February 15, 2007 (PLANSPONSOR.com) - Federal
regulators have issued detailed guidance on how workers can
have their employers roll over their health Flexible Spending
Arrangements (health FSAs) and Health Reimbursement
Arrangements (HRAs) to Health Savings Accounts
(HSAs).
A Treasury Department
news release
said that the guidance from Treasury and Internal Revenue
Service (IRS) officials clarified the requirements for
making these rollovers, which must be made directly to the
custodian or trustee of the HSA.
Authority for the rollover came from the Tax Relief and
Health Care Act of 2006, enacted December 20, 2006, which
allowed employers to amend their health FSAs or HRAs, with
balances on September 21, 2006, to allow a one-time HSA
rollover by 2012 (See
Bush Signs Bill
Enhancing HSA Offerings
).
The rollover to an HSA must not exceed the lesser
of the balance in the health FSA or HRA on September 21,
2006, or as of the date of the distribution, according to
the guidance.
Generally, under the new rules, in order to receive
the favorable tax treatment, the necessary actions
include (by year end):
Amending the plan,
Electing the rollover by the employee,
Freezing the year-end balance; and
Transferring the funds by the employer within
two and a half months after the end of the plan year
and result in a zero balance in the health FSA or
HRA.
Under special transition relief for amounts
remaining at the end of 2006, however, there is no
requirement to freeze the year-end balance in the health
FSA or HRA, and the amendment, election, and transfer
must be completed by March 15, 2007, according to the
latest notice.
According to the guidance, the new law does not
change the requirement that unused amounts remaining at
the end of a health FSA’s plan year must be forfeited
in the absence of a grace period.
So, regulators pointed out, if a health FSA does
not have a grace period, unused amounts remaining at the
end of the plan year are forfeited and generally cannot
be transferred through a qualified HSA distribution to an
HSA after the end of the plan year.
Citing numerous hypothetical examples, the regulators
also discussed how employees’ eligibility for such
rollovers is determined under a variety of timing
situations and plan types.
But what if the disease that’s being spread IS the
co-worker?
Researchers at the University of Washington have just
published a new study that claims that “bad apples” at work
– people who don’t do their fair share of the work, who are
chronically unhappy and emotionally unstable, or who bully
or attack others
– actually create a toxic work environment that truly does
spoil the whole bunch.
The researchers’ paper, appearing in the current issue
of Research in Organizational Behavior, examines how, when
and why the behaviors of one negative member can have
powerful and often detrimental influence on teams and
groups.
Wife Experiences
It was inspired by the experience of the wife of William
Felps, a doctoral student at the UW Business School and the
study’s lead author.
Felps’ wife was unhappy at work and characterized the
environment as cold and unfriendly. Then, she said, a funny
thing happened. One of her co-workers who was particularly
caustic and was always making fun of other people at the
office came down with an illness that caused him to be away
for several days.
“And when he was gone, my wife said that the atmosphere
of the office changed dramatically,” Felps said. “People
started helping each other, playing classical music on
their radios, and going out for drinks after work. But when
he returned to the office, things returned to the
unpleasant way they were. She hadn’t noticed this employee
as being a very important person in the office before he
came down with this illness but, upon observing the social
atmosphere when he was gone, she came to believe that he
had a profound and negative impact. He truly was the “bad
apple” that spoiled the barrel.”
Following that realization, Felps, together with Terence
Mitchell, a professor of management and organization in the
Business School and UW psychology professor, analyzed about
two dozen published studies that focused on how teams and
groups of employees interact, and specifically how having
bad teammates can destroy a good team.
They found that a single “toxic” or negative team member
can be the catalyst for downward spirals in organizations.
In a follow-up study, the researchers found the vast
majority of the people they surveyed could identify at
least one “bad apple” that had produced organizational
dysfunction.
In one study of about 50 manufacturing teams, they found
that teams that had a member who was disagreeable or
irresponsible were much more likely to have conflict, have
poor communication within the team and refuse to cooperate
with one another. Consequently, the teams performed
poorly.
According to Felps, group members will react to a
negative member in one of three ways:
motivational intervention,
rejection or
defensiveness.
In the first scenario, members will express their
concerns and ask the individual to change his behavior and,
if unsuccessful, the negative member can be removed or
rejected. If either the motivation intervention or
rejection is successful, the negative member never becomes
a "bad apple" and the "barrel" of employees is spared.
These two options, however, require that the teammates have
some power: when underpowered, teammates become frustrated,
distracted and defensive, according to a press release.
Defense Mechanisms
Common defensive mechanisms employees use to cope with
these "bad apples" include:
denial,
social withdrawal,
anger,
anxiety and
fear.
Trust in the team deteriorates and as the group loses
its positive culture, members physically and
psychologically disengage themselves from the team.
Negative Outweighs Positive
Felps and Mitchell also found that negative behavior
outweighs positive behavior -- that is, a "bad apple" can
spoil the barrel but one or two good workers can't cure the
situation.
"People do not expect negative events and behaviors, so
when we see them we pay attention to them, ruminate over
them and generally attempt to marshal all our resources to
cope with the negativity in some way," Mitchell said. "Good
behavior is not put into the spotlight as much as negative
behavior is."
The authors caution there's a difference between "bad
apples" and employees who think outside the box and
challenge the status quo. Since these "positive deviants"
rock the boat, they may not always be appreciated. And, as
Felps and Mitchell argue, unlike "bad apples," "positive
deviants" actually help spark organizational
innovation.
The researchers note that managers at companies,
particularly those in which employees often work in teams,
should take special care when hiring new employees.