On May 8, 2013, the Employee Benefits Security Administration of the U.S. Department of Labor (“DOL”) issued Technical Release No. 2013-02 (“Release”) providing important guidance under the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (“Affordable Care Act”), with regard to the requirement that employers provide notices to their employees of the existence of the Health Insurance Marketplace (“Marketplace”), previously referred to as the “Exchange.” These employee notices must be provided to existing employees no later than October 1, 2013. This deadline is intended to correspond to the open enrollment period for the Marketplace commencing October 1, 2013, for coverage through the Marketplace beginning January 1, 2014. The Release includes temporary guidance and two model employee notices of the Marketplace upon which employers may rely. Additionally, the Release provides an updated model election notice for group health plans for purposes of the continuation coverage provisions under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) to include information of the health coverage options offered to individuals through the Marketplace for comparative purposes.

Employee Notice of the Marketplace. The Affordable Care Act amended the Fair Labor Standards Act (“FLSA”) to require employers to issue to employees a notice of the health coverage options available under the Marketplace. The FLSA requirement was supposed to have been satisfied on or before March 1, 2013; however, given the regulatory delays in establishing and approving the Marketplace, the DOL extended the deadline. The guidance under the Release is temporary through the applicability date of October 1, 2013, but may be relied upon until future guidance and regulations are issued.

Which Employers Are Required to Comply with the Notice Requirements?

Whether or not they are required to “pay or play” under the Affordable Care Act, all employers subject to the FLSA must provide their employees with notice. The FLSA generally applies to employers that employ one or more employees and are engaged in, or produce goods for, interstate commerce. The FLSA also covers, among other things, hospitals; schools; institutions of higher education; and federal, state, and local government agencies. To determine whether an employer is subject to the FLSA, the DOL provides an Internet assistance tool at http://www.dol.gov/elaws/esa/flsa/ scope/screen24.asp.

Which Employees Must Receive the Notice?

Employers must provide the employee notice to each of their employees, whether or not an employee has part-time or full-time status. It does not matter whether the employee is enrolled or eligible to enroll in a group health plan. A separate notice is not required for dependents or other individuals who may become eligible for coverage under the plan but are not employees.

What Information Must the Notice Contain?

The employee notice must contain the following information: •the existence of the Marketplace; •the contact information and description of services offered on the Marketplace; •a statement that the individual may be eligible for a premium tax credit if the employee purchases a qualified plan on the Marketplace; and •a statement that, if the employee purchases a qualified plan on the Marketplace, the employee may lose the employer contribution to any health benefit plan offered by the employer and all or a portion of employer contributions may be excluded from federal income.

What Are the DOL Model Notices?

The DOL has provided two model employee notices, which are available on its website, one for employers that do not offer a health plan and one for employers that offer a health plan to some or all employees. The Release provides that employers may use the model notice(s), provided that the notice(s) include(s) the information described above.

The model employee notice for employers that do not offer health coverage includes the information described above, as well as an explanation of the impact of the availability of employer health coverage on the employee’s eligibility for subsidies on the Marketplace. The model employee notice does not require the employer to provide specific contact information for the Marketplace in the state where the employee resides, but rather refers the employee to the healthcare.gov website for contact information for the Marketplace in the employee’s area. This model employee notice requires the employer to provide contact information for the employer, including the employer’s EIN (Employer Identification Number). This is the information that an employee will need to include in an application for a premium subsidy on a Marketplace.

The model employee notice for employers that do offer health coverage, while generally including the same information as the model employee notice for employers that do not offer health coverage, also requires the employer to provide contact information to obtain more information about the employer’s health care coverage. The disclosure section requires the employer to state whether the health care coverage is offered to all employees and, if not to all employees, a description of those employees eligible for health care coverage. This model employee notice further requires the employer to state whether it offers dependent coverage and which dependents are eligible. Finally, the employer is required to disclose whether the health care coverage offered meets the minimum value standard and that the cost of coverage is intended to be affordable. The Department of Treasury and Internal Revenue Service recently issued proposed guidance to assist employees in assessing whether the coverage offered provides minimum value. (For more information, see the Epstein Becker Green Health Employment And Labor blog post by Michelle Capezza entitled “New Proposed Guidance for Determining Whether Employer-Sponsored Health Plan Provides Minimum Value.”)

In addition, the model employee notice for employers that offer health coverage includes optional information that an employer may provide to employees based on the Marketplace Employer Coverage Tool to help them better understand their coverage choices, including whether an employee is eligible in the next three months for employer coverage, whether the employer offers a health plan that meets the minimum value standard, the premium for employee-only coverage under the lowest-cost plan that meets the minimum value standard if the employee received the maximum discount for any tobacco cessation program, and what changes the employer will make for the next plan year. Although this information is optional, it may be to an employer’s benefit to demonstrate, where appropriate, that its plan is providing minimum value and is affordable.

