What benefit specialists think about medical savings account options for large firms

Currently, tax-preferred medical savings accounts (MSAs) are being offered on a trial basis to employees of small companies. This article reports results of a survey investigating the potential impact of adding an MSA to a medium- or large-sized firm's employee benefit offerings. The variables examined fall into the categories of attitudes toward views on employee benefits in general, the MSA option and issues associated with risk segmentation.     

Employee contributions: a primer on their use, historical trends and overall fit within benefits strategy

This article focuses on the use of employee contributions as a strategic tool within employee health plans. While most employers require some form of employee contributions for health care, there is no clear "one-size-fits-all" solution. A myriad of strategies are in place, some active and some passive. This article reviews both common and emerging strategies and how they differ based on industry, employer size and region; discusses how employee contribution strategy fits within overall benefits strategy; and provides a strategic framework for approaching employee contributions in the future.     

Impact of Replacing a Defined Benefit Pension with a Defined Contribution Plan or a Cash Balance Plan

Abstract

Four pension plan conversions are examined to determine the impact on retirement benefits of workers. The study was based on interviews with top management, employee surveys, and actuarial analysis of retirement benefits under the old and new pension plans. In general, workers who leave the firm prior to the age of early retirement can expect increased benefits under the new defined contribution and cash balance plans, whereas older, more senior workers can expect to accrue smaller benefits after the plan conversions. Recognizing these potential adverse effects, the employers in our studies provided various types of transition benefits to existing workers or gave employees the choice of remaining in the old defined benefit plan. Employee surveys reveal that younger workers are more supportive of the new pension plans than are older workers. These case studies also indicate that communication by managements with their employees is very important to the successful implementation of plan conversions.     

Empowering the managed care consumer: not as easy as it sounds

Managed care remains one of the most highly publicized issues in employee benefits, with its accompanying controversy causing concern to the consumer and the employer. The authors of this article discuss the very basic things consumers of health benefits should know about their plans in order to be prepared, as well as what they should reasonably expect from employers that sponsor the plans.     

Making a successful transition to cash balance. Using employee choice and financial education

As employee work patterns change, the need for flexible plan design has increased. Hybrid plans such as cash balance plans offer a plan design variation that incorporates elements of the traditional defined benefit plan as well as those of defined contribution plans. This article examines plan design trends and discusses both negative and positive reactions to those trends. Finally, the solution of offering choice to plan participants is suggested, and the issues that must be considered are discussed.     

Building a culture of personal benefits responsibility

Successfully having employees take personal responsibility for their benefits plans requires going beyond the rapid rollout of new benefit plan designs; it requires employers to invest in understanding the complexity of their workforce. This article reviews the evolution of benefit plans and what has arisen as the current state of employee benefits. It then discusses steps employers can take to build a successful total benefit strategy that recognizes the importance of the emerging workforce's racial, ethnic and cultural diversity.     

Insurance Company Employees' Financial Expertise and Practices: Implications on Benefit Participation and Satisfaction

Employers continue to shift financial decision-making responsibility for employee benefits to employees. This article examines employees' financial practices, financial expertise, and levels of benefit participation and overall satisfaction. We show that there are significant differences in employees' financial practices and financial expertise based on socio-demographic characteristics. While levels of benefit satisfaction and employer ranking are high, significant differences in how employees feel toward their employer exist. Employees more highly value traditional benefits than nontraditional benefits, but satisfaction with benefits was high regardless of take-up rate. We also find that respondents are more knowledgeable over experiential financial concepts than more specific financial concepts like qualifying conditions for a traditional individual retirement account. Employer-sponsored financial education programs, which increase employee understanding of employer-provided benefits and their importance to employees' financial well-being, should improve overall employee satisfaction, loyalty, and productivity.     

Direct provider contracting: one employer's experience.

Employers and unions typically offer an array of health care options to their plan participants including many managed care options. However, until recently, few have considered contracting directly with an integrated delivery system (IDS), therefore circumventing health plans altogether. This article offers a case study of one employer's experience with direct IDS contracting, including employee contribution strategy, benefits design and evaluation of the delivery system.     

Reporting to Employees: Identifying the Areas of Interest to Employees

This paper identifies the areas of information of interest to employees and the attitudes of accounting executives and employees towards what information was considered to be of interest to employees. Accounting executives felt that employee informational needs were limited to their job security and short-term material benefits from employment. Employees, on the other hand, indicated that their informational needs were far greater and related to their job security, financial matters affecting them, their conditions of employment, and the organizational structure of their employee companies.     

Communicating the new benefits deal

Communication is critical to changing employees' attitudes toward increased responsibility for benefit decisions and health and wellness. As employers shift responsibility, they not only must provide the right decision-making tools; employers must also maintain a safety net for those who don't want the responsibility. This article discusses the experience of four organizations that implemented the "new deal" of increased employee responsibility while also balancing employee needs.     

