Strategic HR Lawyer

For a good overview of salary increase estimates for 2009, follow this link to the Compensation Force Blog for:

Salary Increase Data for U.S. & Canadian Metro Areas

According to World at Work, which recently issued this information, the projected increases range from 3.7% to 3.9%.  Doesn't seem like much when the news tells us about inflation rising every day.

Thanks to The Compensation Force Blog for bringing this to our attention.

Posted By Diane Pfadenhauer In Compensation & Benefits | Permalink

The IRS recently announced the 2009 contribution limits for both Health Savings Accounts (HSA's) and High Deductible Health Care Plans (HDHC's). Here are the new limits:

HSA's Contribution Limit – Individual coverage - $3000, Family coverage - $5950

HDHC's Minimum Deductible – Individual - $1150, Family - $2300

HDHC's Annual Out of Pocket Expense Limit – Individual - $5800, Family - $11600

For more information follow this link to:

Revenue Procedure 2008-29

Posted By Diane Pfadenhauer In Compensation & Benefits | Permalink

The Heroes Earnings Assistance and Relief Tax Act of 2008 is a law that amends the Internal Revenue Code in order to provide certain benefits to members of the military, Reserves and National Guard who work for an employer in addition to performing their military duties.

Here are some of the more interesting provisions:

1. payments made by an employer to supplement the wages the employee receives in the military must have proper tax withholding by the employer. This applies to payments made after December 31, 2008.

2. Interestingly, the employee receiving such payments is to be treated as an employee under the employer's retirement plans, even though he or she may be on active duty. The employer must include the payments it makes to the employee as wages when calculating retirement plan benefits/contributions. BUT, at the same time, the employee can be considered TERMINATED from employment so that he/she can take advantage of certain plan provisions that permit the individual to obtain certain distributions from the plan.

3. With respect to plan distributions or withdrawals, the participant employee/military service member, under certain conditions, can take withdrawals from the plan prior to age 59 ½ without penalties. Similar provision apply to Section 125 Plans.

4. If a service member is killed in the line of duty, he/she is now treated for retirement plan purposes as if he/she died while employed by the employer – assuming that the service member returned to duty with the employer on the date before his/her death.

5. For small employers, there is a tax credit for providing wages to supplement military pay. This applies to employers with less than 50 employees.

For the House of Representative's 55 page "summary" explanation follow this link:

TECHNICAL EXPLANATION OF H.R. 6081, THE “HEROES EARNINGS ASSISTANCE AND RELIEF TAX ACT OF 2008"

For a comprehensive explanation see, Janell Grenier's post her her Benefits Blog:

H.R. 6081: Heroes Earnings Assistance and Relief Tax Act of 2008

Posted By Diane Pfadenhauer In Compensation & Benefits | Permalink

According to fellow Lexblogger, Vicky Johnson, individual plan particpants now have the opportunity to recover damages against plan fiduciaries who breach their responsibilities.  The United State Supreme Court recently held in LaRue v. DeWolff, Boberg & Associates., Inc. that an individual that sustained a financial loss in plan assets could sue under ERISA to recover damages cause as a result of plan fiduciaries.  In this instance it is generally understood now that individuals can recover under 409(A) of ERISA with respect to damages like this in a defined contribution (in this case a 401(k)) plan.

For the full text opinion, follow this link: LaRue v. DeWolff, Boberg & Assocs., Inc.

Posted By Diane Pfadenhauer In Compensation & Benefits , Retirement | Permalink

World at Work is a professional association typically associated with compensation professionals.  It provides all sorts of resources and training for HR and Compensation professionals.  It recently made available a useful tool for planning in executive compensation.  The idea behind the Executive Rewards Questionary (no, not a typo...) is to ensure that you are designing a compensation that will be able to survive the scrutiny of a variety of stakeholders - like shareholders and the regulator environment.  It addresses such areas as:

• Stock plans
• Equity-based plans
• Short- and long-term incentive plans
• Executive perquisites
• Executive benefits
• Deferred compensation plans
• Employment agreements
• Severance agreements

Hey, even if you are not designing an executive compensation plan, it's useful from the perspective of prompting you to think about a compensation philosophy, in general.  Oh, and did I tell you it's FREE!

Hat tip to Compensation Force for bringing this to our attention.
Posted By Diane Pfadenhauer In Compensation & Benefits | Permalink

The IRS recently announced benefit plan limits for 2008.  Here are some of the highlights:

• Maximum 401(k) Contributions - $15,500
• Maximum Compensation Limit - $230,000
• Highly Compensated Employees - $105,000
• Annual Contribution Limit for Defined Contribution Plans - $46,000
• Annual Benefit Limit for Defined Benefit Plans - $185,000
• Age 50 and Older Catch-Up Contributions (for other than SIMPLE Plans) - $5,000
• Annual Contribution Limit for 457 Plans - $15,500

Posted By Diane Pfadenhauer In Compensation & Benefits | Permalink

Something I've heard a fair amount about lately is the policy of some employers to require proof that an employee's spouse/child is really a dependent before he/she can be added to benefits plans.  In addition, some employers are going a step further to conduct audits of plans in their entirety and require participants to dig out social security cards, marriage certificates, etc. in order to prove dependent status for participation in health plans.  