When Must the Employee Notice Be Provided, and What Are the Acceptable Delivery Methods?

Current employees who are employed before October 1, 2013, must be provided with the notice no later than October 1, 2013. Beginning October 1, 2013, the employer must provide each new employee with the notice at the time of hire, which will be considered timely in 2014 if it is provided within 14 days of the employee’s start date.

The employee notice must be provided free of charge, in writing, and in a manner calculated to be understood by the average employee. The employee notice may be provided by first class mail or electronically if done in accordance with the DOL’s electronic disclosure safe harbor.

What Is the COBRA Model Notice?

Under COBRA, an individual who was covered by a group health plan the day before a qualifying event occurred may be eligible to elect COBRA continuation coverage. These qualified beneficiaries must be provided with an election notice within 14 days after the plan administrator receives notice of a qualifying event. The COBRA election notice is required to include specific information.

The DOL updated its model COBRA election notice to provide information about the Marketplace for the purposes of informing qualified beneficiaries that they may also be eligible for a premium tax credit to pay for coverage offered through the Marketplace. The model COBRA election notice also includes a clarification on the limit on pre-existing condition exclusions beginning in 2014. Such information is not specifically required under the Affordable Care Act and should have no impact on whether an employer is subject to the employer responsibility penalties if, in fact, a former employee obtains coverage on the Marketplace.

The Release provides that the use of the model COBRA election notice, if completed appropriately, will be considered good faith compliance with the COBRA election requirements. The model COBRA election notice does not provide a specific deadline or compliance date. Employers may wish to review their existing COBRA election notices for changes relating to the Affordable Care Act.

Conclusion

Employers have long been waiting for specific guidance from the DOL on their employee notice requirements. Now that it is here, compliance should be addressed well before the October 1, 2013, deadline.

For more information about this Advisory, please contact:

Gretchen Harders New York 212-351-3784 gharders@ebglaw.com   Michelle Capezza New York 212-351-4774 mcapezza@ebglaw.com

This Advisory has been provided for informational purposes only and is not intended and should not be construed to constitute legal advice. The information is not intended to create, and receipt of it does not constitute, a lawyer-client relationship.

IRS Circular 230 Disclosure

To ensure compliance with certain IRS requirements, we inform you that any tax advice contained in this publication is not intended or written to be used, and cannot be used, for the purpose of avoiding penalties under the Internal Revenue Code.

http://tinyurl.com/cc9ljuo 

“This interim final rule with comment period sets the payment rates for
covered services furnished to individuals enrolled in the Pre-Existing
Condition Insurance Plan (PCIP) program administered directly by HHS beginning
with covered services furnished on June 15, 2013. This interim final rule also
prohibits facilities and providers who, with respect to dates of service
beginning on June 15, 2013, accept payment for most covered services furnished
to an enrollee in the federally-administered PCIP from charging the enrollee an
amount greater than the enrollee’s out-of-pocket cost for the covered service
as calculated by the plan.” (Centers for Medicare & Medicaid Services)

I have updated my Employer’s Guide to Health Savings Accounts (HSAs) to include the new 2014 contribution and coverage amounts and the required changes under health care reform.

Since I first wrote this publication in 2004, I have been updating it every time there has been any changes in the law. It explains every aspect of HSAs in fifty questions and answers. It also includes a chart that compares HSAs with Health FSAs and HRAs.

If you would like a copy, please click on the link below:

New HSA Guide

If the link does not work, please respond to this e-mail and I will send you a copy.  In addition, a copy will be posted on my website:

www.larrygrudzien.com

May 9, 2013

Yesterday, the Department of Labor released Technical Release 2013-02.  It provided guidance for the Model Exchange Notice and the Model COBRA Election Notice.  A copy of Technical Release 2013-02 follows:

I. Introduction

Many provisions of the Patient Protection and Affordable Care Act (Affordable Care Act) that become effective beginning in 2014 are designed to expand access to affordable health coverage. These include provisions for coverage to be offered through a Health Insurance Marketplace (Marketplace), premium tax credits to assist individuals in purchasing such coverage, employer notice to employees of coverage options available through the Marketplace, and other related provisions. The Departments of Labor, Health and Human Services (HHS), and the Treasury are working together to develop coordinated regulations and other administrative guidance to assist stakeholders with implementation of the Affordable Care Act.