Employee responsibility in benefit change

If employers want to move employees beyond superficial acceptance of benefit changes, organizations need to increase the focus on how they manage the change process and support employee decision making. This article describes how employers can help workers understand changes and, through effective change management and communication, successfully navigate in an evolving benefits world. Using recent survey research about large employer and employee attitudes, the authors demonstrate tangible proof that these efforts pay off, both in financial and cultural terms.     

The Influence of Culture on Pension Plans

It is widely recognized that culture is a dimension affecting a vast array of management and social choices. However, we know little about the effect of culture on choices that combine both business and social issues in an accounting setting. Employee benefit choices by managers reflect both the business choices of a firm in the selection and retention of employees and social choices in the type and extent of benefits provided to employees. The objective of this study is to investigate the extent to which culture affects employee benefits as manifested in pension plans. In a comparison of plans that differ according to the home country of the parent firm and are offered in the regulated environment of the United States, results indicate an effect of culture on pension plan choices. In particular, culture plays a role in determining the funding level percentage of the plan, employer contributions receivable, and revenues received or receivable from employers.     

Adopting hybrid pension plans: financial and communication issues

This article provides a systematic framework for the evaluation of the movement toward hybrid pension plans by examining the reasons given by firms for converting their existing pension plans to hybrid plans, illustrating the impact of plan changes on expected pension benefits, and identifying winners and losers.     

Adoption and Benefits of Management Accounting Systems: Evidence from Finland and Australia

This study provides empirical evidence on management accounting practices in Finnish manufacturing companies. It identifies the adoption of the management accounting practices, received benefits from the adoption and intentions to emphasize the practices in the future. The results indicate that financial measures like product profitability analysis and budgeting for controlling costs is likely to be important in the future, but it is also clear that greater emphasis will be placed on newer practices like customer satisfaction surveys and employee attitudes. The results of the management accounting practices are compared to the findings of a similar study based on Australian data.     

Religious beliefs, gambling attitudes, and financial market outcomes

This study investigates whether geographic variation in religion-induced gambling norms affects aggregate market outcomes. We conjecture that gambling propensity would be stronger in regions with higher concentrations of Catholics relative to Protestants. Consistent with our conjecture, we show that in regions with higher Catholic–Protestant ratios, investors exhibit a stronger propensity to hold lottery-type stocks, broad-based employee stock option plans are more popular, the initial day return following an initial public offering is higher, and the magnitude of the negative lottery-stock premium is larger. Collectively, these results indicate that religion-induced gambling attitudes impact investors' portfolio choices, corporate decisions, and stock returns.     

The technology of benefits outsourcing: helping employees help themselves

The exponential growth of health plan offerings and increased use of defined contribution retirement plans has caused a fundamental shift in the way that benefits management is done. Specifically, the authors point out that we are moving into an era of "self-service" in employee benefits, with employees often taking the role of management of their own benefits through use of technology. Outsourcing benefits management through the use of technology has meant the role of HR departments has shifted from personnel administrators to strategic business partners. By outsourcing administrative functions and maximizing the power of new interactive technology, human resource departments are able to focus on the strategic needs of the company to adapt to the challenges of the future.     

Global added value of flexible benefits

Flexible benefits, or "flex," is a strategic human resources solution that can give companies a truly competitive edge in winning the global war for talent and containing costs. Several companies in Asia plan to implement flex in the next few years, and a number of emerging best practices in flexible benefits design are being developed. This article discusses the many advantages of flex, flex best practices emerging across Asia, and important considerations for employers when designing flexible benefits. Finally, the author shows how one global company in Singapore found flex to be an effective differentiator for attracting and retaining talent as well as helping manage employee health care costs.     

Evaluation of student feedback

We examine a flexible assessment system that allows students to determine the weights allocated to each course component and to re-allocate the weights in response to achieved scores. The flexibility is intended to encourage students’ participation in the learning process, thereby promoting self-regulated learning skills. We compare this assessment system to a traditional system and to another system, in which the students may choose their own weights but cannot change them later in the term. We examine the impact on students’ motivation as measured by the Motivated Strategies for Learning Questionnaire (MSLQ), as well as the impact on grades and students’ attitudes. Our results indicate little improvement in motivation, grades or attitudes when students design and commit to their grading plans early in the term. However, the more flexible system, which allows for re-allocation, appears to improve students’ grades, self-reported motivation and attitudes.     

Can managed care reduce employers' retiree medical liability?

The Financial Accounting Standards Board (FASB) has forced U.S. companies to look squarely at their current retiree health obligations and their future commitments. Accounting Statement No. 106 (FAS 106) requires employers to accrue liabilities for retiree health benefits during employees' active service, rather than record the costs as benefits are paid. Employers are scrambling to find ways to reduce the statement's effect on corporate balance sheets. While managed health care has been increasingly employed to control benefit costs in active employee health plans, it has not been as popular in retiree plans. This article reviews important demographic and health trends in the retiree population and summarizes employers' early responses to FAS 106. It explores why managed health care has thus far played a limited role in reducing employers' postretirement medical liability, and offers insight into how that role could be increased in the future.