Compliance October 10, 2014

Company Used Insurance as Excuse to Fire Older Workers

October 10, 2014 (PLANSPONSOR.com) – Spartanburg, South Carolina-based Atchison Transportation Services has settled an age discrimination charge by the Equal Employment Opportunity Commission (EEOC).
Reported by

According to the agency, the company’s operations manager told William Thomas, who was a motor coach driver for Atchison, that he had thought Thomas was “only 70,” but because Thomas was actually 75, the company had to let him go. The complaint alleged that the operations manager further stated that the company’s insurance policy had a clause that did not allow drivers to drive after they reached the age of 75.

In addition, the EEOC’s suit said Norris Locke, who also worked as a motor coach driver for the company, was discharged by the same operations manager in April 2009, when Locke was 76. The operations manager stated that Locke was fired because the company’s insurance carrier would no longer insure him.

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The EEOC said the company’s insurance policy had no age restriction for coverage.

Atchison agreed to pay $85,000 and furnish other relief to settle a lawsuit brought by the EEOC in federal district court in South Carolina.

“Employers commonly make assumptions about how long persons should work before retirement, including assumptions about their ability to work based solely on age,” says EEOC regional attorney Lynette A. Barnes, based in the agency’s Charlotte district. “Employers must be careful, as making such assumptions and then acting on them can result in a violation of federal law.”

Benefits October 10, 2014

Sponsors See Need for Holistic Health and Retirement Benefits

October 10, 2014 (PLANSPONSOR.com) – As increasing health care costs compete with retirement savings, employers see a demand for a holistic health and retirement benefits plan in the near-term.
Reported by

“As we focus on improving retirement outcomes, changing health costs and the regulatory environment are causing health and retirement to be more and more linked,” Shelby George, benefits solutions practice leader at Manning & Napier, in Rochester, New York, tells PLANSPONSOR.

George explains that a holistic health and retirement benefits plan for plan sponsors looks different depending on employers’ goals for their plans. “We’re talking about a consultative approach driven by employers’ objectives for their benefit plans, not a one-size-fits-all turnkey approach,” she says. “The onus is on those of us in the industry to create awareness and tools for approaching benefits in a holistic way.”

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A survey by Manning & Napier found 39% of businesses are interested in transitioning to a defined contribution (DC) plan for health benefits as well as retirement benefits. More than half (55%) believe they will make the transition to a plan for both health and retirement benefits in one to three years. Thirty percent of businesses have at least half of their employees enrolled in a health savings account (HSA)-compatible health plan.

Manning & Napier encourages the use of HSAs so participants can save for health care specifically while also saving for retirement. “HSAs are not the end-all-be-all, but in Manning & Napier’s opinion, they are an underutilized savings vehicle,” George says. “Employers and employees should be aware of the preferential tax treatment of HSAs.” HSAs allow individuals to pay out-of-pocket qualified medical expenses, and offer triple tax advantages: Contributions go into the account tax-free, earnings accrue tax-free and distributions are tax-free for qualified medical expenses.

There are many models for DC health benefits plans (see "Exploring DC Models in Health Care Benefits"), but they all focus on treating employees as consumers and making employees responsible for decisions, just as they are in DC retirement plans, George points out.  Employers in the survey indicated their top concern in developing an employee benefits strategy is cost (74%), followed by the employer contribution amount (49%).

The majority (79%) of respondents are concerned that employees will cut back retirement contributions due to the rising cost of health care. According to George, there are indications that participants are already reducing retirement plan contributions because of health care costs, as reported by her colleagues. Sixty-one percent of survey respondents agree that DC retirement plan vendors will need to provide an integrated tool to help participants navigate health and wealth planning decisions.

“Looking ahead, undoubtedly the next generation will see health care costs rise to an all-time-high at retirement, exponentially higher than previous generations. Among employers today, HSAs are still very much a widely under-utilized tool. Simply, they often lack adequate participant education that demonstrates the broader financial savings use. Beneficially, HSAs enable participants to begin saving for these costs, now,” George says.

The survey received 404 respondents consisting of U.S. small business owners, business managers and HR professionals (businesses of one to more than 5,000 employees). The survey was distributed between July and August of 2014.

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