Beginning January 1, 2014, individuals and employees of small businesses will have access to affordable coverage through a new competitive private health insurance market – the Health Insurance Marketplace. The Marketplace offers “one-stop shopping” to find and compare private health insurance options. Open enrollment for health insurance coverage through the Marketplace begins October 1, 2013. Section 1512 of the Affordable Care Act creates a new Fair Labor Standards Act (FLSA) section 18B requiring a notice to employees of coverage options available through the Marketplace.(1)

This Technical Release provides temporary guidance regarding the notice requirement under FLSA section 18B and announces the availability of the Model Notice to Employees of Coverage Options. This Technical Release also provides an updated model election notice for group health plans for purposes of the continuation coverage provisions under Title X of the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) to include additional information regarding health coverage alternatives offered through the Marketplace.

II. Background On The Notice to Inform Employees of Coverage Options Under the FLSA

Section 18B of the FLSA, as added by section 1512 of the Affordable Care Act, generally provides that, in accordance with regulations promulgated by the Secretary of Labor, an applicable employer must provide each employee at the time of hiring (or with respect to current employees, not later than March 1, 2013), a written notice:

1. Informing the employee of the existence of the Marketplace (referred to in the statute as the Exchange) including a description of the services provided by the Marketplace, and the manner in which the employee may contact the Marketplace to request assistance;
2. If  the employer plan’s share of the total allowed costs of benefits provided under the plan is less than 60 percent of such costs, that the employee may be eligible for a premium tax credit under section 36B of the Internal Revenue Code (the Code) if the employee purchases a qualified health plan through the Marketplace; and
3. If  the employee purchases a qualified health plan through the Marketplace, the employee may lose the employer contribution (if any) to any health benefits plan offered by the employer and that all or a portion of such contribution may be excludable from income for Federal income tax purposes.

On January 24, 2013, the Department of Labor (the Department) issued guidance stating the Department’s conclusion that the notice requirement under FLSA section 18B will not take effect on March 1, 2013 for several reasons.(2) The Department explained that this notice should be coordinated with HHS’s educational efforts and Internal Revenue Service (IRS) guidance on minimum value. The guidance also stated the Department’s commitment to a smooth implementation process including providing employers with sufficient time to comply and select an applicability date that ensures that employees receive the information at a meaningful time. The guidance further stated that the Department expects the timing for distribution of notices will be the late summer or fall of 2013, which will coordinate with the open enrollment period for the Marketplace.

The Department is issuing this temporary guidance and model notice in advance of the expected timeframe announced in the guidance because, since the issuance of the guidance, the Department has received several requests from employers for a model notice on an earlier timeframe so that they may be able to inform their employees now about the upcoming coverage options through the Marketplace. Therefore, employers are permitted to use the model notice and/or rely on this temporary guidance prior to the applicability date stated below(3) to inform their employees earlier.

III. Guidance For The Notice to Inform Employees of Coverage Options Under the FLSA

This section provides temporary guidance on what the Department will consider as compliance with FLSA section 18B, and this guidance will remain in effect until the Department promulgates regulations or other guidance. Future regulations or other guidance on these issues will provide adequate time to comply with any additional or modified requirements.

A. Employers Subject to the Notice Requirement

 The FLSA section 18B requirement to provide a notice to employees of coverage options applies to employers to which the FLSA applies. In general, the FLSA applies to employers that employ one or more employees who are engaged in, or produce goods for, interstate commerce. For most firms, a test of not less than $500,000 in annual dollar volume of business applies.(4) The FLSA also specifically covers the following entities: hospitals; institutions primarily engaged in the care of the sick, the aged, mentally ill, or disabled who reside on the premises; schools for children who are mentally or physically disabled or gifted; preschools, elementary and secondary schools, and institutions of higher education; and federal, state and local government agencies.(5)

 The Department’s Wage and Hour Division provides guidance relating to the applicability of the FLSA in general including an internet compliance assistance tool to determine applicability of the FLSA. See www.dol.gov/elaws/esa/flsa/scope/screen24.asp.

B. Providing Notice to Employees

Employers must provide a notice of coverage options to each employee, regardless of plan enrollment status (if applicable) or of part-time or full-time status. Employers are not required to provide a separate notice to dependents or other individuals who are or may become eligible for coverage under the plan but who are not employees.

C. Form and Content of the Notice

Pursuant to the statute, the notice to inform employees of coverage options must include information regarding the existence of a new Marketplace as well as contact information and description of the services provided by a Marketplace. The notice must also inform the employee that the employee may be eligible for a premium tax credit under section 36B of the Code if the employee purchases a qualified health plan through the Marketplace; and a statement informing the employee that if the employee purchases a qualified health plan through the Marketplace, the employee may lose the employer contribution (if any) to any health benefits plan offered by the employer and that all or a portion of such contribution may be excludable from income for Federal income tax purposes.

