Compliance November 4, 2015

myRA Ready for Use Nationwide

Employees can set up payroll deductions to fund their “my Retirement Account.”
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The U.S. Department of Treasury has announced the national launch of the myRA program.

With individuals being able to fund the accounts through payroll deduction and the program’s availability to those not participating in as well as those not eligible for an employer-sponsored retirement plan, employers need to prepare. Speaking at the American Retirement Association’s 2015 ASPPA Annual Conference, J. Mark Iwry, senior adviser to the secretary and deputy assistant secretary for retirement and health policy at the U.S. Department of Treasury, said the department has piloted payroll deduction into the myRA program with a group of employers to make sure any kinks are worked out.

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Individuals can set up automatic direct deposit contributions to myRA through their employer, fund a myRA account directly by setting up recurring or one-time contributions from a checking or savings account, and at tax time, direct all or a portion of a federal tax refund to myRA.

For employees who have not yet met the eligibility provisions of their employer-sponsored retirement plan, part-time employees who may never be eligible, or even eligible employees who feel they cannot save much or are afraid of investing in the market, myRA is a good way for employers to encourage them to start saving for retirement. The program requires an initial contribution of at least $25 and automatic ongoing contributions of $5 or more every payday, and accounts are available to any individual with an annual income of less than $129,000 or a couple with annual income of less than $191,000.

NEXT: Starting a savings habit

“Treasury is trying to provide an easy way for those who have never saved to dip their toe in and not worry about losing assets in the market,” Iwry said. “Once they get into the savings habit, they can rollover their accounts into private-sector IRAs.” Iwry said the accounts are invested in a new U.S. savings bond.

As myRA account holders grow their savings, they have the option to transfer to a private-sector Roth IRA with diverse investment options at any time, or transfer to a private-sector Roth IRA once they reach the maximum myRA balance of $15,000. The myRA accounts are like Roth IRAs in that taxes are paid up front, not at distribution time.

At the ASPPA conference Iwry and Phyllis C. Borzi, assistant secretary of labor for the Department of Labor’s (DOL) Employee Benefit Security Administration (EBSA), each said their departments are focused on expanding retirement plan coverage. In developing the myRA initiative, Iwry received an information letter from the DOL stating that myRA would not be subject to the Employee Retirement Income Security Act (ERISA).

More information about myRA is at https://myra.gov/.

Benefits November 4, 2015

Employers Focused on Increasing Engagement in Wellness

Avoiding the ACA excise tax and using preventive services are also top health benefits goals.
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An annual survey of 119 employers by the non-profit Midwest Business Group on Health (MBGH) finds employers are implementing a number of strategies to make sure they get the most value from their health benefits spend.

While the vast majority of employers (76%) are focusing their health benefit strategies on avoiding the 2018 Affordable Care Act (ACA) excise tax, a greater number indicated that increasing employee engagement in health improvement programs (81%) and using preventive services (77%) are priorities for 2016 and 2017. For the past three years, managing specialty drugs (61%) and creating a culture of health (60%) were noted as employer priorities.

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Fifty-four percent of employers will make high-deductible health plans available to employees. But, employers still believe health maintenance organizations (HMOs) and preferred provider organizations (PPOs) will remain viable because they want to support employees that are in lower salary tiers.

A majority of employers (80%) are not yet sure if increasing cost share for employees will be higher or not by 2017, and 21% have indicated they plan to remain at 70/30, with only 6% moving to a higher cost share of 50/50.

Telemedicine, viewed as a means of increasing access and reducing unnecessary absences in order to get care, will be a priority for 46% of employers. By 2017, more than half of employers (56%) plan to contract directly with a center of excellence, while 47% expect to offer narrow, high performance provider networks to their workers. Nearly 50% of self-insured employers identified outcomes-based incentives as a priority.

NEXT: Avoiding the excise tax

Asked about their expected excise tax timeline, 47% of MBGH survey respondents indicate they will reach it beyond 2019, while only 18% expect to reach it in 2018 when the tax is set to begin.

Top strategies employers currently have in place to avoid the excise tax include increasing the availability of wellness programs, offering high deductible plans, adding or expanding incentives for employee wellness programs, and increasing employee cost share. Employers indicated they also plan to optimize networks for best providers and reduce benefits.

Employers largely indicated that they will not consider offering private exchanges to workers through 2016 (79%). However, the percent of employers who say they won’t consider this strategy decreases dramatically in 2017 and 2018 to 44% and 29%, respectively.

When asked if they plan to offer benefits in 2025, 60% said yes and 40% said they don’t know. This will be influenced by peer company actions (75%), government mandates (71%), and labor market pressures (61%).

A summary of survey results can be found here.

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