1. HUMAN CAPITAL PRACTICE
HRFocus
March 2012 — Issue 57 www.willis.com
LEGAL &
COMPLIANCE
DOL ISSUES GUIDANCE ON
USE OF MLR REBATES
New guidance from the Department of Labor (DOL) states that, if the
insurer providing benefits under an ERISA group health plan pays a
medical loss ratio (MLR) rebate to the plan sponsor, that rebate may
be a plan asset and the plan sponsor would be required to comply with
ERISA’s fiduciary responsibility rules in handling the rebate. The
guidance, Technical Release 2011-04, explains whether and how the
rebate should be shared with participants in various situations,
emphasizing that the documents explaining the plan are crucial to
determining a sponsoring employer’s obligations.
BACKGROUND
Insurers are responsible for complying with the MLR provisions of
the health care reform law. Very generally, insurers are required to file LEGAL & COMPLIANCE
an MLR report with the Department of Health and Human Services DOL Issues Guidance on Use of MLR
(HHS) each year, explaining the ratio of total premium collected Rebates 1
compared to the cost of providing the insured benefits. If the MLR for California Amends Insurance Law
a plan year is below a specified level, the insurer must provide a rebate Affecting Domestic Partners 4
to each enrollee. Satisfying the MLR requirements is based on the Illinois Tax Code Changes 4
insurer’s entire book of business issued in a state. It is not based on
the MLR of an employer-specific plan. Insurance companies will have Massachusetts Releases 2012
to pay rebates for 2011 by August 2012. Of course, this issue affects Individual Mandate Penalties 5
only insured plans that provide health benefits. Self-insured plans Checking in on Backgrounds 5
generally would not receive MLR rebates.
Since You Asked 7
ERISA PLANS WELLNESS
If an insurer paid any required rebate directly to enrollees (e.g., Step Up to Wellness 8
participating employees), this provision would be of little concern to HR CORNER
employers. Under HHS regulations that implement the MLR The Future Lies in Flex Scheduling 9
standards, however, insurers are to pay any rebates owed to enrollees Employee Loyalty Not Recession-Proof,
under a group health policy to the policyholder. In the case of an Says MetLife Study 11
insured group health plan, this means that the sponsoring employer
WEBCASTS 13
would receive the rebate payment. The insurer is allowed to enter into
an agreement with the group policyholder to distribute the rebates on CONTACTS 15

2. behalf of the insurer (although the insurer still
retains responsibility).
Technical Release 2011-04 confirms that an
employer receiving a rebate payment may
incur liability under ERISA in connection
with its handling of the rebate. In most cases,
the rebate payment will be a plan asset and the
employer would be required to comply with
ERISA fiduciary provisions for handling that
plan asset. In other words, employers
receiving MLR rebates should not assume that
they can just keep such amounts. It may be
necessary to apply them for the benefit of plan
participants.
ERISA will require the employer to apply or
expend plan assets consistent with its would be attributable to participant contributions and the rebate
fiduciary duties. ERISA directs plan would be allocated accordingly.
fiduciaries to act prudently, solely in the
interest of the plan participants and While a discussion of ERISA’s trust rules are beyond the scope of this
beneficiaries, and in accordance with the article, such rules generally require that plan assets be held in a
terms of the plan. In general, ERISA requires separate trust by one or more trustees. However, several exceptions
plan fiduciaries to ensure that plan assets are or non-enforcement policies regarding the ERISA trust requirement
applied exclusively for the benefit of plan apply to certain ERISA welfare plans. Due to the application of a
participants or for defraying the reasonable non-enforcement policy (Technical Release 92-01), many insured
costs of plan administration. The employer’s plans with participant contributions do not have a trust. Technical
first step, therefore, will be to determine the Release 2011-04 makes similar trust relief available in regard to
extent to which any rebates are considered MLR rebates and provides that the DOL will not assert a violation
plan assets. This determination will be based of ERISA’s trust requirement against plans receiving rebates that
on a variety of factors, including the terms of do not otherwise maintain a trust, as long as the rebate is used to pay
the governing plan documents. This will premiums or refunds within three months of receipt of the rebate.
require a careful review of the terms of the The plan sponsor may be able to avoid the trust requirement if it
plan to determine to what extent rebate directs the insurer to apply the rebate against future participation
payments are addressed. If the plan contributions or benefit enhancements.
documents do not resolve the issue of how to
properly allocate the rebate, the portion of a With respect to terminated ERISA plans, Technical Release 2011-04
rebate that is attributable to participant advises plan sponsors to comply with ERISA’s fiduciary provisions in
contributions would generally be considered the handling of rebates that it receives, including looking to the plan
plan assets. For example, if the participants document to determine how assets of the plan are to be allocated
and the employer each paid a fixed percentage upon termination. ERISA provides that the assets of an employee
of the cost of the insurance coverage, a welfare benefits plan that terminates must be distributed in
percentage of the rebate equal to the accordance with the terms of the plan (to the extent the plan terms
percentage of the cost paid by participants are consistent with ERISA and following the terms of the plan would
not violate any other applicable federal law or regulation).