D. Timing and Delivery of Notice

Employers are required to provide the notice to each new employee at the time of hiring beginning October 1, 2013. For 2014, the Department will consider a notice to be provided at the time of hiring if the notice is provided within 14 days of an employee’s start date.

With respect to employees who are current employees before October 1, 2013, employers are required to provide the notice not later than October 1, 2013. The notice is required to be provided automatically, free of charge.

The notice must be provided in writing in a manner calculated to be understood by the average employee. It may be provided by first-class mail. Alternatively, it may be provided electronically if the requirements of the Department of Labor’s electronic disclosure safe harbor at 29 CFR 2520.104b-1(c) are met.

E. Model Notice

To satisfy the content requirements for FLSA section 18B, model language is available on the Department’s website www.dol.gov/ebsa/healthreform. 

There is one model for employers who do not offer a health plan and another model for employers who offer a health plan or some or all employees.  Employers may use one of these models, as applicable, or a modified version, provided the notice meets the content requirements described above.

 F. Paperwork Reduction Act Statement

The notice specified by this guidance is a collection of information approved under OMB Control Number 1210-0149, which currently is scheduled to expire on November 30, 2013. The Department notes that a federal agency cannot conduct or sponsor a collection of information unless it is approved by OMB under the PRA, and displays a currently valid OMB control number, and the public is not required to respond to a collection of information unless it displays a currently valid OMB control number. See 44 U.S.C. § 3507. Also, notwithstanding any other provisions of law, no person shall be subject to penalty for failing to comply with a collection of information if the collection of information does not display a currently valid OMB control number. See 44 U.S.C. § 3512. A covered employer’s response to this collection is mandatory. See 29 U.S.C. § 218b. Each individual response is estimated to take less than 15 seconds, as an employer may send a copy of the same notice to each affected employee. Send comments about this information collection, including suggestions for reducing its burden, to G. Christopher Cosby, Department of Labor, Employee Benefits Security Administration, Office of Policy and Research, 200 Constitution Ave, NW, N-5718, Washington, DC 20210 (cosby.chris@dol.gov). Do not send a copy of the notice to this address.

 IV. Background and Guidance for the Model COBRA Election Notice

In general, under COBRA, an individual who was covered by a group health plan on the day before a qualifying event occurred may be able to elect COBRA continuation coverage upon a qualifying event (such as termination of employment or reduction in hours that causes loss of coverage under the plan).(6) Individuals with such a right are called qualified beneficiaries. A group health plan must provide qualified beneficiaries with an election notice, which describes their rights to continuation coverage and how to make an election. The election notice must be provided to the qualified beneficiaries within 14 days after the plan administrator receives the notice of a qualifying event.

 The election notice is required to include:

• The name of the plan and the name, address, and telephone number of the plan’s COBRA administrator;
• Identification of the qualifying event;
• Identification of the qualified beneficiaries (by name or by status);
• An  explanation of the qualified beneficiaries’ right to elect continuation coverage;
• The date coverage will terminate (or has terminated) if continuation coverage is not elected;
• How to elect continuation coverage;
• What will happen if continuation coverage isn’t elected or is waived;
• What continuation coverage is available, for how long, and (if it is for less than 36 months), how it can be extended for disability or second qualifying events;
• How continuation coverage might terminate early;
• Premium payment requirements, including due dates and grace periods;
• A statement of the importance of keeping the plan administrator informed of the addresses of qualified beneficiaries; and
• A statement that the election notice does not fully describe COBRA or the plan and that more information is available from the plan administrator and in the plan’s summary plan description (SPD).

Some qualified beneficiaries may want to consider and compare health coverage alternatives to COBRA continuation coverage that are available through the Marketplace. Qualified beneficiaries may also be eligible for a premium tax credit (a tax credit to help pay for some or all of the cost of coverage in plans offered through the Marketplace).

The Department of Labor has a model election notice that plans may use to satisfy the requirement to provide the election notice under COBRA. This notice is being revised to help make qualified beneficiaries aware of other coverage options available in the Marketplace. As with the earlier model, in order to use this model election notice properly, the plan administrator must complete it by filling in the blanks with the appropriate plan information. Use of the model election notice, appropriately completed, will be considered by the Department of Labor to be good faith compliance with the election notice content requirements of COBRA.

The model election notice is available in modifiable, electronic form on the Department’s website at www.dol.gov/ebsa/cobra.html. A clean copy is available, as is a redline from the prior model notice to help interested stakeholders identify the changes.