According to this article, audits are conducted in a variety of ways.

• Some companies start with an amnesty program, permitting workers to quietly remove those who don't belong on the plan.
• The employers will take step of requiring workers to submit proof of eligibility before family members can remain on the plan.
• Some audits have all workers fill out a questionnaire about dependents but only later collect documentation from a random sample.

Here's the kicker:

5 percent to 10 percent of dependents will come off the rolls after an audit, including those dropped because workers didn't submit the paperwork. Some companies with more generous benefits plans have seen 20 percent of dependents dropped.

All you have to do is "do the math" on this one and it's obvious why employers would do audits.

Posted By Diane Pfadenhauer In Compensation & Benefits , Policies & Procedures | Permalink

As of January 1, 2008, 401(k) plans can begin to offer an alternative enrollment method which can eliminate the need for top heavy and discrimination testing.  Called a "Qualified Automatic Contribution Arrangement" (QACA), it requires certain minimum levels of deferrals.  Here's how it works:

·         all employees eligible to participate in the 401(k) plan must be covered except employees who either elect not to participate or elect to participate at a different contribution rate.

·         the minimum automatic employee deferral percentage is 3% of compensation for the first and second years the employee is covered by the QACA, increasing by 1% each year thereafter to 4% in the third year, 5% in the fourth year and 6% for each year thereafter. The automatic contribution percentage cannot exceed 10% of compensation at any time.

·         It requires a minimum level of employer contribution – either a matching contribution or a non-elective contribution

·         employer contributions can be subject to a two year vesting requirement.

·         a QACA must provide employees with a notice that explains the automatic enrollment provisions and the employee's right to elect not to participate in the arrangement or to participate at a different level.

·         an employee can elect out of automatic contributions after they have begun and can withdraw contributions made under an automatic enrollment arrangement provided the withdrawal occurs within 90 days after the first automatic employee contribution is made. This permissible withdrawal is not subject to the 10% early distribution penalty tax.

OK, I'm not sure how you are supposed to pronounce "QACA" yet, but this article from Fisher & Phillips has a more comprehensive explanation of what it's all about.
Posted By Diane Pfadenhauer In Compensation & Benefits | Permalink

According to some recent surveys and experts, we can rest assured that our percentage salary increase next year will be about the same as it was this year.  According to World at Work salary increases for 2008 will be budgeted at 3.9%.  And, according to Hewitt Associates, organizations will increase pay 3.8% in 2008.

Interestingly, however, organizations have increased the percentage budget allocated to bonuses.  According to World at Work, "In the 1990s, employers budgeted only about 5% of their payroll for bonuses. For 2008, companies anticipate devoting nearly 12% of payroll to bonuses — using pay as a way to retain and reward valued employees."

The good news in all of this...consumer inflation, which was 2.7% for the 12 months ending in June.  The bad news, we'll likely continue to see double digit increases in health care costs.
Posted By Diane Pfadenhauer In Compensation & Benefits | Permalink

Once again an employer has managed to become liable under a statute when it initially failed to meet the threshold number of employees required for coverage.  Michael Fox points out that in a recent Sixth Circuit case, a court held that "it is possible that an employer with fewer than 50 employees within a 75 mile radius, could still find themselves "required" to grant FMLA leave, based on their conduct, even though not technically within the coverage of the statute." In other words, by treating all of the employees the same, even though the employer has some employees who are not otherwise eligible, the employer can become legally obligated to provide the benefits of the FMLA to those otherwise ineligible employees.
Posted By Diane Pfadenhauer In Compensation & Benefits , Employment Law | Permalink

A recent Supreme Court Case discusses the doctrine of estoppel and the Sixth Circuit relied on that case in noting that an employer with fewer than 20 employees may be liable for COBRA coverage.  The Supreme Court case in question was Arbaugh v. Y&H Corp.   and the Sixth Circuit Case was Thomas v. Miller.  According to the Health Plan Law Blog:

This holding stands for the proposition that, even though an employer may have less that 20 employees, it may be subject to COBRA requirements if the employer has used “conduct or language amounting to a representation” that an employee is entitled to COBRA benefits. If the employer’s insurance contract does not provide COBRA benefits, the employer could be stuck with huge medical bills with no insurance carrier to turn to for reimbursement.

In this case, although the plaintiff actually lost her case, the Sixth Circuit noted that the doctrine of estoppel could apply in an instance such as this where the employer may have held itself out as to have a plan subject to COBRA when in fact it did not.

And, according to Michael Fox over at Jottings by an Employer's Lawyer:

...an employer's conduct under certain circumstances can cause it to be covered, even though it falls below the statutory threshold.