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3. pLans noT sUBJeCT To eRisa
Plans that are not subject to ERISA are not directly affected by this DOL guidance. HHS
released interim final regulations on MLR rebate requirements specifically for non-federal
governmental plans. These rules provide that the policyholder must use the subscriber portion
of the rebate, at the option of the policyholder, in one of the following ways:
n To reduce subscribers’ portion of the annual premium for the subsequent policy year for
all subscribers covered under any group health policy offered by the plan
n To reduce subscribers’ portion of the annual premium for the subsequent policy year for
only those subscribers covered by the group health policy on which the rebate was based
n To provide a cash refund only to subscribers that were covered by the group health policy
on which the rebate is based
In all three options, the rebate is used to reduce premiums or is paid to subscribers enrolled
during the year in which the rebate is actually paid, rather than the MLR reporting year on
which the rebate was calculated. The reduction in future premium or the cash refund, at the
option of the policyholder, may be:
n Divided evenly among such subscribers
n Divided based on each subscriber’s actual contributions to premium
n Apportioned in a manner that reasonably reflects each subscriber’s contributions to
premium
Regarding plans that are not ERISA or non-federal government plans (e.g., church plans),
HHS’ final rules on the MLR requirements provide that rebates may only be paid to the
policyholder if the issuer receives a written assurance from the policyholder that the rebates
will be used in accordance with the rules for non-federal government plans. Otherwise, the
issuer must distribute the rebate directly to the subscribers of the group health plan covered
by the policy during the MLR reporting year on which the rebate is based by dividing the entire
rebate, including the amount proportionate to the amount of premium paid by the
policyholder, in equal amounts to all subscribers entitled to a rebate without regard to how
much each subscriber actually paid toward premiums.
If the group health plan has been terminated at the time of rebate payment and the issuer
cannot, despite reasonable efforts, locate the policyholder whose plan participants or
employees were enrolled in the group health plan, the issuer must distribute the rebate
directly to the subscribers of the terminated group health plan by dividing the entire rebate,
including the amount proportionate to the amount of premium paid by the policyholder, in
equal amounts to all subscribers entitled to a rebate without regard to how much each
subscriber actually paid toward premiums.
ConCLUsion
As the calculation of MLR will be based on an insurer’s book of business rather than a
particular group health plan’s experience, there is a good chance that an employer, particularly
in the large group market, will not receive an MLR rebate. Regardless, employers should be
prepared to address the distribution of rebates. For an employer whose plan is subject to
ERISA, this means a careful review of plan documents. All employers, whether ERISA applies
or not, should familiarize themselves with the MLR requirements, discuss with the carrier its
procedures for distributing rebates to policyholders and establish a process for distributing
rebates to plan participants in accordance with applicable law.
3 Willis North America • 03/12

4. CALIFORNIA AMENDS BaCKgRoUnD
The general rule when it comes to insurance is
INSURANCE LAW that each state is given regulatory authority
AFFECTING DOMESTIC over insurance carriers licensed and doing
business within the state’s borders and over
PARTNERS those insurance policies that are filed with the
state’s department of insurance for sale in
On October 9, 2011, California Governor Jerry Brown (D) signed the that state. A state generally would not have
Insurance Nondiscrimination Act (SB 757). The law, effective direct authority over insurer contracts that
January 1, 2012, amends the state’s extraterritorial provision as it are filed for sale in another state or over
relates to state law insurance requirements for domestic partners. policies that are sitused in another state. This
rule can be blurred if the policy originating
Prior to this amendment, a policy or certificate of health insurance from one state covers the residents of another
marketed, issued or delivered to a California resident, regardless of state, which is not an uncommon occurrence
the situs of the contract or master group policyholder, was generally with group plans in today’s market. If a state’s
subject to California insurance law. However, there was an exception insurance laws are drafted to be
for a policy issued outside of California to an employer whose “extraterritorial,” then the state’s insurance
principal place of business and majority of employees were located laws are applied to its residents regardless of
outside of California. Due to the Insurance Nondiscrimination Act, where the insurance policy is sitused. This
California insurance law now provides that any group health care means that if a policy is sitused outside of
service plan contract and any group health insurance policy that is Pennsylvania but covers residents of
marketed, issued or delivered to a California resident must comply Pennsylvania, then those residents must be
with California’s insurance requirements for registered domestic issued a certificate of insurance that complies
partners. Please note that as this is an insurance law, the obligation with the insurance laws of Pennsylvania.
to comply rests with the insurance carrier.
