by admin | Apr 6, 2018 | Benefit Management, Employee Benefits, ERISA
The Department of Labor’s new claim rules for disability benefits took effect April 2, 2018. The changes were announced over a year ago, but the effective date was delayed to give insurers, employers, and plan administrators adequate time for implementation. Although we’ve reported on the key issues in this blog previously, now seems like a good time for a refresher on how the new rules affect employer plans.
Affected Plans
The new claim rules apply to disability benefits provided under plans covered by the Employee Retirement Income Security Act (ERISA); that is, plans sponsored by private-sector employers. Then the new rules apply if the ERISA plan must make a determination of disability in order for the claimant to obtain the benefit. Group short- and long-term disability plans are the most common examples, but pension, 401(k), and deferred compensation plans also may be affected.
Many plans do not make their own determination of disability, but instead condition the plan’s benefit on another party’s determination. For instance, employer plans that base the benefit on a disability determination made by the Social Security Administration (SSA) are not affected by the new rules.
New Rules
For ERISA plans affected by the new rules, the following additional requirements apply to disability claims filed on or after April 2, 2018:
- Disclosure Requirements: Benefit denial notices must explain why the plan denied a claim and the standards used in making the decision. For example, the notices must explain the basis for disagreeing with a disability determination made by the SSA if presented by the claimant in support of his or her claim.
- Claim Files and Internal Protocols: Benefit denial notices must include a statement that the claimant is entitled to request and receive the entire claim file and other relevant documents. (Previously this statement was required only in notices denying benefits on appeal, not on initial claim denials.) The notice also must include the internal rules, guidelines, protocols, standards or other similar criteria of the plan that were used in denying a claim or a statement that none were used. (Previously it was optional to include a statement that such rules and protocols were used in denying the claim and that the claimant could request a copy.)
- Right to Review and Respond to New Information Before Final Decision: Plans are prohibited from denying benefits on appeal based on new or additional evidence or rationales that were not included when the benefit was denied at the claims stage, unless the claimant is given notice and a fair opportunity to respond.
- Conflicts of Interest: Claims and appeals must be adjudicated in a manner designed to ensure the independence and impartiality of the persons involved in making the decision. For example, a claims adjudicator or medical or vocational expert could not be hired, promoted, terminated or compensated based on the likelihood of the person denying benefit claims.
- Deemed Exhaustion of Claims and Appeal Processes: If plans do not adhere to all claims processing rules, the claimant is deemed to have exhausted the administrative remedies available under the plan (unless exceptions for minor errors or other conditions apply). In that case, the claimant may immediately pursue his or her claim in court. Plans also must treat a claim as re-filed on appeal upon the plan’s receipt of a court’s decision rejecting the claimant’s request for review.
- Coverage Rescissions: Rescissions of coverage, including retroactive terminations due to alleged misrepresentations or errors in applying for coverage, must be treated as adverse benefit determinations that trigger the plan’s appeals procedures.
- Notices Written in a Culturally and Linguistically Appropriate Manner: Benefit denial notices must be provided in a culturally and linguistically appropriate manner in certain situations. Specifically, if the claimant’s address is in a county where 10 percent or more of the population is literate only in the same non-English language, the notices must include a prominent statement in the relevant non-English language about the availability of language services. The plan would also be required to provide a verbal customer assistance process in the non-English language and provide written notices in the non-English language upon request.
Action Steps for Employers
Employers are reminded to work with their carriers, third-party administrators, and advisors to make sure their plans comply with the new requirements. Consider these steps:
- Identify all plans that are subject to ERISA. (Plans sponsored by governmental employers, such as cities and public school districts, and certain church plans, are exempt from ERISA.)
- Does the ERISA plan provide any benefit based on disability? If so, is the benefit conditioned on a determination of disability made by the plan or by another party, such as Social Security?
- For insured plans, such as group STD and LTD insurance plans, the carrier generally is responsible for compliance with ERISA’s claim rules. The employer, however, does have a duty to make reasonable efforts to ensure the carrier is complying.
- For self-funded plans, the employer is responsible for compliance. Although the employer may engage the services of a third-party claims administrator, the employer remains responsible for the plan’s compliance with all rules.