V. For Further Information Contact

Amy Turner or Elizabeth Schumacher, Employee Benefits Security Administration, Department of Labor, at 202-693-8335. Additional information for employers regarding the Affordable Care Act is available at www.healthcare.gov and www.dol.gov/ebsa/healthreform.

Footnotes

1. The Secretary of Labor has delegated responsibility for FLSA section 18B rulemaking to the Employee Benefits Security Administration (EBSA) within the Department of Labor. See Q2 in ACA Implementation FAQ Part V, available at www.dol.gov/ebsa/faqs/faq-aca5.html.
2. See FAQs about Affordable Care Act Implementation Part XI, Question 1 available at www.dol.gov/ebsa/faqs/faq-aca11.html.
3. See section III. D of this notice.
4. See  www.dol.gov/compliance/guide/minwage.htm.     
5. Id.

For more information on COBRA continuation coverage requirements applicable to group health plans, see “An Employer’s Guide to Group Health Continuation Coverage Under COBRA,” available at  www.dol.gov/ebsa/publications/cobraemployer.html

In light of the Affordable Care Act prohibition against health plans with an annual dollar limit on essential benefits, which takes effect in the plan year beginning on or after January 1, 2014, there have been concerns about whether Health Reimbursement Arrangements (HRAs) will be permissible in 2014 and after.

The three federal agencies implementing the Affordable Care Act (HHS, DOL, and the Treasury) recently released a set of answers to frequently asked questions (FAQs) addressing the future of HRAs. The answers discuss guidance on how an employer can provide HRA coverage and stay in compliance with the new regulations. In general, the guidance confirms that in order for an HRA to be permissible, an employee must be enrolled in other primary group medical coverage that complies with the annual dollar-limit.

Whether an HRA will be considered permissible under the Affordable Care Act’s annual dollar limit rules will depend on whether the HRA is an “integrated” HRA or a “stand-alone” HRA. While the DOL has never specifically defined those terms, “integrated” was commonly understood to mean that an employee who elected major medical plan coverage would also have an HRA; and, the only way to have an HRA was to also have major medical plan coverage. In contrast, a “stand alone” HRA would allow an employee to participate even if the employee did not participate in the major medical plan.

Why does this matter? The DOL has said that it is relatively easy for an “integrated” HRA to satisfy the ACA rule that a plan not have any lifetime dollar limits on essential health benefits. An integrated HRA satisfies this rule by relying on the coverage provided by the major medical plan. What about a stand‐ alone HRA? The DOL has provided only limited relief for such an HRA and has implied that stand‐alone HRAs may be eliminated entirely in 2014.

The FAQs provide that:

• Individual Policies Not Sufficient. Stand‐alone HRAs used to purchase individual coverage ARE NOT considered integrated with the individual coverage and therefore such HRAs violate the annual limit and lifetime limit requirements.

• Must Participate in Both HRA and Major Medical Plan. HRAs offered to employees who do not enroll in the underlying group health plan violate the ACA. In other words, to be “integrated” the coverage needs to be identical: the employee must be “in or out” for both the major medical plan and the HRA.

• Grandfathered HRAs for Pre‐2014 Contribution. Generally, amounts credited before 2014 under an existing HRA will be “grandfathered” in 2014 and beyond. So, even if future DOL guidance effectively eliminates HRAs ‐‐ a real possibility, especially for stand‐alone HRAs ‐‐ current amounts in the HRA could continue to be used until they were exhausted.

Key takeaways: The rules regarding HRAs are being tightened. It is suggested in this guidance that HRAs would need to be integrated with an underlying group health plan or they will be considered in violation of the law. Employers that offer HRAs must carefully examine each HRA option to assure that it is permissible in 2014. Also note that the ACA lifetime and annual limits are not applicable to retiree‐only HRAs.

By Richard F. Stolz

We all know employees can’t appreciate benefits they don’t understand. But not everyone realizes how strongly linked good benefits education is to the way employees feel about their employers and their financial security.

Once those connections are clear, the big question becomes: How can we help employees understand and appreciate their benefits? The right combination of time and tools can make all the difference.

Making the connection

The quality of a company’s benefits communication program is positively correlated with how employees rate their company as a place to work. And although employers appear to have made progress in raising the quality of their employee education programs over the last few years, there is plenty of room for further improvement, according to a recent survey of more than 1200 working Americans conducted by Harris Interactive for Unum.

Of the 37% of employees who rated their company’s benefits communication program very good or excellent, 81% described their employer as a very good or excellent place to work. In contrast, of the employees who rated their benefits education as fair or poor (25% of those surveyed), only 23% rated their employer as an excellent or very good place to work.

