Communicating the need for additional savings in the face of retiree health benefit cutbacks.

In preparing for retirement, employees need to consider not only their pension benefits but also the challenge of financing their retirement health care needs. Various trends evolving in our society indicate that future retirees will be increasingly dependent on their own retirement savings. Evidence suggests that employees are not fully aware of the significance of health costs in retirement and must be educated to the need to save for retiree health care expenses. This article discusses the issues of Medicare reduction and retiree health benefit cutbacks and the relative communication and education challenges such issues pose to employers.     

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.     

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.     

Engaging employees in health care can contain costs and improve quality

Employers need to do much more to change some of the deep-seated employee attitudes and behaviors that are driving health care costs. This article debunks common employer misconceptions about employees' attitudes and behaviors with regard to health care. It then discusses the results employers can obtain by taking specific initiatives that provide employees with the motivation and resources they need to effectively manage health risks and make informed health care decisions.     

University-Provided Retirement Planning Support and Retiree Financial Satisfaction During Retirement: Differences by Gender, Job Classification, and Planning Behavior

Sound financial planning and financial advice is necessary to achieve retirement income adequacy. The shift from defined benefit to defined contribution pension plans and the recent bankruptcy of Enron Corporation underscore the importance of managing retirement accumulation and liquidation risks. This study analyzes the effectiveness and adequacy of institutional-provided information and advice on employees' retirement planning decisions and their satisfaction with financial resources during retirement. Results suggest that retirement planning should begin earlier in an employee's career and that employer-provided retirement information and advice is a highly valued service. Gender, planning practices, job classification, and age are all significant predictors of satisfaction with financial resources during retirement. Targeting women and union employees with retirement information and advice that focuses on allocating contributions using a balanced portfolio approach should result in significant increases in satisfaction with financial resources during retirement. Regulatory objectives should focus on reducing retirement accumulation and liquidation risks, improving the delivery of professional financial advice to plan participants, and expanding qualified retirement plan choice for all labor force participants. To encourage employer participation in employee retirement planning, employers acting in "good faith" should be federally protected from liability for providing retirement planning information and advice to employees.     

The impact of health care reform on older workers, retirees and employers

The Patient Protection and Affordable Care Act as amended by the Health Care and Education Reconciliation Act of 2010 impacts everyone who uses or pays for the health care system. Among the new law's effects will be changes in older workers' health care choices as they transition from full-time employees to part-time work or other jobs and, ultimately, to retirement, and the retiree health benefit choices facing their employers. This article reviews the major issues surrounding these changes, including those affecting retiree health benefits, benefits for Medicare-eligible retirees and health care options for older Americans not yet eligible for Medicare. The authors conclude that although employers will be reacting in 2010 and 2011 with regard to some issues surrounding FASB ASC 715-60 and the early retiree reinsurance program, employers should consider waiting to make major changes until regulations are issued and the health plans for active employees have been fully vetted.     

Employee communications and health care reform

The Patient Protection and Affordable Care Act (PPACA) has made health care reform a reality. Although many of PPACA's details are still unclear to many employers, and most of the act's major reforms will take effect over the next several years, companies have reason to begin preparing for change and enough information to begin a communications effort with employees. The authors describe a number of immediate actions that employers should take to make the most of their own understanding of PPACA as it develops, as well as help their employee benefits leaders make the most informed decisions about when and how to communicate with employees about the law and its impact on their group health plan coverage.     

Health care spending accounts: a flexible solution for Canadian employers

Flexible benefits plans have grown more slowly in Canada than in the United States, largely because of certain legal and regulatory considerations. Health care spending accounts (HCSAs) provide a cost-effective way for Canadian employers to address the health care benefit needs of a diverse workforce. A flexible health care spending account is a versatile and cost-effective instrument that can be used by Canadian employers that wish to provide a full range of health care benefits to employees. The health care alternatives available through an HCSA can provide employees with an opportunity to customize and optimize their benefits program. Regulatory requirements that an HCSA must meet in order to qualify for available tax advantages are discussed, as are the range of health care services that may be covered.     