Originally Published By ThinkHR.com
by admin | Apr 3, 2018 | Hot Topics, Human Resources, IRS, Workplace
Managing pay can be tricky. Handled incorrectly, pay can create problems for an employer — everything from the inability to attract the right candidates and losing great employees to the competition to presenteeism (employees who are physically in the workplace but not engaged in their work), employee relations issues, compliance audits, and lawsuits. These outcomes impact productivity. They infect the company culture. And they tarnish the employer brand.
In your role as a trusted advisor to clients who may be struggling with their total compensation programs, you need to be ready to help them determine how to make the right decisions. This requires you to be aware of new trends while also helping clients manage risk by complying with wage and hour rules.
Pay Versus Employee Motivation and Retention
Many employee engagement reports note that pay doesn’t impact motivation as much as other work factors, such as:
- The quality of the company and its management.
- Belief in the organization’s products.
- Alignment with the company’s mission, values, and goals.
- Ability to make a meaningful contribution.
- Ability to develop new professional skills.
IBM’s Smarter Workforce Institute’s 2017 study looked at employees’ decisions to leave their jobs and found that the three generations comprising most of today’s workforce would be open to considering new job opportunities for better compensation and benefits: Millennials at 77 percent, Generation X at 78 percent, and Baby Boomers at 70 percent. Those are big numbers, and they shouldn’t be ignored when designing pay plans.
Further, while pay may not be a motivator, it can be a powerful dissatisfier when employees believe that they aren’t being paid correctly for the value they are bringing to the organization, or at the market value of their jobs. Worse yet is the perceived — or real — belief that their pay is lower than what their co-workers are earning. In some markets, this problem is genuine, as companies in hot labor markets struggle with paying new people more than current employees, causing pay compression. Employees do talk and pay information is readily available.
Considering every variable that goes into compensation planning can be complicated. Your clients can start by: setting a compensation strategy to fit their company’s needs and budget; developing compensation programs to fit that strategy, the talent marketplace, and employee demographics; and then administering the compensation program fairly and in compliance with federal, state, and local laws.
Equal Pay Mandates
The Equal Employment Opportunity Commission’s (EEOC) Strategic Enforcement Plan prioritizes enforcing the Equal Pay Act (EPA) to close the pay gap between men and women, and the Trump administration has been silent about changing this direction. This topic is trending, as legislators in more than 40 jurisdictions introduced bills related to equal pay in 2017. California, New York, Massachusetts, and Maryland are setting the pace with laws addressing this issue. These states have set rules that more broadly define the equal pay standard requiring different factors, such as skill, effort, working conditions, and responsibility, in justifying gender pay disparities. These states are also broadening the geographic restrictions for employee pay differentials.
We expect that more states will enact equal pay rules in 2018. Companies should review gender pay differences in their workforce, document the bona fide business reasons for the differences, and correct wage disparities as needed. Permitted differences could include seniority, documented merit performance differences, pay based on quantity or quality of production or sales quotas, or geographic differentials.
Salary History Ban
The issue of pay has traditionally been an inevitable topic of discussion in any job interview. However, in a growing number of places throughout the country, an employer can no longer ask an applicant about his or her salary history. At least 21 states and Washington, D.C., along with several municipalities, have proposed legislation that would prohibit salary history questions. California (effective January 2018), Delaware (effective December 2017), Massachusetts (effective July 2018), and Oregon (effective January 2019) have enacted laws impacting private employers. More bans are expected at both the state and local level.
While the provisions of each law vary, they make it illegal for employers to ask applicants about their current compensation or how they were paid at past jobs. The rationale for these laws stems from the equal pay issue and the premise that pay for the job should be based on the value of the job to the organization, not the pay an applicant might be willing to accept. These laws are designed to reverse the pattern of wage inequality that resulted from past gender bias or discrimination.
For employers, this means:
- Establishing compensation ranges for open positions and asking applicants if the salary range for the position would meet their compensation expectations.
- Updating employment applications to remove the salary history information.
- Training hiring managers and interviewers to avoid asking questions about salary history.
