Nearly Half of Employers Now Auto-Enroll Employees in 401(k) Plans, Watson Wyatt Survey Finds

WASHINGTON, Sept. 23 /PRNewswire-FirstCall/ -- In a trend that is likely to continue, nearly half of U.S. companies are automatically enrolling workers into 401(k) plans to encourage them to save for retirement, according to a survey by Watson Wyatt, a leading global consulting firm. The survey also found that the number of companies that use target-date or lifecycle funds as their default investment option has increased sharply in the last few years.

"Employees need to participate more effectively in their company defined contribution plan as this is increasingly the primary vehicle they use to save for retirement," said Chris DeMeo, senior investment consultant at Watson Wyatt. "Taking an interest and actively participating in their plans will allow employees to make more informed decisions and develop investment strategies that take into account their goals and risk profiles."

The survey found that nearly half of surveyed companies (47 percent) now auto-enroll their employees into their defined contribution (DC) plan. Additionally, one-third of those that do not currently auto-enroll are considering it. Watson Wyatt's survey was conducted in March and April 2009, and includes responses from 149 mainly large companies, representing a total of more than 2 million employees across a broad range of industry sectors.

Nearly all companies (96 percent) have a default investment option. The number of companies using lifecycle or target-date funds as their default investment option has increased significantly, from 38 percent in 2006* to 62 percent today. More than 10 percent still offer stable value and money market funds as their default, despite Department of Labor (DOL) regulations issued in 2007 that stated that these options would not be given fiduciary protection.

Plan sponsors that auto-enroll their employees use a median initial contribution rate of 3 percent, with a range from 1 percent to 7 percent. Slightly more than half (51 percent) of the plan sponsors that auto-enroll also automatically increase the contribution rate by a certain amount each year for their participants. The final contribution rate is between 3 percent and 20 percent, with a median rate of 6 percent.

"While plan sponsors have made progress towards encouraging greater participation, saving and educated decision making, there is still room for improvement," said Robyn Credico, senior retirement consultant at Watson Wyatt. "Designing the optimum plan is tricky and requires plan sponsors to juggle many factors including overall plan design, investment, communication and governance. However, the potential upside is great and could cause DC plans to emerge stronger from the current economic crisis."

Employees and Employers Reveal High Satisfaction and Improved Cost Control with HSAs, Surveys Report

Most employers and account holders utilizing Health Savings Accounts (HSAs) and HSA-qualified health plans are satisfied with their coverage, spend less, and are more engaged in managing health benefits, separate surveys released today indicate.

The tax-favored health care savings accounts are designed to help individuals pay for current qualified health care expenses and save for future medical and retiree health care expenses.
"With the vigorous debate over health care reform, and more specifically health insurance reform, the survey results indicate that employers and account holders more effectively control costs and are satisfied with their coverage by utilizing HSAs," said Tom Hricik, national director, AMS Groups or AMS Personal Plans.

"The survey results also indicate that HSAs are being used by account holders as an important vehicle to save for future medical expenses."

Health Savings Accounts provide a convenient way to pay for today's health care expenses and to save and invest for the future.

Voluntary Dental Plans good for small business owners!

In today's economy, many small businesses find themselves struggling to add or retain employee benefits. Before an employer considers dropping dental benefits, it should consider a AMS Dental voluntary plan.




How it works
Voluntary plans offer convenience and cost savings for both employers and employees.
• The plan is sponsored by an employer and allows employees to choose whether or not to sign up.
• Employees who elect the coverage pay part of or the entire premium, while enjoying a group rate for the plan.
• The employer collects monthly premiums through payroll deductions and submits eligibility information to Delta Dental.

Benefits of a voluntary plan
The voluntary plan is a great option for groups looking to reduce their costs while still offering their employees comprehensive group dental coverage.
• Plans encourage regular use of diagnostic and preventive services (such as cleanings), reducing long-term costs for both employee and employer.
• Improved oral health can lead to better overall health and fewer days away from the job for oral or other health problems.