He further notes the threshold that a plaintiff would have to satisfy:

• the employer must have used “conduct or language amounting to a representation of material fact;”
• the employer must have been aware of the true facts;
• the employer must have had an intention that the representation be acted on, or have
  conducted itself in such a way that the employee had a right to believe that the employer's conduct was so intended;
• the employee must have been unaware of the true facts; and
• the employee must have detrimentally and justifiably relied on the representation.

While most seasoned HR professionals could hardly imagine how something like this could happen, the reality is that we see many smaller employers that presume that they are covered under COBRA and a variety of other laws that do not apply to them.  This is truly a lesson for all of them.

Posted By Diane Pfadenhauer In Compensation & Benefits | Permalink

The Department of Labor has finally issued it's report on comment is invited on the Family and Medical Leave Act in December, 2006.  The DOL received over 15,000 comments.  According to the DOL's press release:

"The 15,000 comments from workers, employers and others attest to the importance of family and medical leave for America’s caregiving workforce," said Victoria A. Lipnic, assistant secretary of labor for the department’s Employment Standards Administration. "While family and medical leave is widely supported, we also heard from many workers and employers that there are challenges with the way certain aspects are being administered. This report provides information for a fuller discussion about how some of the key FMLA provisions and their interpretations have played out in the workplace."

For some late night reading, follow these links:

• The DOL's Press Release - Report on FMLA Request for Information issued by U.S. Department of Labor
• The Executive Summary
• The Request for Information Website
• The Whole Report - a mere 181 pages

Posted By Diane Pfadenhauer In Compensation & Benefits , Employment Law | Permalink

Paid family leave has gained steam in a number of states.  The FMLA blog notes that several states have enacted legislation or have pending legislation - notably California, Washington, New Jersey and New York.  The New York proposal was passed by our state Assembly in some late day haggling at the end of their legislative session and now will likely be addressed by the state Senate in their next legislative session.  This article from the New York Times - Spitzer Pushes Paid Leave Plan for Workers - discusses the Governor's push for paid family leave. 

According to the New York State Paid Family Leave Coalition, the legislation would expand New York’s Temporary Disability Insurance (TDI) program to include paid family leave. The bill would provide up to 12 weeks of paid leave to care for a new baby or a newly placed adopted child, or for a seriously ill family member, including a spouse, parent, in law, sibling, child or domestic partner. Benefits – in line with current TDI benefits in New York – would be half of weekly wages up to a maximum of $170 a week.  The proposal calls for the extension of benefits to be paid for by an increase in employer contributions.

Needless to say, the Business Council of New York State, a business advocacy group, opposes paid family leave.

As for me, unless we can come up with solutions for the administrative nightmare that FMLA already is and unless we can provide benefits without burdening small employers, it's just another tax on already over-burdened businesses in NY - particularly small ones.  I'm not suggesting that the burden to care for family members should be overlooked by society and recognize that there truly are those who are torn between caring for family members and paying their bills.  Unfortunately, however, the burden on certain employers, at times, outweighs the social benefit of this type of legislation. Posted By Diane Pfadenhauer In Compensation & Benefits , Employment Law | Permalink

Michael Fox over at Jottings by an Employer's Lawyer notes that part of the legislation that includes the Iraq War funding is legislation to increase the minimum wage.  He notes that it could go into effect as early as late July.   The minimum wage would rise to $5.85 two months after the bill is signed into law, $6.55 a year later, and $7.25 the following year. Posted By Diane Pfadenhauer In Compensation & Benefits | Permalink

All too often employers make the mistake of misclassifying someone as an independent contractor rather than an employee.  Jerry Kalish at the Retirement Plan Blog points us to two solutions when that error is made.  The first deals with the retirement plan issue - in other words, how you get the person on the retirement plan without wrecking the plan?  The other relates to the problem of payroll taxes.  That is, once you've determined that the person should really be an employee, how do you handle the fact that you did not previously pay payroll taxes for this person?  Well, Jerry has the answers.  Take it away , Jerry. Posted By Diane Pfadenhauer In Compensation & Benefits , Employment Law | Permalink

Watson Wyatt predicts the following tends for 2007 in the benefits area:

• Increased focus on high-deductible health plans (HDHPs) coupled with a reimbursement arrangement (e.g., health savings accounts), although few employers appear to be completely replacing their current plans with an HDHP.
• More benefits information and tools online.
• As more popular prescription drugs come off patent in the next three years and their prices are reduced, employers will loosen their requirements that employees use generic drugs whenever possible.
• Greater integration between healthcare and absence management programs.
• More on-site clinics in the workplace.
• Companies will consider new retirement plan options such as cash balance plans or other hybrid models.
• Companies will consider alternative investments in retirement plans such as private equity, hedge funds, infrastructure and real estate. 
  

