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In This Issue
Important January Reminders
Employee Addresses:
W-2’s will be mailed this month. Please remind your employees to submit any address changes to us. If they participated in Open Enrollment, new benefits information will be sent out as well. We want to ensure it is sent to the correct mailing address.
Payroll Deductions for Benefits:
Please remind employees to check their benefit deductions to verify that:
- They are being deducted for the coverage in which they enrolled.
- The rates for that coverage are correct.
The HIRE Act payroll tax exemption, which granted an exemption from the employer's 6.2 percent share of Social Security tax on wages paid to qualifying newly hired employees, was only effective for wages through December 31, 2010.
The second element of the act - the HIRE Act retention credit for a retained qualified employee during the 52 consecutive week period - can still be claimed. However, the credit applies only for workers hired after February 3, 2010, and before January 1, 2011. The 52-week retention period starts on the date of hire.
For more information call
eESI at 888-465-1171. Read More
Senators voted 61-35 — six votes short of the necessary 67 — to reject an amendment by Sen. Mike Johanns (R-Neb.) that would strip a provision from the new healthcare law that requires businesses to report supply purchases of $600 or more with a single vendor. Likewise, the chamber voted 44-53 to defeat Sen. Max Baucus' (D-Mont.) amendment, which would accomplish the same provision but is unpaid-for. That amendment also required 67 votes. Read More
Premiums for employer-sponsored family health insurance increased an average of 41 percent across states from 2003 to 2009, more than three times faster than median incomes, and Maryland's rise was among the highest, at 50 percent, according to a report to be released Thursday by the Commonwealth Fund. Read More
The results of a new survey reflect employers' belief that the new law will fuel health care inflation since several provisions— including the extension of coverage to employees' adult children up to age 26, eliminating lifetime dollar limits and fully covering preventive services—kicked in Jan. 1 for many companies.
Read More
WASHINGTON—Senate Democrats accused McDonald's Corp. of offering hourly workers a bad deal on health insurance, prompting a strong defense from a top McDonald's executive who disclosed fresh details about the chain's benefits.
The exchanges came at a hearing Wednesday that was part of a Senate committee investigation into "mini-med" insurance policies, a type of limited health plan favored by retailers and restaurant chains. The investigation came after McDonald's warned federal regulators the company could drop its health-insurance plan for nearly 30,000 hourly restaurant workers unless regulators waived a new requirement of the U.S. health overhaul dictating how much its insurance carrier spends on medical care. Read More
Know It to Win It
Congratulations to Carmen from Houston ! She correctly answered November’s Know It To Win It contest question.
Send the correct answer to eESINews@eesipeo.com within 5 business days from the PeopleTalk release date and you will be entered into a drawing for a prize. Following the drawing, we will contact the winner to verify their contact information and reveal the prize for delivery.
January's contest question is the following:
What did Senator Kay Bailey Hutchison of Texas call the $2,000 annual benefit cap for the McDonald's plan?
Remember, please send your answer to eESINews@eesipeo.com.
In addition, if you know someone who would like to start participating in the PeopleTalk / Know It to Win It contest, have them enter their winning answer too.
Good Luck to All!
If you missed a previous release or simply want to review an article of interest, all our PeopleTalk newsletters have been archived. Read More
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OTC Drugs Require Prescriptions for Account Reimbursement
Saving cash on over-the-counter (OTC) drugs has just gotten tougher for employees with tax-advantaged health accounts, including flexible spending arrangements (FSAs), health reimbursement arrangements (HRAs) and health savings accounts (HSAs). The Patient Protection and Affordable Care Act (PPACA) requires account holders to have a prescription for an OTC drug to qualify for account reimbursement and preferred tax treatment starting this month.
Insulin and OTC medical devices and supplies are exempt.
Robert Zirkelbach, spokesman for America's Health Insurance Plans, sees the new ruling as flawed.
"Now those with tax-favored accounts need to take the time out to see a physician for a daily medication, clogging doctor's offices when there is already a primary care physician shortage and promoting the use of more costly prescription drugs," he says. "The changes are adding unnecessary costs to the system."
In order for tax-favored account holders to receive reimbursement from their tax-advantaged accounts for OTC drugs, they will need to pay out-of-pocket and submit a prescription and receipt for the purchase. FSA/HRA debit cards can still be used for a drug transaction according to recently updated rules, and consumers may purchase health-related products, such as bandages and thermometers. Consumers must follow the new rules carefully because account withdrawals for payment of non-qualifying medical expenses will be reflected in an employee's gross income and subject to an additional tax of 20%.
A written or electronic order for a drug that meets the legal requirements of a prescription in the state in which the medical expense is incurred and that is issued by an individual who is legally authorized to issue the prescription is required. A simple doctor's note will not suffice for the tax benefit.
David Goldfarb, founder and principal, DSG Benefits Group, an employee benefits brokerage and consulting firm headquartered in Dallas, anticipates that the new ruling may make tax-advantaged accounts less desirable and will undoubtedly have a cost impact on both employees and payers through an increase in premiums.
401(k) Contributions Rise, as Do Concerns over Social Security
Contributions to 401(k) plans increased in 2010, underscoring increased efforts by American workers to improve their financial well-being, according to the Principal Financial Well-Being Index.
The index, which surveys American workers at growing businesses with 10 to 1,000 workers and retired Americans, is released quarterly by the Principal Financial Group, a financial services provider. In the fourth quarter 2010 index survey:
• 85 percent of U.S. workers who are eligible for defined contribution retirement plans reported that they are participating, up from 81 percent of workers in the fourth quarter of 2009.
• When asked what changes they have made to their 401(k) account because of economic conditions, 18 percent reported that they have increased their contributions vs. 13 percent a year earlier.
Meanwhile, 45 percent of workers and 43 percent of retirees are very concerned or extremely concerned about the future of Social Security. In addition:
• While a third of retirees (32 percent) view Social Security as their primary source of income, nearly half (48 percent) said it is a secondary source of income.
• Significantly, 69 percent of those working today expect Social Security to be a secondary source of retirement income.
When asked how they would manage if Social Security were to fail, 46 percent of workers said they would remain in the workforce longer, up significantly from 40 percent in the fourth quarter of 2007, the last time the survey question was asked. Twenty percent said they would phase into retirement, down from 26 percent in 2007, and another 14 percent said they would lower their standard of living, an increase of 4 percentage points over 2007.
"With mounting worries about Social Security, it appears that fewer workers are staking their future on the system and are considering alternatives, which for many means putting more money in a defined contribution plan," said Luke Vandermillen, vice president of retirement and investor services at The Principal. "On a positive note, it may be a sign the economy is improving that some workers are comfortable increasing their 401(k) contributions instead of dipping into retirement savings to cover daily expenses."
The fourth quarter index survey of 1,159 U.S. employees and 528 retirees was conducted October 2010.
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