Pay Transparency
Outside of certain industries, the public sector, and unionized environments where pay grades and step increases are common knowledge, historically many employers have had a practice of discouraging employees from openly discussing their compensation. That practice is fast becoming history, due to another notable trend in state legislatures: enacting laws that allow employees to discuss their wages and other forms of compensation with others. Although the provisions of the laws vary, California, Colorado, Connecticut, Delaware, Washington, D.C., Illinois, Louisiana, Maine, Maryland, Michigan, Minnesota, New Hampshire, New Jersey, New York, Oregon, and Vermont now have laws in place allowing pay transparency.
In addition to these state laws, Section 7 of the National Labor Relations Act (NLRA) allows employees to engage in pay discussions as “concerted and protected activities for the purpose of collective bargaining or other mutual aid or protection.” During the Obama administration, the National Labor Relations Board (NLRB) broadly interpreted the NLRA’s Section 7 to side with employees’ rights to discuss wages and other terms and conditions of employment. Unless the Trump administration’s NLRB changes direction on this issue, which is not expected, the clear message for employers is to remove any prohibitions of employees discussing pay or working conditions with others.
Be Vigilant
Employee compensation has always been a hot topic, and this year the temperature will continue to rise. Keep abreast of legislative and regulatory changes that impact pay practices to help your clients stay in compliance with the pay laws that are spreading throughout the country.
Now is a good time to suggest that your clients consider conducting pay audits, updating compensation plans, making compensation adjustments where needed, training managers regarding pay strategy and practice, and communicating the company’s compensation strategy and incentive plans to employees.
By Laura Kerekes, SPHR, SHRM-SCP
Originally posted on thinkHR.com
by admin | Mar 28, 2018 | Benefit Management, Benefit Plan Tips, Tricks and Traps, Human Resources
As the costs of health care soar, many consumers are looking for ways to control their medical spending. Also, with the rise of enrollment in high deductible health plans, consumers are paying for more health care out-of-pocket. From medical savings accounts to discount plans for prescriptions, patients are growing increasingly conscious of prices for their healthcare needs. Price shopping procedures and providers allows you to compare prices so that you are getting the best value for your care.
Why do you need to look beyond your nearby and familiar providers and locations for healthcare? Here’s a hypothetical example: Chris is a 45-year old male in good physical health. During his last check-up he mentions to his doctor that he’s had some recent shortness of breath and has been more tired as of late. His doctor orders an EKG to rule out any problems. If Chris went to his local hospital for this procedure, it would cost $1150. He instead looks online and shops around to find other providers in his area and finds he can get the same procedure for $450 at a nearby imaging center. His potential savings is $700 simply by researching locations.
So where do you start when shopping around for your health care? A good place to begin is by researching your health plan online. Insurance companies will post cost estimates based on facility, physician, and type of procedure. Keep in mind that these are just estimates and may vary based on what coverage you are enrolled in. Another way to shop is by checking out websites that have compiled thousands of claims information for various procedures and locations to give an estimate of costs. However, deciphering whether a site is reporting estimates based on the “medical sticker price” of charges or rates for private insurance plans or Medicare is difficult. There are huge differences in prices at different providers for the exact same procedure. This is because contracts between insurance agencies and providers vary based on negotiated amounts. This makes it hard to get consistent pricing information.
Check out these sites that do a great job comparing apples to apples for providers:
- Healthcare Blue Book
- What Kelly Blue Book is to cars, Healthcare Blue Book is to medical pricing
- New Choice Health
- Reports on pricing of medical procedures, providers, quality of facilities, and customer feedback for healthcare in all 50 states
- The Leapfrog Group
- Publishes data on hospitals so patients can compare facilities and costs for treatments and procedures
After compiling all the information on prices and procedures, you can still call and negotiate costs with the location of your care. Fair Health Consumer has tips on how to negotiate with providers and plan for your healthcare needs.
Knowledge is POWER and when you spend time researching and comparing healthcare costs, you are empowering yourself! Exercising due diligence to plan for you and your family’s medical needs will save you money and give you confidence in your decisions for care.
by admin | Mar 23, 2018 | Employee Benefits, Human Resources
Fear of missing out—is more than just a hashtag. Many Millennials admit that #FOMO drives a lot of their decisions on what they wear, what they do, even what they eat and drink. We live in a world of social influence.