Under California insurance law, registered domestic partners must
ILLINOIS TAX
be provided with the same access to insurance as provided to spouses CODE CHANGES
(the California Insurance Equality Act, AB 2208, was enacted in
2004). The enactment of the Insurance Nondiscrimination Act On January 31, 2011, Governor Pat Quinn (D)
means that an employer with an insured policy sitused in another signed the Illinois Religious Freedom
state but which covers California residents will be subject to Protection and Civil Union Act (Senate Bill
California’s domestic partner coverage requirements. As this is an 1716). The law, which was effective June 1,
insurance law, a self-insured plan (that is governed by ERISA) will 2011, grants civil union partners in Illinois the
not be affected by this change. “same legal obligations, responsibilities,
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5. protections, and benefits as are afforded or recognized by the law of federal poverty level ($16,755). For individuals
Illinois to spouses.” with incomes between 150.1% and 300% of the
federal poverty level, penalties increase with
Soon after Illinois began allowing civil unions, the Illinois increasing incomes. Penalties for married
Department of Revenue (DOR) released an announcement that said couples who can afford health insurance but
that the law made no changes to Illinois income tax laws and that who lack coverage will equal the sum of the
such laws conformed to federal law for purposes of determining an penalties for each spouse. Information about
individual’s taxable income. This meant that the state tax code did the 2012 tax penalties can be found here.
not confer any tax benefits to civil union partners. For example, the
value of employer-provided benefits for civil union partners would The Massachusetts HCRA was a model for the
be taxable under state income tax laws to the same extent as under federal health care reform legislation, the
federal income tax laws. This ruling would appear to contradict the Patient Protection and Affordable Care Act
intent of the Illinois civil union law to be read very broadly. (PPACA). PPACA also has an individual
mandate requiring individuals to maintain
The DOR has recently changed how Illinois treats same-sex civil unions minimum essential coverage each month or
for tax purposes. Civil union partners are now treated as married for pay a penalty. This requirement is effective
Illinois state tax purposes. The DOR’s announcement provides that if January 1, 2014. Under PPACA, the annual
a taxpayer was in a same-sex civil union as of December 31, 2011, he penalty for not having minimum essential
must file Form IL-1040 using either the “married filing jointly” or coverage will be the greater of a flat dollar
“married filing separately” filing status. Since a same-sex civil union amount per individual ($95 in 2014; $325 in
couple may not file a federal return using a married filing status, the 2015 and $695 in 2016) or a percentage of the
DOR provides the following instructions: individual’s taxable income (1% in 2014; 2% in
2015; 2.5% in 2016). After 2016, the flat dollar
n If the taxpayer and his same-sex partner choose to file a joint amount is indexed to inflation. Generally, the
Illinois return, the taxpayer must complete a federal “as-if- annual penalty is capped at an amount equal
married-filing-jointly” return, for Illinois purposes only. to the national average premium for qualified
n If the taxpayer and his same-sex partner choose to file separate health plans which have a bronze level of
Illinois returns, the taxpayer must complete federal “as-if- coverage available through the state exchanges.
married filing separately” returns, for Illinois purposes only. In March 2012, the U.S. Supreme Court will
hear oral arguments on the legal challenges
The Illinois announcement can be found here. brought against PPACA’s individual mandate.
MASSACHUSETTS CHECKING
RELEASES 2012 INDIVIDUAL IN ON
MANDATE PENALTIES BACKGROUNDS
The 2012 penalties for non-compliance with the individual mandate Many employers do background checks on
under the Massachusetts Health Care Reform Care Act (HCRA) have current employees and job applicants.
been released. Penalties accrue for each month that a taxpayer fails Background checks can be a simple and
to comply with the state’s individual mandate. A lapse in coverage of effective screening tool in a market flooded
no more than 63 days is permitted. (This 63 day rule corresponds with job seekers. At the same time, they can
with federal HIPAA portability standards for maintaining valid become troublesome if all of the rules
“creditable coverage.”) regarding background checks are not
followed. Unfortunately, many employers do
The maximum penalty for tax year 2012 will be $105 a month ($1,260 not realize that they must comply with the
for an entire year of non-compliance) for a person 27 or older with Fair Credit Reporting Act (FCRA) whenever
income over 300% of the federal poverty level ($33,510 or more for obtaining a background report prepared by a
singles in 2012). For 2011, the penalty was $101 a month or $1,212 reporting agency.
annually. For individuals up to age 26 with income over 300% of the
federal poverty level, the penalty will be $83 a month ($996 annually). The Fair Credit Reporting Act (FCRA) imposes
Penalties are waived for individuals with incomes up to 150% of the a number of requirements on employers that
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6. wish to investigate applicants for employment through the use of consumer credit
reports or criminal records checks. This law requires the employer to advise the
applicant in writing that a background check will be conducted, obtain the applicant’s
Furthermore, written authorization to obtain the records and notify the applicant that a poor credit
employers should not history or conviction will not automatically result in disqualification from
employment.
be fooled into
thinking that the Furthermore, employers should not be fooled into thinking that the FCRA is only
applicable to background checks on credit. The law is applicable whenever an
FCRA is only employer obtains a report concerning the individual’s credit, character, reputation,
applicable to personal characteristics or mode of living. Background checks most familiar to
employers include criminal and civil records, credit reports and driving records.
background checks
on credit. The law is Outlined below are summaries of some key steps an employer must take to ensure
compliance with the FCRA.
applicable whenever
an employer obtains n Disclose in writing in a stand-alone document to the employee that he or she will
be the subject of a background report as part of the employment process.
a report concerning
n Obtain the employee’s signed authorization to prepare the background report.
the individual’s FCRA permits this authorization to be combined with the written disclosure.
credit, character, n Upon receipt of the reporting agency’s background report, review and determine
whether any “adverse actions” will be taken based on the report.
reputation, personal
characteristics or l Adverse actions can include but are not limited to not hiring an applicant, not
promoting an employee, not retaining an employee, or any other action which
mode of living. has a negative impact on an individual’s employment.