Thanks to BLR for bringing this to our attention. Posted By Diane Pfadenhauer In Compensation & Benefits | Permalink

You have about a week to put together your OSHA log. As of February 1, employers must post their OSHA 300 log - a summary of the work related illnesses and injuries.  Here are the forms:

OSHA 300 - Summary of Work Related Illnesses and Injuries

Posted By Diane Pfadenhauer In Compensation & Benefits | Permalink

The BNA Pension & Benefits Blog has an interesting discussion on the seeming lack of popularity of high deductible health plans.  It seems:

An objective national survey (by the Kaiser Family Foundation and Health Research and Educational Trust) reports that in 2006 only about 7 percent of American employers offered an HSA-qualifying HDHP or an HDHP with a HRA. Four percent of workers were enrolled in these products -- and only 19 percent of employees who were offered these products along with other health coverage options enrolled in such a plan. The proportion of firms offering and employees enrolling in these products in 2006 were not statistically significantly different from those in 2005.

A few years ago it seemed as though these plans were all the rage.  Some of the reasons attributed to their lack of popularity, according to BNA, include:

• that their average national total cost (the HDHP premiums plus the employer contributions to an HSA or HRA, if employers make such a contribution) is no lower than that of traditional plans (like HMOs and PPOs).

• employee premium contributions for the HDHP plans are similar to those for other types of coverage, yet the consumer-directed plans include much higher cost sharing.

• While the current HDHP + HSA model has been in place only 3 years, research on experience of HRAs and other earlier types of individual spending accounts reveal mixed results.

• people who enroll in such plans are younger and healthier and have higher incomes than those who do not.

• only 10 percent of Americans account for 69 percent of health care costs --- because they either have expensive long-term chronic illness or experience high cost acute episodes. Even if these people desire to be "prudent" health care purchasers, they quickly exhaust their deductibles and thereafter no longer have such an economic incentive.

• some opponents of the consumer-directed model express concern that high deductible plans create incentives to skimp on early preventive and primary care that will lead to worse health and no reduction in (but possibly higher) overall spending for their later care.

I've previously posted on this subject here,  here, and here.  So it looks like we may not be saving money after all.

Posted By Diane Pfadenhauer In Compensation & Benefits | Permalink

Employers often struggle with how to encourage employees to use direct deposit.  While some states permit mandatory direct deposit, there are many other states which do not.  Now, Uncle Sam wants to encourage your employees to use it.  Why?  Because when they retire, the Social Security Administration wants them to accept direct deposit of their social security payments.  Seems that Baby Boomers are less likely than their younger counterparts to enroll in direct deposit or to use online banking.   According to Treasury Department officials, 98% of problems with social security payments occur with paper checks.  The Treasury and Federal Reserve Banks have established a website godirect.gov to enable recipients to enroll in direct deposit of their government checks.  This website also describes the advantages of direct deposit - so let the government help you encourage employees to use direct deposit.
Posted By Diane Pfadenhauer In Compensation & Benefits , Policies & Procedures | Permalink

The IRS recently announced the 2007 benefit plan contribution/benefit limits for 2007.  Here they are:

Contribution/Limit:	2006 Limit	2007 Limit
401(k)/403(b) Contributions*	$15,000	$15,500
457(b) Limit	$15,000	$15,500
Catch-up Contributions	$5,000	$5,000
Compensation Limit**	$220,000	$225,000
Highly Compensated Employees**	$100,000	$100,000
Key Employee Officer Compensation**	$140,000	$145,000
Maximum Annual Benefit - Defined Benefit Plan**	$175,000	$180,000
Maximum Annual Contribution - Defined Contribution Plans**	$44,000	$45,000
ESOP Limits- Dollar limit for determining lengthening of 5-year period*	$175,000	$180,000
ESOP Limits - Dollar amount for determining max. amount subject to 5-year distribution*	$885,000	$915,000
Maximum SIMPLE contribution	$10,000	$10,500
FICA Wage Base ***	$94,200	$97,500

*Calendar year limitation

**For plan years beginning in the calendar year. The compensation limit and key employee officer compensation also apply for purposes of Code Section 409A.

***Calendar year limitation for FICA withholding purposes and for plan years beginning in the calendar year for retirement plan purposes.

Posted By Diane Pfadenhauer In Compensation & Benefits , Trends | Permalink

It's that time of year when employers start looking at employee bonuses and awards at year end.  All too often, they forget about the tax consequences of such distributions.  The IRS, obviously, has specific guidance on this issue.  Follow this link to the IRS Guidlines on Bonuses & Special Awards  and don't get caught handing out one hundred dollar bills under the table!
Posted By Diane Pfadenhauer In Compensation & Benefits | Permalink

Today marks the 25th birthday of the 401(k) plan.  The plans were designed in an effort to allow employees to supplement their existing retirement plans, according to a recent article in the Wall Street Journal.  We all know, however, that the trend has been that, for many, their traditional pension plans have been replaced by 401(k) plans. 

• 25 Years ago, there were 30 million active participants in traditional defined benefits (DB) plans and 19 million in other non-401(k) defined contribution plans.
  
