obama announced he was open to incorporating several Republican ideas into his legislation. But two of the principle ones — hiring investigators to pose as patients and search for fraud at hospitals and increasing spending for medical malpractice reform initiatives — did not make it into the legislation. The legislation incorporates only one, an increase in payments to primary care physicians under Medicaid, an idea mentioned by Sen. Charles Grassley, R-Iowa.

On March 2, 2010, the U.S. Senate passed H.R. 4691, the Temporary Extension Act of 2010 by a vote of 78-19.  This Senate action follows House passage of H.R. 4691 on February 25, 2010.  The President immediately signed this bill into law on March 2, 2010.

The Temporary Extension Act:

1. Extends the COBRA subsidy program that was enacted under the American Recovery and Reinvestment Act and
2. Extends unemployment benefits through April 5, 2010.

COBRA

The law’s COBRA provisions:

• Extend the eligibility period for the 15-month 65 percent premium subsidy to those involuntarily terminated from March 1 through March 31, 2010.

• Allow employees to receive the subsidy if they first lost group coverage due to a reduction in hours and then were terminated after enactment of the bill.

Unemployment Insurance

The law’s unemployment insurance benefit provisions:

• Extend the period during which individuals may file applications for Federal Emergency Unemployment Compensation (EUC) from the current end date of February 28, 2010 to April 5, 2010 and the period during which individuals may claim and be paid EUC is extended from July 31, 2010 to September 4, 2010.
• Extend the period during which individuals may qualify for the Federal Additional Compensation (FAC), the extra $25 weekly benefit amount on state and federal unemployment compensation, from the current end date of February 28, 2010 to April 5, 2010 with weekly payment provided during the phase out period for weeks ending October 5, 2010 instead of August 31, 2010.
• Extend the period during which 100% federal reimbursement for weeks of regular federal extended benefit payments to April 5, 2010, with the state option to continue the extended period from July 31, 2010 to September 4, 2010.

Additional Extension

These “short-term” extensions of the COBRA subsidy and unemployment benefits are intended to give Congress more time to consider legislation to extend these programs through 2010.  Under H.R. 4213, a bill the Senate is currently debating, both the COBRA subsidy program and unemployment benefits would be extended through December 31, 2010.

The Internal Revenue Service, in Revenue Procedure 2010-10, set the maximum vehicle values below which the ‘‘vehicle cents-per-mile’’ valuation rule and the ‘‘fleet-average’’ valuation rule may be employed in valuing the personal use of vehicles provided in 2010 by an employer to an employee.

The maximum value of employer provided vehicles first made available to employees for personal use in calendar year 2010 for which the vehicle cents-per-mile valuation rule (Treas. Reg. § 1.61-21(e)) may be applicable is $15,300 for a passenger automobile and $16,000 for a truck or van, IRS said.

The maximum value of employer provided vehicles first made available to employees for personal use in calendar year 2010 for which the fleet average valuation rule pertaining to 20 or more automobiles (Treas. Reg. § 1.61-21(d)) may be applicable is $20,300 for a passenger automobile and $21,000 for a truck or van.

According to the IRS, if an employer provides an employee with a vehicle that is available
to the employee for personal use, the value of the personal use must generally be included in the employee’s income and wages pursuant to Internal Revenue Code § 61.

http://www.dol.gov/opa/media/press/ebsa/EBSA20100056.htm

The federal Department of Labor’s Employee Benefits Security Administration establishes a final rule, effective Jan. 14, 2010, giving employers that have employee benefit plans with fewer than 100 participants a seven business day safe harbor period to deposit employee contributions to plans. Employers with retirement or welfare benefit plans subject to the federal Employee Retirement Income Security Act of 1974 must deposit employee contributions to plans on the earliest date that contributions reasonably can be separated from other employer assets. The safe harbor rule does not change ERISA’s requirement that employee contributions to welfare benefit plans must be made no later than 90 days after receipt, and employee contributions to retirement plans must be made by the 15th business day of the month following the month in which contributions are received.