Background checks l If an adverse action is considered, provide a “pre-adverse action notice”
informing the employee that the employer is considering adverse action based
most familiar to on the background report.
employers include l Provide the employee with a copy of the background report, a copy of the FCRA
document entitled “A Summary of Your Rights under the Fair Credit Reporting
criminal and civil Act” and a reasonable period of time to dispute the information in the report.
records, credit
An employee may contact the reporting agency to dispute any information in the
reports and driving background report. The reporting agency is responsible for re-investigating any
records. disputed items and issuing an updated report to both the employer and employee.
Once an updated report is issued, an employer must again review the updated report
before making a final employment decision. If the employer determines that an
adverse action is still appropriate, the employer must send a notice of adverse action
to the employee. In it, the notice must state: (1) that the adverse action is based on
information in the background report; (2) that the reporting agency did not make the
adverse decision and does not know the basis for the decision; (3) include the name,
address, and toll free number of the reporting agency; and (4) that the employee has
the right to obtain another free copy of her background report within the next 60 days.
The FCRA’s rules are only applicable when an employer uses a reporting agency for
background checks. Thus, an employer who performs background checks on its own is
not affected by the FCRA rules.
Additional information on the FCRA rules governing employee background reports
can be found at the Federal Trade Commission’s website.
6 Willis North America • 03/12

7. SINCE YOU ASKED:
HeaLTH Fsa annUaL saLaRY
ReDUCTion ConTRiBUTion LimiTs anD
non-CaLenDaR YeaR pLans
Currently, the law does not limit how much can be contributed to a
health flexible spending account (FSA) on an annual basis. Such
limits are determined by the plan sponsor and set forth in the plan
document. Effective for tax years beginning after December 31, 2012
(i.e., January 1, 2013), however, the Patient Protection and Affordable
Care Act (PPACA) imposes a $2,500 limit on annual salary reduction
contributions to health FSAs. The limit is indexed for inflation for tax
years beginning after December 31, 2013.
Please note that the limit only applies to employees’ pre-tax salary in regard to amending the plan document and
reduction contributions made to a health FSA (through a cafeteria communicating changes to employees. An
plan). Non-elective employer contributions to health FSAs, such as employer with a non-calendar year plan who
matching contributions, are not subject to the limit. In order for the waits until January 1, 2013 to impose the limit
health FSA to be considered a qualified benefit under the cafeteria may experience problems with the uniform
plan, the cafeteria plan must provide for the annual limit. availability rule given that it could result in
employees having been reimbursed more than
WHaT aRe non-CaLenDaR YeaR pLans they contributed at the time the plan is amended.
To Do?
The National Legal & Research Group has previously communicated Employers could also comply with the
that the $2,500 limit applies on a tax-year basis (i.e., calendar year) requirement by amending the health FSA, prior
rather than plan year (the law’s references to “taxable year,” which for to the commencement of the plan year starting
most employees is the calendar year, appears to make this a calendar in 2012, to make it a calendar year plan and
year limitation). impose the $2,500 limit as of January 1, 2013.
Changing to a calendar year plan would result
For calendar year health FSAs that currently allow employees to elect in a short plan year for the health FSA (the plan
more than $2,500 on an annual basis, addressing the change in the year would end December 31, 2012). Employers
annual limit should be fairly easy to do. However, this raises more should clearly communicate to participants the
significant issues for non-calendar year health FSAs that start in 2012 change in plan year prior to conducting
and end in 2013 (i.e., April 1, 2012 to March 31, 2013). Unfortunately, enrollment to ensure that they take the short
there is currently no guidance from the Treasury/Internal Revenue plan year into consideration when determining
Service on how to administer this change. how much to contribute to the health FSA.
Employers with non-calendar year health FSAs, who will need to Plan documents will need to be amended to
monitor compliance with the annual limit on a calendar-year basis, incorporate changes made to the annual
should decide how to address the annual limit prior to the start of the contribution limit and plan year, and a new
plan year that includes the law’s January 1, 2013 effective date. Doing summary plan description or summary of
this will help prevent an employee from inadvertently exceeding the material modification describing the changes
limit for the 2013 calendar year and beyond. Given the unique to the plan should be distributed to participants.
requirements that apply to health FSAs, such as the uniform
availability rule (the employee’s total election must be available at all ConCLUsion
times during the coverage period) and the use-or-lose rule (elected Please note that this article is not intended to
amounts must be used by the end of the plan year or forfeited), it is address every potential way that could be used
important for employers to decide how to address this issue sooner to comply with the annual limit requirement.
rather than later. Other options may be available to employers,
particularly once guidance is provided, and
One way to comply with this new requirement is to implement the should be discussed with legal counsel. Willis is
dollar limit as of the first day of the upcoming 2012 plan year. monitoring this issue closely and should guidance
Employers may find this option the easiest to administer, particularly become available we will provide an update.