• Today there are about 47 million participants in 401(k) plans, 21 million participants in DB plans and 8 million in other defined contribution plans.

Sadly, 25% of eligible employees do not participate in their employer's 401(k) plans, even when the employer provides a match.  Fewer than 10% of investors save the maximum allowed ($15,500 in 2007 and $20,500 for those over 50). Posted By Diane Pfadenhauer In Compensation & Benefits | Permalink

This week's Time Magazine has an article discussing a continuing trend for insured workers to pay more for their health benefits in terms of deductibles and premiums.

• For the average employee, premiums and out-of-pocket expenses will reach $2,904 a year for a family, up $300 from 2006. That's the pass-along pain of the costs that employers now endure, nearly $9,000 per employee, up an estimated $518 from this year.
• Containing those costs is a new corporate imperative. Among the tactics: bosses are skimping on raises.
  
• Someone making $40,000 a year can anticipate a 4% pay increase next year. (Don't spend it all in one place.) With health-care costs expected to rise about 7%, that means at least 16% of that raise would go to higher premiums or new out-of-pocket expenses.

HSA's are often touted as tin the he magic bullet for some off these problems.  A recent article in the Wall Street Journal on HSAs (registration required), however reminds us that such plans are really only ideal for two groups - the healthy and the wealthy. 

"If you're young, healthy or wealthy, health savings accounts, or HSA's, can help to defuse a looming time bomb -- the six-figure, out-of-pocket health-care tab that experts believe most of us will face during retirement. Because the young and healthy generally don't spend much on health care today, current savings can pile up for later. The wealthy, meanwhile, can max out their savings and hope they don't need it all before they retire."

The myth of the HSA is even more absurd as we hear benefits consultants tout the benefits of having employees "empowered" to negotiate benefits costs and think twice before going to the doctor.   Some would have us believe that employees have been on the gravy train for far too long, that they go to the doctor when it's unnecessary whenever they feel like it and that they have no sense of what health care costs.  While that may be true for some, it is certainly not true for all.

Too bad we still have plans out  there that require people to go to a primary care physician, who gets to charge for doing nothing other than filling out a form.  Add to that the reality that the public can obtain very little information on what health care charges will cost as they are placed at a considerable disadvantage when dealing with health care providers.  I'll stop now.  Can you tell I'm annoyed?
Posted By Diane Pfadenhauer In Compensation & Benefits | Permalink

Health care costs increases for 2007 are predicted to be the lowest in years.  According to Hewitt Associates, most health care plans should see an average cost increase of 7.7% in 2007.  Despite this seemingly modest increase, it still outpaces inflation and employee salary increases.  For example,

In 2007, Hewitt projects, salaried employees can expect a base salary increase of 3.7 percent.1 Therefore, an employee making $40,000 today who receives the average salary increase ($1,480) will use 16 percent of that salary increase to pay for the increase in health care costs next year.

A few metropolitan areas, however, will continue to see double-digit increases.  These include San Antonio (13.1 percent), St. Louis (13 percent), Hartford (12.8 percent), Milwaukee (11.4 percent), Cleveland/Akron (10 percent) and San Francisco (10.5 percent).  In addition, Hewitt expects the following increases by plan type:

• 7.0 percent for preferred provider organization (PPO) plans
• 8.0 percent for health maintenance organization (HMO) plans 
• 9.0 percent for point-of-service (POS) and indemnity plans.

Scary to think that this is actually good news.

 

 

Posted By Diane Pfadenhauer In Compensation & Benefits , Trends | Permalink

The Pension Protection Act of 2006 enacts sweeping changes to most benefits plans.  Single employer, multiple employer, defined benefit, defined contribution, and IRA's are all affected by this legislation.  The Department of Labor has put together a Pension Reform Page on its website with resources, ranging from the simple and easy to read to the hundreds of pages of legislation.  Here are some links to helpful documents:

• House Committee on Education and the Workforce PPA Fact Sheet
  

• Deloitte Consulting's PPA Resource Page

• The Library of Congress' Summary Page

My advice:  start with the simple and work your way up to the complex!  This quick little outline of changes is just the beginning:

•Expansive sweep affects virtually all employer retirement plans

•Affects defined contribution plans, 401(k) plans, IRA’s, deferred compensation plans, retiree health benefits, health and welfare plans.

•Effective date: it depends

–Some are retroactive
–Some are when the regulations are issued

•Funding of Single Employer Defined Benefit Pension Plans:

–New funding rules go into effect for 2008 plan year
–Will require DB plan sponsors to contribute substantially more than they do under existing law

•Hybrid Plans – i.e. Cash Balance Plans

–Now will require 3 year cliff vesting
–“Wear-away safeguards” – where the plan is created from a traditional DB plan

•Provisions Affecting 401(k), 403(b) and 457(b) Plans

–Investment Advice to Participants – as of Jan. 1, 2007 a “fiduciary advisor” can now provide investment advice
–Paid by employer or from plan assets
–The DOL is required to issue a model notice for this provision

·Automatic Contribution Safe Harbor for 401(k) Plans

•“Qualified automatic contribution arrangements” - automatically defer a stated percentage of an employees pay and are exempt from the ADP and Top Heavy rules.