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.     

Managing health and welfare plans instead of letting them manage you

The explosive growth and change in the health care provider industry is presenting a considerable challenge to employers that manage these benefits for their employees. Corporate mergers, supportive federal and state legislation expanding benefit availability and access to new consumer markets are a few of the forces changing the shape of the industry. Furthermore, participants are more knowledgeable about their benefit plans and are more vocal about their needs. The authors discuss these challenges and possible solutions for the employer that is attempting to determine how plan delivery and management needs can be served in a way that supports business environment and strategy.     

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.     

A review of ethical considerations in benefits planning

The rising cost of employee benefits and ongoing pressure to improve existing benefits is forcing employers to make difficult decisions. Most employers are truly concerned about the welfare of their employees and attempt to make these decisions in an ethical manner. This article offers practical advice on maintaining an ethical perspective, which the authors contend is necessary to maintain when facing these challenging responsibilities. The article identifies the various stakeholders as well as the necessary steps to consider when attempting to make an ethically sound decision involving employee benefits.     

Retiree health care benefits: strategies for a changing workforce.

Demographic, economic and cultural trends foretell a dramatically different environment for retiree health care coverage. This article will focus on the redesign of retiree health benefits to meet the retirement objectives of employers and employees, anticipate changing demographics, and respond to changes in Medicare and other government initiatives, including the Consumer Bill of Rights. The material will discuss recent design trends, including managed care, and present results of a study the author co-authored for the Kaiser Family Foundation on changes in retiree health plans.     

How aware are employees of their benefits? Findings from two companies

This study examines benefit awareness of employees in two companies. Contrary to previous research, the results show that employees are generally accurate in their perceptions of the benefits available to them. However, the results also show a lack of awareness of unemployment insurance and disability insurance as benefits. In addition, employees were somewhat uncertain regarding costs of benefits to employers. These findings suggest that employers should monitor employee awareness of benefits and target communications to specific problem areas.     

Health care consumerism: engaging the real buyers--employees

Many employers have begun moving toward health care consumerism strategies designed to encourage employees to take more responsibility for their health care and the cost of that care. Recent surveys suggest ways employers can ensure their consumerism strategies succeed in engaging employees and, ultimately, encourage employees to change their behavior. This article describes what those surveys reveal about employer and employee perspectives on consumerism and suggests steps employers can take to align their interests with those of their employees in order to manage the demand for and use of health care.     

Sounds great, but what's in it for me? Helping employees understand their role in the retirement planning process

The communication of retirement plans by employers to their workers has greatly improved, but in many cases still falls short of getting employees to understand their roles in planning for their own retirement. The author states that a well-designed personalized retirement savings education program encourages employees to take ownership of their retirement plan. Three employee profiles are examined in the context of the personalized retirement education process.     

Facing the new facts of retirement income adequacy

A range of new factors is responsible for the current problem with insufficient retirement resources. Changes inside and outside the organization share partial responsibility, as do employee behaviors. In addition, other factors simply have been overlooked as employers and employees think about retirement income adequacy. The authors describe the current situation, discuss the significant risks it creates for both employers and employees and advise employers on what they should do to help employees build a more secure future in retirement.     

A Review of Major Influences on Employee Retirement Investment Decisions

The recent retirement plan debacle of the Enron employees has caused regulators and lawmakers to think about new ways to protect and help retirement plan participants. When investigating participant investment decisions, researchers have traditionally studied the retirement plan characteristics and employee characteristics. More recently, some researchers have extended the analysis to social influences, such as social norms and peer affects. Others have expanded into behavioral finance and examined the role of various psychological biases. This paper combines and summarizes these four sets of influences so that researchers and policy makers can better understand all the influences affecting an employee when making retirement plan contribution and investment decisions.     

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.     

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.