Showing posts with label HR. Show all posts
Showing posts with label HR. Show all posts

Tuesday, November 5, 2013

Why HR Should Support ENDA


A proposed bill in Congress, called ENDA, is up for discussion again this year.  This isn’t the first time it has come up, but it does have more momentum now than in previous years.   At this writing, it looks like the Senate may actually pass it.  The House of Representatives, however, may not even bring it up to a vote.  As an HR professional who has been in the business for over 30 years, I think this bill is not only “the right thing to do,” but its passage is a necessity.    Forgetting about warm fuzzies for a few moments, I am presenting three business reasons why human resources professionals should support this bill.

ENDA is The Employment Non-Discrimination Act.  If ratified, the law would prohibit discrimination in hiring and employment on the basis of sexual orientation or gender identity by civilian and nonreligious employers with at least 15 employees.  The reaction of some of the politicians regarding this bill reminds me of the scene in the mayor’s office in Ghosthunters:   We are “headed for a disaster of biblical proportions…Fire and brimstone coming down from the skies!  Rivers and seas boiling!...  Forty years of darkness!  Earthquakes, volcanoes, The dead rising from the grave, Human sacrifice, dogs and cats living together…mass hysteria!”   Let’s calm down a minute.   I hate to do this, but I think I will try to confuse everyone with facts instead of “mass hysteria.”

Reason One:  In actuality, the passage of ENDA may let another secret “out of the closet” - - harassment of a person because of their perceived sexual orientation or gender identity is already against the law.   Even if you’re not a lawyer, you can easily Google lawsuits such as Price Waterhouse v. Hopkins (1989), Oncale v. Sundowner Offshore Services (1988), and the recent September 2013 ruling in EEOC v. Boh Brothers Construction Company.  In each of these cases, a person alleged that he or she received harassment and/or discrimination because the employee did not fit the stereotype of how his or her gender was supposed to act.   In Oncale and Boh Brothers, male employees were faced with a hostile work environment because other employees thought they acted too effeminate.  In the Price Waterhouse case, a female was told she didn’t act feminine enough and was subsequently not given a promotion.  All sued under Title VII of the Civil Rights Act of 1964, claiming that they were being discriminated against because of their gender.    You see, folks, this has been on the books for ALMOST 50 YEARS and the courts are now interpreting Title VII’s protection of gender as including protection from discrimination if the person’s gender doesn’t fit someone else’s stereotype of how that gender should act.   With the passage of ENDA, employers can officially say that this activity is against the law instead of having to go around their elbows by giving the detailed Title VII “gender stereotype” examples as I had to do above.  In other words, unlike those politicians who are saying that this passage will cause MORE lawsuits, in theory, the passage could cause LESS as more companies will understand in clearer terms that this activity IS against the law.

Another reason HR should support ENDA comes from Aretha Franklin:   “R.E.S.P.E.C.T.”    I live in the South where we pride ourselves that we don’t need unions or third-party intermediaries between our managers and our employees.  A great deal of this non-union environment is because we encourage respect for our employees.  How can we promote and encourage respect on the one hand and on the other hand allow disrespect for persons because of their sexual orientation?  An organization is either respectful of employees and applicants or not.  News of bad actions travel a lot faster and last a lot longer than good ones.  Employees and the public will hear if you are not respectful.  Period.   What impression do you want YOUR company to have with the public?

The final reason of my short list in support of ENDA is that it just makes good recruiting sense.  Even though we have recently experienced high unemployment rates, the rates will go down.  People will begin moving around to attractive employers whose “brand” is that of an organization with a welcoming environment.  HR managers and hiring managers will want to hire the most qualified people who they can afford.  In today’s competitive environment, employers who disregard candidates because of reasons other than knowledge, skills, abilities, (KSAs), performance, and attendance are shooting themselves in the foot.   We in HR should promote and encourage our hiring managers and supervisors to forget about all other things except for whether or not the person is qualified for and can perform the job.  Otherwise, we are discounting a lot of potentially good employees.  In my supervisory training, I tell supervisors that in reality it doesn’t matter what all the laws are and who is protected under Title VII, the Age Discrimination in Employment Act, or the laws relating to military services, disability, genetic information, and so forth.  They shouldn’t worry so much about whether or not Congress tomorrow decides that anyone who wear green dresses are covered.  If we are being good supervisors, then we are staying with our plan to hire and promote those who are most qualified for the job. 

It has been estimated that ENDA will help protect the rights of over 7 million private sector employees.  Somehow many politicians think of the LGBT community as “them.”  “They” are “us.”  They are parents, children, friends, aunts, and uncles.  They are knowledgeable employees who help make our companies successes.   It makes good business sense to protect and respect them in all of our organizations.

Wednesday, July 18, 2012

Healthcare Reform Act - A Step-by-Step for HR - Part I - Rebates


Yep, I know:  you waited and hoped the Supremes would make your life easier by ruling that the Healthcare Reform Act was unconstitutional.  You haven’t done a thing to prepare.  The Court let you down.  Now you are slammed up against the impending deadlines and you realize that the future election is AFTER some of these deadlines kick in.  There’s no hope that you’ll get out of this now.  Uh Oh!!  Don’t panic.  This week and in the coming weeks, I’ll list some of How-To’s for HR, starting with the most pending deadlines.  We’ll get through this - - we always do.

August 2012 Rebates 

The Patient Protection and Affordable Care Act (PPACA) – the real name of the Healthcare Reform Act – calls for insurers (for our purposes, that would mean insurance companies) to report their Medical Loss Ratios (MLR).  If the insurer fails to achieve the stated MLR, it must issue a rebate.  The first rebate is due August 2012.  Getting money doesn’t sound like a bad thing, but since we in HR are under the rules of the IRS and the Department of Labor (which includes compliance with the Employment Retirement Income Security Act of 1974 – ERISA), we need to make sure we understand the consequences and have a game plan of what to do with the funds.