•Requires:

–Uniform application
–Automatic contribution amount (3%, but no more than 10%)
–Option to opt out
–Matching contributions
–Vesting in employer contributions at 2 years
–Advance notice of automatic contribution feature

•Additional Provisions

–Diversification requirements – for public employers who provide contributions in the form of employer stock
–Rules concerning “Blackout Periods”
–Modifications to 5500 Forms
–DB Plans must provide benefits statements every three years
–Changes to Summary Annual Report

Posted By Diane Pfadenhauer In Compensation & Benefits | Permalink

From the "just when you think you've heard it all category..."  The LA Times recently reported on a new and interesting twist on identity theft - medical identity theft.  Instead of just stealing your identity and scamming you out of money, this latest twist involves obtaining possession of your health insurance information, posing as you, having treatment and your insurance company gets the bill.  Works until there are fees not covered by insurance.  Then you get the collection notices.  According to the report:

Although the most typical of the millions of identity theft cases in the U.S. each year involve credit cards, a 2003 federal report estimated that at least 200,000 instances involved medical identity fraud. Experts believe that the rising cost of healthcare is driving more identity theft, and that many people are unaware they have become victims unless they receive a hospital bill or query from their insurer. The bulk presumably remain invisible.

With their medical records compromised, victims of this kind of fraud face a greater risk of injury or even death if doctors make treatment decisions based on bad information. Files might list incorrect prescriptions, the wrong blood type, or an erroneous diagnosis.

Imagine finding out that after your wallet is stolen, someone has has used the emergency room in your name.  The thief's medical history is now co-mingled with yours in your medical records - a disaster waiting to happen. 

For those in the business of purchasing insurance for our businesses, this clearly demonstrates the need to audit claims and plan usage.  It will serve not only to protect employees and plan participants but ensure that the experience charged back to our plans really belongs there.
Posted By Diane Pfadenhauer In Compensation & Benefits | Permalink

More and more employers are recognizing the need to deal effectively with our aging population by offering elder care benefits to their employees.  According to one survey, caregiving issues cost employers $34 billion dollars annually in lost productivity.  Some other interesting statistics:

• By 2020, one in three U.S. households is expected to be involved in caring for elderly or disabled relatives, up from one in four today

• About a quarter of all companies currently provide some basic elder-care benefits, mainly referrals that help employees find caregivers and legal services

• Some companies are adding such benefits even as they cut back in other areas, especially health-care coverage, where costs are soaring. Why? Because they are cost effective.

Some of the more interesting approaches:

• leave sharing programs

• allowing employees to add an adult relative to the employer's health plan, such as an elderly parent

• state disability programs, such as in California, that allow for partially paid family leave

• emergency elder care services

Thanks to Workplace Prof Blog for bringing this to our attention.

Posted By Diane Pfadenhauer In Compensation & Benefits , Trends | Permalink

This is the time of year when the budget folks begin thinking about raises for 2007.  The prediction:  a whopping 3.7% (according to Mercer).  That wouldn't be so terrible, except that inflation is predicted to be about 3.3%, thus eroding most pay increases.  To add more the mix, my guess is that the trend for employers to pass more health benefits costs on to employees will continue.  As a result, there will likely be more belt tightening on the part of employees. Posted By Diane Pfadenhauer In Compensation & Benefits | Permalink

Delta Airlines recently obtained approval to terminate its pilots' pension plan as part of its bankruptcy restructuring plan.  This essentially means that the plan will be turned over to the Pension Benefit Guaranty Corporation - a government entity that insures belly-up plans.  The PBGC is funded by insurance proceeds paid for by those who have defined benefit pension plans.  Unfortunately, however, the PBGS is largely underfunded.  The result:  you and I will likely get to fund the pilots' $75,000/year retirement income.

Delta argued that the plan poses an immediate $1 Billion liability that would prevent the company from emerging successfully from bankruptcy.  The pilots' union has agreed to the termination.  I suppose a job is better than a pension?

Posted By Diane Pfadenhauer In Compensation & Benefits , Corporate Turnaround | Permalink

According to a recent study published by Mt. Sinai Medical Center, the toxic effects of the fall of the World Trade Center 5 years ago continue to be felt by workers who were there handling the recovery in the aftermath of the towers' collapse. 

"Roughly 70 percent of nearly 10,000 workers tested at Mount Sinai from 2002 to 2004 reported that they had new or substantially worsened respiratory problems while or after working at ground zero."

In addition:

• One-third of the patients in the new study showed diminished lung capacity in tests designed to measure the amount of air a person can exhale.
• Among nonsmokers, 28 percent were found to have some breathing impairment, more than double the rate for nonsmokers in the general population.
• The study is among the first to show that many of the respiratory ailments — like sinusitis and asthma, and gastrointestinal problems related to them — initially reported by ground zero workers persisted or grew worse in the years after 9/11.

