Some Premium Reimbursement Arrangements Violate ACA
The Department of Labor has issued frequently asked questions (FAQs) about the compliance of health care premium reimbursement arrangements with the Patient Protection and Affordable Care Act (ACA).
The
FAQs supplement prior guidance by the DOL and the Department of Treasury that employer
health care arrangements, such as health reimbursement arrangements (HRAs) and
employer payment plans, are group health plans that are subject to the group market
reform provisions of the ACA. The Departments’ prior guidance clarified that
these employer health care arrangements will not violate market reform
provisions when integrated with a group health plan that complies with such
provisions. However, an employer health care arrangement cannot be integrated
with individual market policies to satisfy the market reforms.
The
new guidance clarifies that if an employer uses an arrangement that provides
cash reimbursement for the purchase of an individual market policy, the payment
arrangement is part of a plan maintained for the purpose of providing medical
care to employees, without regard to whether the employer treats the money as
pre-tax or post-tax to the employee. Such employer health care arrangements
cannot be integrated with individual market policies to satisfy the market
reforms and can trigger penalties. Under the DOL’s prior published guidance,
the cash arrangement fails to comply with the market reforms because the cash
payment cannot be integrated with an individual market policy.
In
addition, the DOL clarifies that a vendor product for which employers cancel
their group policies, set up a Code section 105 reimbursement plan that works
with health insurance brokers or agents to help employees select individual
insurance policies, and allow eligible employees to access the premium tax
credits for federal marketplace coverage also does not comply with the ACA.
Finally,
the FAQs make it clear that if an employer offers employees with high claims
risk a choice between enrollment in its standard group health plan or cash, the
DOL considers this discriminatory.
In
a webcast about a new report from Aegon UK and the Transamerica Center for
Retirement Studies, Catherine Collinson, president of the Transamerica Center
for Retirement Studies, said a survey of more than 16,000 people in 15
countries revealed that women’s positive retirement aspirations are undermined
by lifestyle differences. Women are more likely to take time out of workforce
or work part-time to take care of family, and they tend to have lower salaries.
“These things affect lifetime savings and long-term retirement readiness,
especially since women tend to live longer than men,” Collinson said.
The
study shows women are more than twice as likely as men to be working in
part-time jobs–jobs that often provide few, if any, retirement plan benefits. In
addition, women, on average, earn about 27% less than men.
On
average globally, women envision entering full retirement at the age of 62. But,
there are big variations among countries. In the United States, women expect to
retire around the age of 66. Overall, women expect they’ll need an average of
71% of their working-age incomes after they retire; in the U.S., the figure is 67%. Collinson says these findings are somewhat
shaped by national policies in each country.
Asked
what words they associate most with retirement, survey respondents used
positive words most often, such as “leisure” (45%) and “freedom” (39%). However,
one-quarter (24%) of women associated retirement with “insecurity” and almost one-fifth
(18%) with “poverty.”
Only
20% of women overall feel they are on course with saving for a secure
retirement, but twice this number (40%) simply do not know whether they are on
course or not. In the U.S., 24% of women feel they are on course, and 43% do
not know.
According to the
survey, women generally feel responsible for their own retirement income, are
aware of the need to plan financially for their retirement and understand retirement
planning matters. However, this does not often enough lead to action in the
form of planning and saving. Only 10% of women say they feel “very prepared”
for retirement and are confident they are already saving enough. Higher income earners,
those with a greater understanding of financial matters, and those with more
developed planning skills are most likely to belong to this group. More than
twice as many women (23%) say the opposite: they feel “very unprepared” and are
hardly saving at all. In the U.S., 12% say they are saving enough, and 23% say
they are hardly saving at all.
Overall,
more than one-third of women (36%) claim to be dedicated savers whose approach
is always to make sure they are saving for retirement (which is not necessarily
the same as “saving enough”). These women tend to be older with an understanding
of financial matters and highly developed financial planning skills. The
majority of women, however, do not fall into this group. Younger women, for
example, are more likely to be “occasional savers” or to belong to the 24% of
women who are “not currently saving although intend to." In the U.S., 16% say they only save occasionally;
15% are not saving, but intend to; and 15% are not saving, but have in the past.
For
two-thirds (67%) of women, a lack of money to invest is a major obstacle to
saving for retirement. The survey found women feel dependent on their spouse’s or
partner’s income in later life. More than half (54%) of women who are married
or living with a partners say that their spouse/partner will be “very” or “extremely”
important as a source of financial support during retirement. Further, only 12%
of women say that they do not expect their spouse to be an important source of
retirement income.
Overall,
38% of women fear they won’t have enough savings for retirement (compared with
30% of men). Women are also less optimistic when it comes to medical expenses—36%
believe they will be able cover medical costs in retirement, compared to 43% of
men.
Increasing
access to workplace retirement plans and a more flexible retirement is the way
forward, the report recommends. Collinson said 38% of women versus 45% of men
said their employers provide access to a workplace retirement plan.
The
survey shows that 74% of women agree that governments should encourage
employers to automatically enroll all their employees into a retirement plan.
Only 6% of women disagree. Overall, 62% of women say automatic enrollment is “very
or somewhat appealing.”
In addition, the
survey found only a minority of women (29%) expect to stop work immediately at retirement.
In the U.S., it’s only 17%. A clear majority now expect to have some form of phased
transition into retirement.
Collinson
noted that the main reasons women give for working longer are not financial,
but because they enjoy their work and want to remain active.
According
to Angela Seymour-Jackson, managing director, Workplace Savings, Aegon UK, the
report includes recommendations for efforts to improve women’s retirement
readiness. In addition to implementing automatic enrollment in their workplace
retirement plans, employers can implement automatic escalation features. The
report also recommends plan sponsors extend, where necessary, workplace
retirement plans to cover part-time workers thereby providing more employees, particularly
women, the ability to save for retirement.
The
report recommends both government and employer policies to improve retirement
incomes for women while facilitating a more flexible workforce aligned with the
unique needs of women:
Provide
for equal maternity and paternity leave, making it easier for men to share in
caregiving responsibilities;
Provide
assistance and information about caregiving services;
Provide
Social Security or government “credits” for unpaid time spent by individuals in
caregiving roles;
Expand
the entitlement age range for receipt of government retirement benefits in all
countries to reflect increasing longevity and workers’ preferences for a phased
transition into retirement;
Encourage
the implementation of age-friendly workplace policies in recognition of the
potential contribution of employees at all ages and the value of a
multi-generational workforce;
Provide
vocational training opportunities and support to help women remain economically
active longer into their retirement; and
Encourage
the implementation of phased workplace retirement programs, which enable
workers to stay in the workforce and transition gradually to retirement.
The
report says efforts should be made to facilitate the offering of investment
advice inside the workplace, particularly in the context of workplace
retirement plans. In addition, efforts should be made to encourage the role of
investment advisers in providing personalized retirement strategies both inside
and outside the workplace. Finally, the report recommends stepping up financial
literacy courses in schools and workplaces
The
financial industry and plan sponsors could do better at targeting and educating
women, Seymour-Jackson said. Financial education should include household
budgeting as well as long-term savings, she suggested. And, she said, education
should be simple and engaging and available through digital devices.