Other factors come into play, of course, including the quality of the benefits menu itself. But even those who do not rate their benefits package highly are more likely to view their workplace more positively when the benefits communication is considered strong.

Impact on financial security perception

“At a time when many employees are feeling uneasy about their personal financial situation, it is particularly important for employers to maximize the effectiveness of their communications efforts,” according to Barbara Nash, Unum’s VP of corporate research and director of the study.

That’s because the quality of their benefits education may be a factor in their sense of financial security. More than one-third (36%) of surveyed employees say they do not feel secure about their finances. But that number is much lower (20%) among those who rate their benefits education favorably. And employees who feel more financially secure also give higher ratings to their employer as a place to work.

Employees were specifically asked about their level of confidence of having funds for future expenses, or to deal with the financial consequences of a significant illness or injury that kept them from working. Half reported they are “not very” or “not at all” confident, an increase from 46% in the prior year’s survey.

Employers that offer disability benefits can help employees alleviate some of this insecurity with effective communication strategies about the purpose and value of the benefit, Nash suggests. “Employees who understand the value of their disability benefits have a stronger view of their own financial security.”

But many employees lack sufficient information with regard to disability benefits. “This is a place where employers need to spend more time helping their workers appreciate the benefits they have,” according to Nash. Only 25% of employees strongly agree with the statement that they have enough information to make a good decision regarding disability benefits. This is understandable since 40% of the employees did not recall receiving any benefits education that specifically explained their disability benefits.

When employees receive benefits information specifically about their disability benefits, however, their understanding and ability to make good decisions is much improved. “Employees absolutely need to have this information, especially as more and more are asked to make choices regarding their participation,” Nash says.

Keys to effective education

What makes employees rate a benefit communication effort highly? One significant factor identified in the survey is the amount of time employees are given to review their benefit choices. Employees who were given at least three weeks to digest and ask questions about their benefit choices rated their benefits education the highest.

Another consideration is the number of learning options employees are given to be educated about benefits. “People have different learning styles,” Nash says. “Our research shows that employers should offer at least three ways for employees to learn about their benefits.” In this year’s survey, the average number of methods available to employees was between 3 and 4 (with larger employers offering more choices). The question is which are most effective.

Traditional brochures and other printed materials describing benefits remain the most prevalent learning format, and according to Nash that’s a good thing; they also have the highest utilization rate by employees, at 71%. “Although employers may see cost savings in doing away with printed materials, there is no question that many employees want to discuss their choices with family members, and this offers the best way of doing that.”

Employees’ preferred learning methods

When employees are asked to identify their preferred methods for learning about their benefits they most frequently select methods that their employer is already offering:

1. Printed materials they can take home and review
2. Information personalized for them that includes their cost for the benefits
3. Access to a website that provides information on the benefits and lists FAQs
4. Group meetings with the opportunity to ask questions of benefits experts
5. Online interactive tools that help them calculate their benefits needs

At least for now, mobile apps, online message boards and online chats are not very popular. However, younger employees, predictably, were more likely to prefer these methods than older employees. For the most part, however “younger employees are not that different from older ones in terms of their preferences”, Nash says.

“Overall,” Nash adds, “improving your benefits communication effort might not involve more than some fine-tuning here and there, but the results, in terms of employees’ appreciation of their benefits and of your organization as a place to work, can be very significant.”

Franchisees Try to Stay Below Insurance Threshold; White Castle Slows Its Expansion

By JULIE JARGON

Some restaurant operators are scaling back expansion plans because of uncertainty about the expense of insuring employees under the new federal health-care law.

The concerns are especially acute among smaller operators who are more likely to be on the cusp of the Affordable Care Act’s requirements for increased coverage of workers. The doubt is adding to anxiety over other rising costs for items like ingredients at a time when diners are cutting back on eating out.

Sam Ballas, chief executive of ECW Enterprises Inc., owner of East Coast Wings & Grill, a 26-unit chain in North Carolina and Texas, in March imposed a three- to five-unit limit, for the time being, on the number of restaurants that franchisees can own, because of worries about health-care costs.

The law requires employers with more than 50 full-time equivalent employees—those who work 30 hours or more a week—to start offering health insurance to full-time employees in 2014, or to pay a penalty.

Mr. Ballas said several East Coast Wings franchisees are up against that limit now and that one is considering selling a restaurant to remain below the threshold.