The federal government has appropriated $52 million to treat these workers which many view as not nearly enough.  Isn't it interesting that right after 09/11 we were all assured that the air was safe to breathe.  With this as one enormous workers' compensation case, I wonder what will happen years from now and when we'll start hearing about residents in the area succumbing to respiratory problems.

Posted By Diane Pfadenhauer In Compensation & Benefits | Permalink

There's been a lot of buzz lately about the Pension Protection Act of 2006.   Thankfully, the US Department of Labor has updated its website to include a slew of information about this new law.  Although it contains all sorts of information, including a 388 page technical "explanation," I'd start by looking at the Fact Sheet.

DOL Website on Pension Protection Act of 2006.

Hat tip to the Workplace Prof Blog for bringing this to our attention.

Posted By Diane Pfadenhauer In Compensation & Benefits | Permalink

An interesting article in the Christian Science Monitor discusses are cent change to employee benefits at Blue Ridge Paper Products.  In an effort to reduce medical costs, the company is permitting (perhaps encouraging?) employees to travel overseas for medical and surgical care where it can be provided often at a fraction of what it costs in the United States.  According to the article:

Carl Garrett, a paper-mill technician, is scheduled to travel to New Delhi, where he will undergo two operations. Though American individuals have gone abroad for cheaper operations, Mr. Garrett is a pioneer of sorts. Garrett's medical care alone may save the company $50,000. And instead of winding up $20,000 in debt to have the operations in the US, he may now get up to $10,000 back as a share of the savings. He'll also get to see the Taj Mahal as part of a two-day tour before the surgery. His two operations could cost $100,000 in the US; they'll run about $20,000 in India.

Some others who have gotten on the bandwagon....

•Insurers Health Net of California already contracts with medical clinics on the Mexico side of the US border.

•A West Virginia state legislator introduced a bill this year that would encourage state workers to seek treatment overseas using incentives such as cash bonuses and family travel.

•United Group Programs in Florida, which administers self-insurance programs for small companies, has contracted with a Thailand hospital for its employer clients.

•Inquiries from self-insured employers are brisk at IndUShealth in Raleigh, N.C., which specializes in offshoring serious medical cases such as rotator cuff surgery and gall bladder removal to India

So, can someone please tell my why I can't get my prescriptions from Canada?



Posted By Diane Pfadenhauer In Compensation & Benefits | Permalink

HR professionals and employment lawyers typically are not experts in Social Security disability matters.  However, I do think it is a good idea to know what is going on in this area, particularly when dealing with an employee who will ultimately go on long term disability.

The Disabled Worker Law Blog (by my buddy and fellow Lex-blogger, Troy Rosasco) discusses changes to the Social Security Disability claims process.  These changes are effective August 1, 2006.  An overview of the changes include:

1. Social Security Disability Attorneys are not required to submit adverse medical evidence, as was originally proposed in the NPRM.
2. Social Security Disability Lawyers will now have a 75 day notice of an Administrative Law Judge hearing, an improvement over the current 20 day notice requirement.
3. Quick Disability Determinations (QDDs) for clearly disabled claimants
4. Establishment of a new Medical and Vocational Expert System (MVES)
5. The new position of the Federal Reviewing Official (RO), a government attorney who looks at claims between initial denial level and the ALJ hearing level
6. A new Decision Review Board (DRB) replacing the old Appeals Council

Troy points out that these changes are being phased in gradually across the country, starting in Region I (Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont).

For the details, follow this link to:  New Regulations Under the Social Security Disability Claims Process Posted By Diane Pfadenhauer In Compensation & Benefits | Permalink

The IRS has recently issued guidance on the subject of donated leave programs in the case of major disasters.  Generally, when there is a major upheaval, it is not unlikely that employers will want to assist employees by allowing them to donate leave time to those in need.  The purpose of the guidance is "to provide guidance on the federal tax consequences of certain leavesharing plans that permit employees to deposit leave in an employer-sponsored leave bank for use by other employees who have been adversely affected by a major disaster...."

I have included the gist of IRS Notice 2006-59 here:

A major disaster leave-sharing plan is a written plan meeting each of the following requirements:

1. The plan allows a leave donor to deposit accrued leave in an employer sponsored leave bank for use by other employees who have been adversely affected by a major disaster (as declared by the president).
2. The plan does not allow a leave donor to deposit leave for transfer to a specific leave recipient.
3. The amount of leave that may be donated by a leave donor in any year generally does not exceed the maximum amount of leave that an employee normally accrues during the year.
4. A leave recipient may receive paid leave (at his or her normal rate of compensation) from leave deposited in the leave bank. Each leave recipient must use this leave for purposes related to the major disaster.
5. The plan adopts a reasonable limit, based on the severity of the disaster, on the period of time after the major disaster occurs during which a leave donor may deposit the leave in the leave bank, and a leave recipient must use the leave received from the leave bank.
6. A leave recipient may not convert leave received under the plan into cash in lieu of using the leave. However, a leave recipient may use leave received under the plan to eliminate a negative leave balance that arose from leave that was advanced to the leave recipient because of the effects of the major disaster. A leave recipient also may substitute leave received under the plan for leave without pay used because of the major disaster.
   
