Tuesday, November 25, 2014

Recapping the Hot Human Resource Trends of 2014

In the beginning of January 2014 Astron Solutions released a white paper entitled, “2014’s Hot Human Resource Trends”.  As we forge on into 2015, in this issue of Astronology we’ll recap those predictions…and how they’ve played out this year.

Trend #5: Decline in Unpaid Internships
As we suspected, 2014 saw an explosion in lawsuits. In January 2014, Elite Model Management settled with former unpaid interns. In October of this year NBC Universal closed a $6.4 million settlement with their unpaid interns. Lastly in November, Condé Nast settled with their former unpaid interns to the tune of $5.8 million. This lawsuit also ended with Condé Nast terminating its internship program. As mentioned in the white paper, The U.S. Department of Labor, Wage and Hour Division, has a fact sheet describing what an FLSA compliant unpaid internship program should include. Make sure your for-profit organization is in compliance with these before offering any unpaid internships in 2014.”

Trend#4: Immigration Reform
Immigration reform is continuing to be a concern for policy makers. As of this writing, we are awaiting possible adjustment to current immigrations laws. Human Resource professionals need to stay informed in order to ensure their organizations have the talent necessary to success in the short- and long-terms.

Trend #3: Application of the United States vs. Windsor Ruling
In our white paper we mentioned: “Application of this decision will follow into 2014, as many organizations will be faced with interpretation and implementation matters. Make sure you are aware of how the decision impacts compliance and payroll matters, such as those related to FMLA leave administration, payroll taxes, Federal income taxes, tax-qualified retirement plans, group health plans, COBRA, and immigration practices.”  States like Utah found themselves dealing with appeals that halted marriage license issuance in 2014. However, as of October 6, 2014, the Supreme Court refused this appeal. Human Resource professionals should make it a goal to stay informed in the area of state application of same sex marriage laws, as well as the federal application, into 2015.

Trend #2: The Affordable Care Act
Many human resource conferences have covered the impact of the Affordable Care Act and associated updates. In 2014, these updates included increasing the small business tax credit, and determining what type of healthcare your organization can provide. These issues will only become more complicated in 2015.  Does your organization have a trusted benefits broker, legal counsel, or other source of information to ensure on-going compliance with the evolving ACA?

Trend #1: Gamification in Human Resources
In an upcoming white paper from Astron entitled, “Using Gamification in Total Rewards Design,” Astron Solutions will outline the benefits of using gamification in your total rewards program, as well as possible applications. According to the Forbes.com article, Gamification Gets Down to Business, “It is estimated that by 2016, over 70% of Forbes’ Global 2,000 companies will have some form of gamification in their business.”

Have you seen some of these trends pop up in conversation in your organization? Write Astronology about it and we may feature your input in a future article.

Tuesday, November 11, 2014

Supplemental Individual Disability Insurance: An Essential but Undervalued Benefit for Higher Paid Employees

By guest author, Robert Trobe of Crystal & Company

Disability insurance is one of the four most important employee benefits including medical, retirement, and life insurance. Inadequate disability coverage can cause devastating financial consequences if an individual were to suffer a prolonged or permanent illness or injury, yet it is frequently undervalued in the hierarchy of employee benefits. This occurs largely because employees do not expect to become disabled.  Yet one in three Americans between ages 35 and 65 will become disabled for more than 90 days (Statistics, Social Security Administration). Group sponsored Long Term Disability (LTD) plans are often capped at a benefit of $10,000 or $15,000 per month, do not cover non-salary cash compensation, and are frequently taxable, leaving higher paid employees particularly exposed to risk.

Employers can mitigate the risk for higher paid employees through a group sponsored supplemental Individual Disability Insurance (IDI) program. An IDI program can provide a critical benefit to employees in organizations with a significant number of higher paid earners whose total compensation, including cash bonuses and commissions, is not adequately protected under a conventional Group LTD plan. IDI can be provided on a “guaranteed issue” basis on top of a Group LTD plan to cover any gap.

Crystal & Company, a privately owned insurance broker and consultant, has successfully implemented IDI programs for a number of clients providing the following advantages.
Key Advantages for Higher Paid Employees
An employer sponsored IDI Program can provide essential coverage to higher paid employees including the following:
   Protection of a significant portion of their income stream including salary, bonuses, and commissions in the event of disability
   Guaranteed Issue basis if certain conditions are met, which eliminates
·         Invasive medical exams
·         Physician statements or review of medical records
·         A review of tax filings
·         Examination of net worth
·         Personal history interview
·         An extensive insurance application
   Coverage defined on an “own occupation” vs. the more general “any occupation” basis, which may not apply to an employee’s specific job duties as an attorney, chief financial officer, VP for human resources etc.
   “Portable” coverage that remains in effect if the employee leaves the organization
   Significant group discount compared to individual retail rates
   Tax-free benefit if paid by employee with after-tax income
   Fixed rates guaranteed not to change up to age 65                                                                              
Key Advantages for the Employer:
IDI programs can be used by the employer:
   As a key recruitment and retention tool for senior and middle management staff
   To deter a higher paid employee from returning to work too early due to financial hardship
   To provide a choice in how to offer the program:
     As a voluntary employee-paid benefit at no cost to the employer
     As a non-contributory employer-paid benefit with a significant group discount
     As a “hybrid-paid” benefit where the premium is shared by employer and employee
   With no significant commitment of HR staff resources to implement or administer

How is it Implemented?
Supplemental IDI is available through select insurance carriers including MassMutual, UNUM, and MetLife among others. It can be implemented with the assistance of a broker/consultant and requires limited resources from often overtaxed human resource departments. The enrollment normally occurs after bonuses are paid, but generally not during open enrollment for health and other benefits. A robust communication and education effort conducted by the IDI carrier and the broker/consultant, under the direction of the employer’s HR department, is integral to a successful implementation. The plan includes individual consultation and online and telephonic enrollment.

Will this Benefit My Employer and Higher Paid Employees?
In general, an employer willing to pay for the coverage needs only 10 or more employees to obtain an IDI offer. If the program will be paid by the employee, and thus be voluntary, there should be at least 50-75 employees each earning more than $75,000 in total compensation.

What Should I do if interested in Supplemental Individual Disability Insurance?

For an initial assessment of the feasibility and value of such a program or for questions on this article, please contact Robert Trobe (robert.trobe@crystalco.com or 212.504-5960).

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