7 Willis North America • 03/12

8. WELLNESS
STEP UP TO WELLNESS
The spirit is willing, but taking that first step is hard. This is especially true when applied to
implementing a worksite wellness program. Often, employers have a sense that they “should
do something about wellness” but they don’t know what that something should be. Or,
perhaps you’ve been given a directive from senior leadership to start a wellness program, but
you have no idea where to begin. Sound familiar? Fear not – here are some simple and time-
proven strategies that will help you get started on the road to a healthier workforce.
1. TAKE STOCK OF YOUR RESOURCES.
What does your carrier partner offer? Do you have a local wellness council? What chapters
of non-profit health agencies are in your community (American Heart Association,
Diabetes Foundation, etc)? Are there any internal resources you can access: a fitness
center, a training department, employees with special skills, a cafeteria with healthy
menu items? Take a few minutes to think through what resources are readily available
to support your program.
2. CONSULT YOUR EMPLOYEES.
The best way to find out what people are interested in is to ask them. Consider implementing
a needs & interest survey, a focus group or other method to collect associate input. When
getting started with worksite wellness it is important to appeal to what people like, as
well as what they need. Engaging your employees at the onset can set the tone that the
program will be customized to employee interests and your organizational culture.
3. CONSIDER NATIONAL STATISTICS.
In the absence of specific data about your population, you can often start by defaulting
to population data, or local/regional published health statistics to guide your efforts.
The Centers for Disease Control and Prevention, The World Health Organization or
your local health department can be good sources of population health statistics.
4. FOCUS ON THE “BIG 3.”
All organizations can benefit by improving levels of physical activity, encouraging healthier
eating habits and supporting tobacco cessation. These three behaviors drive the majority
of chronic conditions that result in health claims. Get ’em moving, show them how to
choose healthy food options and support their efforts to stop tobacco use of all types.
5. THINK FUN!
Most people love to win prizes, and many enjoy some healthy competition with their co-
workers. Sponsoring teams in community fun runs/walks is a relatively easy way to get
started. Many packaged incentive programs are available in ready-to-use kits to make it
easy to plan and implement a behavior change challenge in your organization. Willis
offers many ideas for clients in our “Getting Started with Your Wellness Program” and
“Building a Culture of Health in Your Organization” Employer Guides.
Just do it! Pick one of these ideas and take that first step toward implementing your worksite
wellness program today. You may access the employer guides mentioned on your Willis
Essentials portal, or please contact your Willis Client Advocate® for more information.
8 Willis North America • 03/12

9. HR CORNER
THE FUTURE LIES IN FLEX
SCHEDULING
Would you be surprised to learn that the vast majority of employers in a recent survey
reported offering at least one workplace flexibility program? In WorldatWork’s survey, 98
percent did so. WorldatWork® is a nonprofit membership organization focused on
compensation, benefits, and work/life balance, and survey respondents were nearly 550 of
its members.
WHaT KinDs oF FLeXiBiLiTY?
The survey covered 12 different types of programs: The most commonly used by employers
are flexible start/stop times, part-time schedules (with or without benefits), and ad hoc or
occasional teleworking (to meet a repair person, care for a sick child, etc.). Each of these
three programs is offered to some or all employees in more than 80 percent of surveyed
companies, and they are also the most popular among employees, with flex-time ranking in
first place.
On average, organizations use 6 different programs simultaneously. Which programs are
used by which employers turned out to depend heavily on what sectors the organizations fell
into: For example, compressed workweeks are more prevalent in the public sector (68
percent); part-time schedules are more common among nonprofits (90 percent); and
telework is more frequently offered by publicly traded companies. The least popular
programs among employees are phased return from leave, phased retirement, career on/off
ramps, and job sharing. Overall, there were two big survey surprises: (1) no correlation was
found between the number of programs offered and turnover rates; and (2) a whopping 37
percent, or more than one-third, of organizations offer full-time telework, and one-half offer
it part-time.
LeT’s TaLK moRe aBoUT pRogRam meTHoDoLogY
The majority of organizations, 60 percent, reported that programs are offered very
informally—without employer policies or forms, and at the discretion of individual
managers. Based on lots of other survey findings, it’s difficult to tell whether that’s good or
bad. What seems to be good is that many organizations say flexibility is embedded in their
cultures, and that a stronger culture of flexibility does correlate with lower voluntary
turnover rates. As WorldatWork practice leader Rose Stanley says, “When it comes to
workplace flexibility programs, culture trumps policy. It’s not about the quantity or formality
of programs offered; it’s about how well supported and implemented the programs are across
the organization.”
Note, however, that pitfalls lurk if flex programs are done ad hoc without policies. Where
nonexempt employees work remotely, for example, they must accurately reflect their hours
worked, electronically or on time sheets, and supervisors must trust that those records are
accurate and pay overtime when due. Will employees working at home use their own
9 Willis North America • 03/12

10. equipment, or will the company provide it? If the equipment belongs
to the company, what guidelines exist for its uses and care? Are
workers using furniture that’s ergonomically sound?