Mr. Ballas’s company studied the past two years of financial data from its restaurants, and modeled how many units a franchisee could own and remain profitable after covering full-time workers. The model showed that franchisees who operate three or fewer stores are likely to remain under the mandatory insurance threshold, while an owner who manages five restaurants efficiently would have just enough scale to offset the cost of paying for insurance or the penalty. Beyond that number, Mr. Ballas said, his company isn’t sure how many restaurants a franchisee could profitably operate under the new law.

“There is no question that the Affordable Care Act has thrown a wet blanket on franchise development,” said Stephen Caldeira, CEO of the International Franchise Association. In a recent survey of its members, the trade group found that 64% of franchisers and almost 72% of franchisees said the health law creates some uncertainty or significant uncertainty in long-term planning.

“Small-business people are telling us they’re afraid to take on any more debt until they know the full cost of the Affordable Care Act,” said Richard Hunt, CEO of the Consumer Bankers Association.

The restaurant business has been a focus of debate about the health-care law’s impact, in part because of its heavy reliance on part-time workers who don’t currently have coverage. Some executives have warned that it could hobble the industry, although some companies, including Wendy’s Co., have scaled back initial estimates of how much the law will cost their restaurants, and others, such as Dunkin’ Brands Group Inc., have played down the impact the health-care overhaul will have on the industry.

The Obama administration says the health-care law will benefit small businesses like franchises, in part by creating insurance marketplaces where they can pool their buying power. “The Affordable Care Act will save money for businesses while giving workers and employers access to quality, affordable health care,” said a Treasury Department spokeswoman.

The law hasn’t crimped expansion plans for some big restaurant companies. Large chains tend to have sophisticated procurement departments that can hedge against volatile commodity costs as well as the scale to negotiate prices of other items, such as paper goods, which can better help franchisees absorb other cost increases. McDonald’s Corp.,which estimates the law will cost $10,000 to $30,000 per restaurant, is opening more new restaurants in the U.S. this year than it has in each of the past three years. A spokeswoman said she hasn’t heard of franchisees scaling back expansion plans.

For others, though, the law adds to other reasons for caution. White Castle Management Co., a closely held chain that doesn’t franchise any of its 406 restaurants, says it is significantly slowing its growth plans in light of rising health-care and other costs. The burger chain plans to open two or three new restaurants this year, down from about a dozen three years ago, and five in both 2011 and 2012, company spokesman Jamie Richardson said.

White Castle currently offers health insurance to employees who work 35 hours or more per week, and 80% of eligible employees accept. Under the law, the offer will have to extend to those who work 30 hours weekly, and employees who refuse will have to pay a penalty. “What we don’t know is what percentage who decline insurance now will sign up for it” when the law takes effect in January, Mr. Richardson said. “This has caused us to re-examine our strategy.”

Franchisees say some of the law’s details, such as how employers will count workers’ hours, have yet to be finalized, limiting their ability to plan. Joe Drury, who owns 22 Wendy’s restaurants in Tennessee and Virginia that employ 600 people, said he wants to open three more restaurants next year. But “if the Affordable Care Act costs me too much money, I’m not going to. It’s as simple as that,” he said.Wendy’s spokesman Denny Lynch said health-care costs are among many concerns franchisees have expressed, along with high chicken and beef costs. Like other restaurant chains, Wendy’s is pushing franchisees to remodel their restaurants in order to remain competitive with the likes of McDonald’s, which has upgraded thousands of restaurants. Wendy’s is presenting franchisees with different remodeling options ranging from $350,000 to $750,000 per store.

Wendy’s originally estimated the cost of complying with the law to be $25,000 a year per restaurant, but more recently its chief financial officer revised it to $5,000 because the company expects many employees to decline the insurance.

“I sure hope he’s right,” said Mr. Drury, who said he hasn’t yet done his own calculations for his operations.

Mr. Drury said he is committed to remodeling his existing stores because “I have to do it to protect my market share.” But, he said, “I’m not committing to how fast I’ll move until I know what the costs of the health-care act will be.”

Write to Julie Jargon at julie.jargon@wsj.com

A version of this article appeared May 15, 2013, on page B2 in the U.S. edition of The Wall Street Journal, with the headline: Eateries Fear Health Law’s Bite.

http://online.wsj.com/article/SB10001424127887323687604578467131472052160.html?KEYWORDS=health+overhaul

Four Myths about Private Health-Care Exchanges

Health Benefits | May 03, 2013 | CFO.com | US

They’re not as cost-predictable as you think, you can’t use them to provide nongroup coverage, and offering dental and other ancillary benefits through them may be risky. David McCann
For all the hoopla in the past year about private health-care exchanges for active employees, relatively few companies with more than 50 workers have taken the plunge. But the market is certainly expecting that to change, with most of the large benefits-consulting firms having launched their own private exchanges and aggressively promoting them.Because the concept of private exchanges is relatively new to most employers, some may be harboring misconceptions. Following is a discussion of four fairly common assumptions that Don Garlitz, head of exchange solutions at bswift, characterizes as myths.  Garlitz can’t be considered an unbiased source, as bswift provides technology platforms for private exchanges as well as for benefits administration generally. But CFO has looked extensively at the private-exchange field and believes the items listed below to be, in fact, myths.