Unique benefits of AMS Dental voluntary plans
In addition to the usual elements of a voluntary plan, Delta Dental offers some unique features that may appeal to both employers and employees.
• An extra cleaning each year for pregnant women
• Coverage for implants
• Coverage for dental accidents
• Shelf-rates (that is, the same rate for all groups, regardless of level of employee participation)
• Low average annual rate increase (an average increase of only 2.9 percent over the past nine years)

Voluntary PPO plans are available for employers with five to 99 eligible employees. If you'd like more information about Delta Dental's voluntary plan offerings, please contact info@amsinsure.com

A Guide to State Guaranteed Coverage in California

The purpose of this post is to provide a concise guide to purchasing guaranteed issue individual health insurance in California. If you have questions, please leave a comment.

Healthcare Reform – Recent Developments

Recent Developments;

August began with the House Energy
and Commerce Committee striking a
deal with the fiscal conservatives
Democrats and approved e a 1,000-
page bill that:
• Eases employer mandates
• Reduces plan costs below $1 trillion
• Trims down public option; ability to
negotiate payments with providers
• The August recess began with townhalls
where a cross-section of
constituents expressed concern,
anger, and, at times, protest over health
proposals being discussed
• The White House responded with its
series of town-hall meetings to correct
misconceptions over reform
• Initial messaging by the White House
seemed to be downplaying the public
option in a possible bid to renew bipartisan
efforts for reform
• However, the possibility of reform
without a public option drew strong
opposition from liberal constituents
as well as Progressive Democrats

Concerns:

• Town-halls during the recess are having
a significant impact on the debate,
centralizing it over few key points
• Price Tag: $1 trillion price tag has
emerged as a major concern for a
significant cross-section of town-hall
attendees
• Public Option: Billed by critics as
govt.-takeover of healthcare, it remains
a core concern; insurance co-ops are
being touted as an alternative
• Death Panels: House reform bill drew
ire over so-called “death panels”, a
tangential reference to “living wills” and
other “end-of-life” care aspects
• Medicare Savings/Donut hole:
Seniors raised concerns over proposal
to draw savings from Medicare for
setting-up a new public option
• Supporters of reform, on the other hand,
do not see any proposal without a
public option as meaningful reform
• Several supportive legislators have
publicly stated their complete
opposition to any such bill, leaving
little room for any compromise

What Next?

The debate in town hall meetings
during the first weeks has given
opponents confidence in their stand
• On the other hand, supporters of
reform are increasingly apprehensive
of any bi-partisanship, thus favoring a
“go-it-alone” strategy
• President Obama is under pressure
from the Democratic legislators to
clarify his expectations from the
reform bills, something he has not
done assertively, so as to not hamper
any scope of bi-partisanship
• Until the Congress reconvenes,
Obama is likely to push to generate
public opinion in favor of reform
• However, White House may also
cement the divide within Democrats
between the conservative Blue Dogs,
moderate Democrats, and the
Progressive groups and prepare for a
“go-it-alone” legislation
• Overall, the jury is still out over the
fate of achieving comprehensive
health reform legislation in the next
session of Congress, even by the end
of 2009

I-9 Handbook

The I-9 Handbook for Employers is a useful reference, especially in light of the newly-revised Form I-9. Every business needs to know the required process for verifying an employee's employment eligibility. The handbook explains:
• Why employers must verify employment eligibility of new employees,
• The process of completing the employment eligibility verification form,
• Unlawful discrimination and penalties for prohibited practices,
• ...as well as important supplemental information.
In the HR Support Center website under the Essentials tab section, simply search for this helpful reference document in the Guides area (as well as the new Form I-9 in the HR Forms area).

New Form I-9 Available.

The U.S. Citizenship and Immigration Services (USCIS) has updated the Form I-9 (revision date of 8/7/09). While the previous form dated 2/2/09 remains acceptable, the recommendation is for all employers to start using the newly updated Form I-9.