Employers should strive to protect proprietary information to which
remote workers have access, with firewalls and other measures.
Remember that if an employee works part-time while away from the
office on Family and Medical Leave, work time cannot count against
the individual’s 12-week allotment.
aDVanTages oUTWeigH RisKs
Stanley believes in flex programs; especially that, if they are part of a
company’s culture, they can significantly enhance recruitment,
Note, however, that pitfalls retention, and employee engagement. Given this sort of freedom,
employees are notably more satisfied, motivated, and loyal to their
lurk if flex programs are done employers. Moreover, stresses Stanley, as work becomes increasingly
ad hoc without policies. Where global, flex scheduling is growing indispensable. How, for example,
nonexempt employees work are employees to connect with colleagues or clients in Europe or Asia
if all U.S. workers are stuck with a 9-to-5 schedule?
remotely, for example, they
must accurately reflect their In addition to the pitfalls mentioned earlier, Stanley believes there’s
another big drawback to informal programs without policies: The
hours worked, electronically or employers who use them will be unable to measure their success;
on time sheets, and supervisors their return on investment. Given good metrics that would quantify
must trust that those records and prove the value of flex, more employers would no doubt
enthusiastically offer more such programs.
are accurate and pay overtime
when due. Will employees Stanley says the best place to start flex programs, or to add to those
working at home use their own you already offer, is to survey your employees about their needs and
wishes. Everyone’s got a different reason for wanting flexibility, she
equipment, or will the company points out: Your youngest workers may want it to perform
provide it? If the equipment community service, the next-older cohort may want it for childcare,
another age group may need it for elder care, and your oldest workers
belongs to the company, what may want to phase gradually into retirement. “And,” she adds, “Flex
guidelines exist for its uses programs can widen your candidate pool by including people with
and care? Are workers using disabilities that restrict their ability to work in an office setting.”
furniture that’s ergonomically BUT TRaining is TRULY BeneFiCiaL
sound? Another finding in the WorldatWork survey is that, just as
employers approach flex programs informally, few of them offer
training in using and managing programs. Training need only be
very basic, Stanley advises, mostly focused on how to maintain
good communication among remote workers and their colleagues
and managers.
This article provided by BLR.
10 Willis North America • 03/12

11. EMPLOYEE LOYALTY BaLanCing THRee BeneFiTs
oBJeCTiVes
NOT RECESSION- The study found that employers’ top three
PROOF, SAYS METLIFE benefits objectives remain the same as last year:
1) controlling health and welfare benefit costs, 2)
STUDY retaining employees, and 3) increasing employee
productivity. However, declining employee
According to MetLife’s 9th Annual Study of Employee loyalty indicates that, without careful evaluation,
Benefits Trends, 47% of employees report feeling very steps to achieve one objective may negate efforts
strong loyalty to their employer, down from 59% just in another area.
3 years ago. Yet many employers may be caught
unaware by this downward trend since they believe “Achieving all three benefits objectives is a
their employees feel the same loyalty toward them skillful juggling act, but an effective balance can
today as they did several years ago. About half (51%) be found. Employers need to look at their
of surveyed employers today believe that their benefits offerings differently – through a new
employees have very strong loyalty to them, and half holistic lens – in order to maximize their
believed the same in 2008. effectiveness as a retention tool for their unique
workforce while meeting other business
While employers of all sizes saw productivity gains objectives,” said Dr. Ronald S. Leopold, vice
over the past 12 months, proving that many were able president, U.S. Business, MetLife.
to “do more with less,” this short-term gain may have
come at the expense of employee loyalty. While 43% The study found that employees who report that
of larger employers (with 500 or more employees) they are very satisfied with their workplace
and 38% of smaller employers (with fewer than 500 benefits are about three times as likely to
employees) reported productivity gains in 2010, more indicate that they are highly satisfied with their
than one-third (36%) of employees hope to work for current job and feel more loyal toward their
a different employer in the next 12 months. employer compared with those who are very
dissatisfied with the benefits program.
"Worker loyalty has been slowly ebbing over the last
several years, and it is important that employers take Among employees who are highly satisfied with
action to turn the tide around. The short-term gains their benefits, 76% report being satisfied with
employers realized from greater productivity appear to their jobs and 71% report feeling loyal to their
be short-lived and now pose bottom-line challenges as employers, compared to only 24% and 25%,
key talent considers other employment opportunities respectively, for employees who are very
that have arisen as a result of the improving economy,” dissatisfied with their benefits.
said Anthony J. Nugent, executive vice president, U.S.
Business, MetLife. “There is no doubt that the Understanding some of the factors motivating
rebounding economy will bring more opportunities for employee loyalty is key. Salary and wages
employees, especially the high performers. A well- continue to be the most important drivers of
architected benefits offering will play an increasingly employee loyalty, which employers recognize,
important role in retaining employees and positioning but there is significant lack of awareness of how
organizations for future growth.” other benefits are also driving loyalty.