Myth 1: Private exchanges will fix an employer’s rate of health-care cost increases year after year.

What drives CFOs mad about health care is the unpredictability of cost from year to year. But it’s expected that coverage offered through private exchanges will typically be funded by defined contributions, much like 401(k) plans. For many CFOs, the predictability that defined contributions afford would be the chief appeal of a private exchange. But fixing the cost outlay for years into the future may not be realistic in the labor market, Garlitz points out. Let’s say a company plans an annual increase of its contribution in line with the consumer price index, or perhaps a fixed amount of, say, 3 percent per year. If the cost of healthcare continues to escalate at a rate higher than the defined contribution increase, employees will simply bear most of the inflation burden. “It’s cost shifting, really, and a competitive labor market will demand more from the employer sooner or later,” Garlitz says.

Myth 2: Offering a private exchange will equate to offering nongroup medical coverage.

This is of particular relevance to small businesses, some of which have used health reimbursement arrangements (HRAs) to provide employees with funds to buy individual insurance policies. Doing so is appealing because the company reduces both its liability and its compliance responsibility. But a recent Department of Labor ruling suggests that employers probably won’t be permitted to use HRAs to fund nongroup coverage through private exchanges. The only other way companies could pay part of employees’ insurance cost without offering group coverage would be to raise their wages commensurately. But that would not be practical. “I don’t see employers doing that and just hoping the employees actually use that money for health insurance rather than take the money and run,” says Garlitz. Besides, in at least 40 states, employer-sponsored nongroup plans are not guaranteed-issue plans (i.e., bound to cover all participants under the same terms regardless of their risk factors).

Myth 3: Employers using private exchanges will offer a single pot of benefits money to each employee.

That would be the simplest approach, with the employee able to spend the money however he or she chooses on medical, dental, disability or life-insurance coverage. But that approach probably wouldn’t meet the needs of many companies. If they did that, employees generally would spend most of it on medical coverage. If participation in the other, ancillary benefits dropped significantly, the company likely would be charged dramatically more for them or possibly even lose its contracts with the benefit providers. “Companies buy those things because they get such wonderful deals on them,” Garlitz says. “We think many companies that move to private exchanges will use them for certain but not all benefits.”

Myth 4: While private exchanges may fix an employer’s costs, they won’t affect the overall costs of the health-care system.

Much discussion of the Affordable Care Act is about whether it actually drives cost out of the health-care system. Many believe that will be only a long-term effect, if it happens at all. Similarly, some believe that while a private exchange may help a company control its own health-care expense, overall health-system costs will remain the same. Garlitz disagrees. Fixing the company’s cost will have practical limits as described in Myth 1, but consumers vote with their feet. “I think with private exchanges you’ll see a movement to lower-cost coverage options, driven in part by the narrower [doctor, hospital and pharmacy] networks that some of those options will offer as well as the availability of health plans with innovative payment models. That’s where private exchanges can drive cost out of the system.” He acknowledges, though, that choosing a low-cost health plan with high deductibles and low coverage limits could lead some people to delay or avoid needed care and thereby risk costly health consequences.

A very informative article for HR professionals, discussing where the field is heading and how to prepare for the future.  The predictions of HR experts were: an increased need for outsourced HR services, a shift toward HR specialist, and smaller in-house HR departments.

“Many businesses are going to get a lot of capability done by better technology, more self-service and the employee doing a lot on their own.” For instance, employees will increasingly input their own data into self-service systems. In addition, many transaction-heavy HR jobs will be outsourced entirely to HR agencies or specialists. Dr. Janice Presser, CEO of The Gabriel Institute, goes so far as to say, “Entry-level HR jobs, as they currently exist, will all but disappear as transactional tasks are consigned to outsourced services.”

What will remain in house will be a demand for more of a strategic role. The HR professionals of the future will need to not only understand HR but also be knowledgeable with business operations and strategy. This strategic function needs in house employees with expertise of the specific company.

Tips for keeping up with the new trends

Additional and cross training (data analysis)

Define yourself as a business person

Risk taking

Networking

Please see the below link for entire article

http://new-talent-times.softwareadvice.com/the-hr-department-of-2020-413/