Where did these funds come from?

A “loss ratio” is not a new term.  Those of us in HR know the term from discussing workers comp premiums with carriers or when a broker is trying to explain why our health insurance rates went up.   Basically, it is the ratio of premiums they receive compared to what they have to pay out (medical care and quality improvement).  Since carriers DO work for a profit, they are going to figure in the loss ratio and add a percentage for administrative costs and profit in determining our premiums each year.  Under PPACA, the carrier is supposed to figure out the Medical Loss Ratio for a plan and determine the exact percentage paid.  For large groups of 100 employees or more (50 or more in some states until 2016, then 100), if the MLR does not reach 85% or, for smaller plans if it does not reach 80%, then a rebate must be given.

Who, what, when?

This rebate does NOT apply to self-funded plans.   Employers with partially- or fully-insured plans may or may not receive a refund.  It depends on the MLR and the manner in which the given state interprets its calculation.  The Kaiser Family Foundation’s recent survey found that, nationwide, employers are expecting rebates totaling $541 million in the large market and $377 in the small market.  This analysis will be ongoing, but the first rebates should be arriving in August 2012.

If your employer purchased the insurance for the benefit of the employees, then the rebate, if there is one, will go to the policy holder, meaning the employer.    Before you start planning on using the rebate to buy an IPad – I have one little heads up for you:  The insurer is supposed to send a letter to ALL subscribers in the group that a rebate is coming!  That’s right!  All those employees who traditionally stand in your doorway, call you, text you, and send you emails regarding every itty bitty thing will now have a good reason to bug you with “Where’s my money?”

Who Gets to Keep the Money?

ERISA has lots of rules regarding “Plan Assets” but these rules normally come into play with regards to retirement plans.  We now have to expand our way of thinking to include Plan Assets in our health insurance plan if we get a rebate.  Basically, we all need to write a policy regarding our medical plan and what to do if we have Plan Assets in the plan.

The DOL has provided some guidance with Technical Release No. 2011-04 with regards to what to do with the money.  The following is MY interpretation of this.  It is not verbatim and if you need more clarification, I suggest you speak with your broker and/or attorney:

-If the employer paid 100% of the premium, then the rebate goes to the employer and there are technically no “Plan Assets”; the employer can do whatever it wants with the money (but wouldn’t it be cool to at least have a little party or a cake or SOMETHING???)

-If the employees paid 100% of the premium, then the entire rebate is considered Plan Assets.

-If the employer paid a stated portion and the employee paid a stated portion, then the percentage that each party paid should be calculated and the employer portion of the premium goes to the employer and the employee percentage goes to “Plan Assets”.

-If the employer paid a fixed portion and the employee a variable portion of the premium – figure out the percentage that the employees paid for the relevant period.  The rebate is then divided proportionately, with the employer receiving its percentage and the “Plan Assets” being the employee portion.  The reverse is true if the employer paid the variable portion and the employee paid a fixed portion.

The above calculations should prove to be “reasonable, fair, and objective” (RFO for short)

The guidelines in the Technical Release No. 2011-04 also discuss the possible scenarios regarding distribution of the “Plan Assets” to the employees.  Things that should be considered: 

-Should the Plan Assets just go to our current insured employees or all of the employees (even the terminated ones) who were covered during the period of coverage?

-What would be the rebate per employee?

-What would be the administrative cost to pay back the employees (or to find the terminated employees)?

-What would be the tax ramifications (more on this in a minute)*?

The guidelines state that, unless you have policies to the contrary, if it is determined that the cost of distributing shares of a rebate to former employees is cost prohibitive (or approximately the cost of the rebate), then it is permissible to allocate the rebate to current employees if that can be done in a RFO fashion.  Or that it may be RFO to determine that, instead of issuing rebates in the form of checks, it may be easier to put the Plan Assets toward future plan premiums to offset the employee pay portion.

A few things to remember –

If you have multiple insurance policies through an insurer, you should make sure you understand which policy had a rebate and make sure the rebate benefits the employees insured under that policy.

*If you plan to hand out checks to your employees and former employees regarding the rebate, remember it is taxable.  If you plan to apply the rebate toward your employees’ portion of the premium (called by some “premium holiday”), then you do not have to charge the employee additional taxes.   As most employers have a pre-tax plan for employee-paid premiums (POP plans or cafeteria plans), the decrease in the pre-tax premium paid would mean an increase in the taxable income, so the tax goes up anyway. 

So What’s the Game Plan?

__ Speak with your finance department and others involved in the decision-making process of what to do if you get a rebate.  Explain that you may or may not be getting a rebate, but that your company should at least go forward with creating a Policy Statement for Plan Assets regarding your medical plans.

__ Write your Policy Statement.  Be sure to consider what you will do with the Plan Assets and consider previous employees, current employees and even future employees (for example, are you going to let new employees get a portion of the rebate even though they were not insured during the policy period that included the rebate?)  Make sure the policy statement is “reasonable, fair, and objective.”

__ Speak to your insurance carrier representative to find out if you are getting a rebate.  If you are, be prepared with a carefully written letter to your employees stating what your policy is regarding the distribution of the rebate.   Write this carefully allowing for as much transparency as possible into your decision-making process.

__ When you receive your rebate, let your employees know.  Remind them what you intend to do with the rebate.   This is a good time to remind them how much money the company has been contributing to their insurance all along.  Turn this administrative exercise into a “Yea Team” pep rally for your organization and its great benefits.

But then again, we’ll have more opportunity to let them know just how much the employer contributes to their benefits when we meet next week for Part 2 of this Blog.  That will be our discussion of Box 12 of our W-2’s.   Until next time...