11 Willis North America • 03/12

12. For example, while 38% of surveyed use social media plan to implement use in the coming
employers believe retirement benefits year—barriers seem minimal. Only:
are important loyalty drivers, 64% of
surveyed employees say they are. n 37% of employers said they did not have the resources
Similarly, 37% of employers said non- to implement social media communications
medical benefits such as dental, n 25% of employers did not think employees would use it
disability, and life insurance are n 23% of employers said they had legal concern
important factors in employee loyalty, n 15% of employers said they would have technical
while 59% of employees said they are. support challenges
CommUniCaTions anD “While a third of employers in the study said that changing
THe geneRaTions employee communications is simply not a current priority,
Employees have disparate preferences effective communications can make the difference between
when it comes to benefits benefits that are understood and valued, and benefits that
communications, indicating a need for a are overlooked and underutilized.
multi-faceted approach. According to the
study, more than half (55%) of all Communicating effectively is related to improved benefits
employees do not find their benefits satisfaction, job satisfaction and loyalty,” said Dr. Leopold.
materials to be clear and comprehensive, “Efforts do pay off. Among employees who said that their
and only about one in four is satisfied employer improved communications over the past year,
with his/her benefits communications. 65% felt their employer was loyal to them, compared to 33%
Employees say they would like to see: of employees overall.”
n More frequent communications HoLisTiC HeaLTH: FinanCiaL
(34%); WeLLness
n Information tailored to life events Since employee lifestyle choices contribute significantly to
(39%); and healthcare costs, disability costs and productivity, it is not
n Benefits information on the internet surprising that the number of employers offering wellness
(44%). programs continues to grow. Overall, surveyed employers
offering wellness programs climbed from 37% in 2009 to
While 70% of employers say they do not 45% in 2010. Among larger employers (500 or more
use social media, there is an appetite employees), that percentage has grown from 61% in 2009 to
among younger employees for receiving 72% in 2010. Nearly three out of four employers (72%) that
information in this way. The study found offer wellness programs say they are effective at reducing
that 42% of Gen Y employees and 38% of medical costs.
Gen X employees would be interested in
accessing/receiving benefits information Taking a holistic approach to employee health is a way to
through social networking sites (as address financial health as well. The recession has left
compared to one in 10 Baby Boomers). symptoms of “financial illness” in its wake. The stress of
struggling with financial concerns can take a physical toll
Similar percentages of Gen Y and Gen X on employees, contributing to health-related costs, and
employees are interested in having decreases in employee productivity. The study shows that
information available through mobile employees who say they are not in control of their finances
devices. Although social media use among are more likely to report poor health.
employers seems slow in adoption—only
8% of employers who do not currently For instance, 68% of employees who say they are in very
good or excellent health say they are also in control of their
12 Willis North America • 03/12

13. finances, compared to just 7% of employees in fair or
poor health. Employees are clamoring for help; 52%
report being interested in receiving financial advice
and guidance through the workplace, and this increases
to 81% among those who acknowledge that financial
concerns have impacted their workplace attendance
or productivity.
ReTiRemenT: empLoYees neeD
a map, DiReCTions
When it comes to retirement planning, both now and in
the future, employees need both guidance and access to
WEBCASTS
protection. Over 60% of Baby Boomers indicate they are
behind in saving for retirement. Only one in five younger
Boomers (ages 46 to 54) and one in four older Boomers ANNUAL HEALTH &
(ages 55 to 65) say they have achieved, or are on track to
achieve, their retirement savings goals. Over half of PRODUCTIVITY
employees, including those on the cusp of retiring, are
not confident that they know how much annual income
SURVEY FINDINGS:
their savings will generate once they retire and many are WORK & LIFE –
not doing the calculations to find out.
THE DELICATE
Why? Many fear the news will not be positive; four out of BALANCING ACT
ten Boomers don’t think they will have the money they
will need. Three in ten Boomers say they don’t know how maRCH 20, 2012
to determine the figure needed. Nearly three-quarters of 2:00 pm easTeRn
employees across all generations (73%) are interested in
receiving help from their employers in the form of presented by:
retirement and financial planning advice. Jennifer C. Price, MS, RD, CWPC,
Regional Wellness Consultant,
The study also found that approximately half of Human Capital Practice
employees who are behind in saving for retirement are
interested in their employer automatically enrolling Try as we might, it is impossible to completely
them in a savings program such as a 401(k). disconnect from our lives outside of work
when we arrive at work each day. As a result,
In addition, employees have expressed an interest in many employees come to work struggling with
receiving some, or all, of their retirement income in issues such as finding or affording reliable
the form of guaranteed income; 69% would like their child care, managing financial strains and
employer to offer an annuity as part of their 401(k) plan. dealing with aging parents or grandparents.
However, only 15% of employers said they currently We set out to uncover how employers are
offer annuities. helping workers balance work & life in a
special focus section in our most recent
The 9th Annual MetLife Study of Employee Benefits Annual Health & Productivity Survey. Join
Trends is available at www.metlife.com/benefitstrends, us for an updated look at worksite wellness
along with a wealth of other related benefits resources trends, a discussion of work/life balance and
a peek at how multinational employers are
This article provided by BLR. expanding their program efforts outside of
the United States.
participant access
Advance reservations are required to
participate. Click here to RSVP for this call.