But one area where #FOMO really does you a disservice? No one is afraid of missing out on the benefits of life insurance. And why should you? There are so many other things competing for your dollars. That said, do you know what you’re missing out on by not having it? Are you making one or more of these mistakes?
You think life insurance is much more expensive than it actually is. Three in four Millennials overestimate the cost of life insurance—sometimes by a factor of 2, 3, or even more! (2017 Insurance Barometer Study by Life Happens and LIMRA) Imagine being able to afford life insurance for the cost of that daily latte, and for less money than your avocado toast habit!
You think you can’t qualify for life insurance. Nothing could be further from the truth, and yet four in 10 Millennials think this is true, according to the same study! Younger candidates have an easier time getting life insurance because they are generally healthier.
You’ll turn to GoFundMe if something goes wrong. In an era where social networking does all things, it’s natural to think that your loved ones can crowdfund their way to solvency after something happens. But life insurance benefits aren’t taxed like GoFundMe proceeds are, and life insurance has a defined, immediate payout that GoFundMe does not. Plus, your loved ones don’t need the stress or the stigma of having to ask others for help.
You’d rather spend that money on other things. In fact, one study recently suggested that many Millennials are more concerned about planning their next night out with a significant other than planning for their financial future. But sensible steps now will make for a better future with that significant other long past tomorrow night’s date.
You don’t care because you don’t have people depending on you for money. Take a look at your student loans. Were any of them private loans? Who is liable for them—in full, often immediately—if something happens to you? There are other debts you may need to consider as well—anything where you have a co-signer.
You keep saying you’ll get around to buying insurance, but don’t. Millennials are getting married, having families! Young families have enough to worry about with daycare costs and increased medical costs, right? Well, imagine what your young family would do about those bills if something happened to you. Could your spouse pay the rent or mortgage without your income?
You tune out when “adulting” gets too hard. One recent college grad recently confessed to me that he hadn’t elected into any of his employee benefits at the dream job he got in his field because “my dad takes care of that.” He was shocked to learn what he was missing out on!
Yes, adulting *is* hard, but a sound financial plan that includes retirement and insurance coverage (health, life, and disability insurance are all part of that plan) goes a long way to making sure that you don’t look back on your younger years and think, “Oh, why didn’t I start this sooner?” Plus, you don’t have to do it alone—that’s what insurance agents are for. They will sit down with you at no cost, or obligation, to discuss what you need and how to get coverage to fit your budget. But then, signing up—that IS on you. Don’t miss out.
By Helen Mosher
Originally published by www.LifeHappens.org
by admin | Mar 21, 2018 | IRS, Retirement
In its March 15, 2018, decision, the U.S. Court of Appeals for the Fifth Circuit overturned the U.S. Department of Labor’s (DOL) Fiduciary Rule that expanded the definition of an investment advice fiduciary under the federal Employee Retirement Income Security Act (ERISA). Under the Fiduciary Rule, investment brokers were going to be required to put the interest of their clients before their own when advising about individual retirement accounts (IRA) and 401(k) plans. Read our blog post on the rule from April 11, 2016.
According to the Fifth Circuit’s decision, “[t]he Fiduciary Rule … bears hallmarks of ‘unreasonableness’ … and arbitrary and capricious exercises of administrative power.” In other words, the court found that the DOL exceeded its authority with the Fiduciary Rule. Additionally, through its ruling, the court agreed with the plaintiffs’ claims that “the Rule is inconsistent with the governing statutes, the DOL overreached to regulate services and providers beyond its authority, the DOL’s imposed legally unauthorized contract terms to enforce the new regulations, the Rule violates the First Amendment, and it is arbitrary and capricious in the treatment of variable and fixed indexed annuities.”
For the time being, the Fiduciary Rule has been overturned, but the issue may be pursued in the U.S. Supreme Court, which has the authority to overturn the Fifth Circuit’s decision.
Originally Published ThinkHR.com
