Benefits January 26, 2006

Michigan's Granholm Announces new 401(k) Plan Proposal

January 26, 2006 (PLANSPONSOR.com) - The state of Michigan plans to open a new 401(k) retirement savings program for employees of small companies that do not offer a retirement benefit.
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In her State of the State speech this week, Governor Jennifer Granholm announced her administration’s intention to launch such a state-administered program by the end of 2006 after consulting with the Internal Revenue Service (IRS) about the details, Crain’s Detroit.com reported. Among those details: the size of employers allowed to get involved in the plan and whether any of the program would force Granholm to come back to lawmakers for specific approval.

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Granholm did not specify how many Michigan employers or employees she sees participating in the plan.

State Treasurer Jay Rising said the state’s role would alleviate the administrative costs, requirements and ongoing duties that often make it difficult for small businesses to set up pension plans. Participants would have a range of investment options, including mutual funds, Rising said.

“Finally, many of you listening tonight who work for small businesses do not have a pension plan,” Granholm said in the speech. “My administration will design and open a 401(k) plan, like the state’s plan, for those workers of small companies who don’t offer a pension plan. At minimal expense to state government, we will help tens of thousands of Michigan workers save for their retirement and achieve economic security. I f those in this room can have a pension plan, thanks to the citizens, certainly those same citizens who are watching tonight ought to be able to have one, too.”

Benefits January 25, 2006

CDHP Costs Keep Rising but at Much Slower Rate in 2005

January 25, 2006 (PLANSPONSOR.com) - Consumer directed health plans (CDHP) grew at a significantly slower rate in 2005 than other types of health plans, a new survey found.
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A news release from the Deloitte Center for Health Solutions found that CDHP costs increased by an average of 2.8% from 2004 to 2005, according to the survey of 152 major US employers. That compares to an 8% increase in total premiums for health maintenance organizations, an 8.5% increase for point-of-service plans and a 7.2% increase for preferred provider organizations. Traditional or indemnity plan costs increased 6.4% last year, according to the survey. The average for all types of plans was 7.3%, the announcement said.

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“Employers are increasingly turning to consumer-driven health plans to reduce costs and help workers and their families make better health care decisions,” said Tommy Thompson, the independent chairman of the Deloitte Center for Health Solutions, in the news release. “Not only do companies protect their bottom lines, they help make employees better health consumers.”

The survey also found that businesses are projecting similar rates of cost growth in 2006, including 2.6% for consumer-driven health plans, 7.4% for health maintenance organizations, 7.3% for point-of-service plans, 7.5% for preferred provider organizations, and 6.6% for traditional or indemnity plans. The average for all types of plans is projected to be 7.1%.

Not surprisingly, 40% employers said consumer-driven health plans offer “the most effective approach for managing costs and maintaining quality care,” while 35% said preferred provider organizations were the most effective. Eighteen percent selected health maintenance organizations, 6% said point-of-service plans, and just 1% said traditional or indemnity plans.

A Deloitte study released in November found that 43% of US companies either have a consumer-driven health plan in place (22%) or will be offering one in the next two years (21%). Another 51% said they are reviewing consumer-driven options and may offer one in the near future if they can be proven to be attractive to employees while saving money.

The survey, held in conjunction with Deloitte Consulting LLP’s Human Capital practice and co-sponsored by The ERISA Industry Committee, was conducted over four weeks in December and early January.

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