13 Willis North America • 03/12

14. WEBCASTS
WILLIS HUMAN CAPITAL PRACTICE
ANNUAL LEGISLATIVE & REGULATORY
UPDATE TELECONFERENCE
FOR EMPLOYERS SPONSORING GROUP
HEALTH PLANS
TUesDaY, apRiL 17, 2012
2:00 pm easTeRn
presented by:
Elizabeth Vollmar, Vice President and Principal Employee Benefits Attorney
National Legal & Research Group
Willis presents our annual webcast on legislative and regulatory developments.
2012 promises to be another challenging year for employers that sponsor group health plans,
with implementation of health care reform requirements continuing. In this teleconference,
Willis’ National Legal & Research Group (NLRG) will review the items that most employers
will be implementing during 2012, including:
n Preparing and distributing 4-page uniform summaries of benefits and coverage (SBCs)
n Women’s preventive care benefits (including the scope of the contraceptive exception)
n Restrictions on use of medical loss ratio (MLR) rebates
n $2500 limit on employees’ pre-tax health FSA contributions
n W-2 reporting of health coverage
n $1 per capita fee
The program will also review a timeline of health care reform provisions becoming effective
after 2012 and some of the recent developments relating to those provisions. The program is
slated for one hour with additional time reserved at the end for Q&A.
participant access
Advance RSVP is required to participate in this call. Click here to register.
14 Willis North America • 03/12

15. KEY CONTACTS
U.S. HUMAN CAPITAL PRACTICE OFFICE LOCATIONS
NEW ENGLAND Wilmington, DE Jacksonville, FL
302 397 0171 904 355 4600
Auburn, ME
207 783 2211 ATLANTIC Marietta, GA
770 425 6700
Bangor, ME Baltimore, MD
207 942 4671 410 584 7528 Miami, FL
305 421 6208
Boston, MA Bethesda, MD
617 437 6900 301 581 4261 Mobile, AL
251 544 0212
Burlington, VT Knoxville, TN
802 264 9536 865 588 8101 Orlando, FL
407 562 2493
Hartford, CT Memphis, TN
860 756 7365 901 248 3103 Raleigh, NC
704 344 4856
Manchester, NH Nashville, TN
603 627 9583 615 872 3716 Savannah, GA
912 239 9047
Portland, ME Norfolk, VA
207 553 2131 757 628 2303 Tallahassee, FL
850 385 3636
Shelton, CT Reston, VA
203 924 2994 703 435 7078 Tampa, FL
813 490 6808
NORTHEAST Richmond, VA 813 289 7996
804 527 2343
Buffalo, NY Vero Beach, FL
716 856 1100 Rockville, MD 772 469 2842
301 692 3025
Cranford, NJ MIDWEST
908 931 3005 SOUTHEAST
Appleton, WI
Florham Park, NJ Atlanta, GA 800 236 3311
973 410 4622 404 224 5000
Chicago, IL
Morristown, NJ Birmingham, AL 312 288 7700
973 829 6374 205 871 3300 312 621 4843
973 829 6465 312 348 7678
Charlotte, NC
New York, NY 704 344 4856 Cleveland, OH
212 915 8802 216 861 9100
Gainesville, FL
Norwalk, CT 352 378 2511 Columbus, OH
203 523 0501 614 326 4722
Greenville, SC
Radnor, PA 704 344 4856 East Lansing, MI
610 254 7289 517 349 3226
15 Willis North America • 03/12

16. Grand Rapids, MI San Antonio, TX
248 735 7249 210 979 7470
Milwaukee, WI Wichita, KS
414 203 5248 316 263 3211
414 259 8837
WESTERN
Minneapolis, MN
763 302 7131 Fresno, CA
763 302 7209 559 256 6212
Moline, IL Irvine, CA
309 764 9666 949 885 1200
Pittsburgh, PA Las Vegas, NV
412 645 8506 602 787 6235
602 787 6078
Schaumburg, IL
847 517 3469 Los Angeles, CA
213 607 6300
SOUTH CENTRAL
Novato, CA
Amarillo, TX 415 493 5210
806 376 4761
Phoenix, AZ
Austin, TX 602 787 6235
512 651 1660 602 787 6078
Dallas, TX Portland, OR
972 715 2194 503 274 6224
972 715 6272
Rancho/Irvine, CA
Denver, CO 562 435 2259
303 765 1564
303 773 1373 San Diego, CA
858 678 2000
Houston, TX 858 678 2132
713 625 1017
713 625 1082 San Francisco, CA
415 291 1567
McAllen, TX
956 682 9423 San Jose, CA
408 436 7000
Mills, WY
307 266 6568 Seattle, WA
800 456 1415
New Orleans, LA
504 581 6151
The information contained in this publication is
not intended to represent legal or tax advice and
Oklahoma City, OK
has been prepared solely for educational
405 232 0651 purposes. You may wish to consult your attorney
or tax adviser regarding issues raised in this
Overland Park, KS publication.
913 339 0800
16 Willis North America • 03/12