7. The employer must make a reasonable determination, based on need, as to how much leave each approved leave recipient may receive under the leave-sharing plan.
8. Leave deposited on account of one major disaster may be used only for employees affected by that major disaster. Except for an amount so small as to make accounting for it unreasonable or administratively impracticable, any leave deposited under a major disaster leave-sharing plan that is not used by leave recipients by the end of the period specified in paragraph 5, above, must be returned within a reasonable period of time to the leave donors (or, at the employer’s option, to those leave donors who are still employed by the employer) so that the donor will be able to use the leave. The amount of leave returned to each leave donor must be in the same proportion as the amount of leave donated by the leave donor bears to the total amount of leave donated on account of that major disaster.
   

Posted By Diane Pfadenhauer In Compensation & Benefits | Permalink

Generally, no.  But in Florida maybe yes.  According to this client alert forwarded to me be a friend at Epstein Becker and Green, the Florida Supreme Court recently ruled that there was a question of fact as to whether an employee "elected" to receive workers' compensation benefits and therefore was precluded from suing his employers.  The facts of the case are the the employee was severely burned in an industrial accident.  In Florida, however, employees may now be able to sue their employers if their injuries were caused by egregious or intentional misconduct. 

I wonder what the Workers' Comp Insider thinks of this? Posted By Diane Pfadenhauer In Compensation & Benefits | Permalink

The results of a survey of Fortune 500 companies by the consulting firm, Watson Wyatt, tells us that there is a growing trend for Fortune 500 companies to reduce or eliminate retiree health benefits.   According to the survey:

- Ninety-five percent of the mostly Fortune 500 companies polled expect to further restrict their retiree health plans over the next five years, and 14% plan to stop providing coverage entirely.
- About a third of U.S. employers offered current workers retiree coverage in 2005, down from about two-thirds in 1988, according to a recent study by the non-profit Kaiser Family Foundation. 
- According to Standard & Poor's, plans for retiree benefits at S&P 500 companies, excluding pensions, were underfunded by $321 billion, meaning promises to retirees are only 22% funded.

Ouch!

Posted By Diane Pfadenhauer In Compensation & Benefits , Trends | Permalink

Everyone thinks about the cost of health care in the United States and wonders if the increases will ever taper off.  Joe Paduda over at Managed Care Matters has this post which was an eye opener for me.  While, yes, I know health care is expensive and I understand compounding, but the thought of paying over $20,000 a year for family health coverage in a few years was eye-opening.  I include his thought provoking comments here:

With family premiums (HMO and other plan types) hovering at the $11,000 mark, and rates increasing by, say, 7% per year, we'll have health insurance costs of $20,000 per family in ten years.
The 7% increase quoted is a wildly optimistic figure, as rates have increased at least 9% each year for the last five years. And, with the number of people without insurance increasing every year, further adding to cost-shifting to insureds; tighter eligibility requirements for Medicaid; and increased employee cost-sharing the middle class (read - voters) will be increasingly demanding action - and if the next presidential election does not have health care as a top theme, it will only be because of a horrendous natural or man-made disaster. Although one could reasonably consider the US health care system a man-made disaster, I'm thinking more on the order of foreign policy.   What does this mean for you?  More pain before our elected officials get their collective act together.

Joe makes a good point.  This is a death spiral/perfect storm for our health system.  Sometimes our leaders would have us think that social issues, with little economic consequence, are the most important issues facing the nation.  The reality is that we all have differing opinions on many of those issues, but they should not cloud the reality that we have significant issues, such as health care, to face as a nation. Posted By Diane Pfadenhauer In Compensation & Benefits , Trends | Permalink

Thanks to the The Workers' Comp Insider for providing this analysis of a recent Supreme Court decision concerning unpaid workers' compensation claims in bankruptcy.  In Howard Delivery Service, Inc., et al v. Zurich American Insurance Co., Zurich claimed that since workers' compensation insurance is an employee benefit, that it should be given priority, like other benefits in corporate bankruptcy.  A provision of the Bankruptcy Code assigns priority to unsecured creditors' claims for unpaid benefit plan premiums.  However, the Supreme Court ruled that these premiums do not qualify. As a result, workers' compsation insurance carriers will go to the end of the line in their efforts to collect unpaid premiums.  For more on this case, in addition to the Workers' Comp Insider's analysis, you can view the entire opinion here and another article presenting the insurance industy's view here. Posted By Diane Pfadenhauer In Compensation & Benefits , Corporate Turnaround | Permalink

Between GM & Delphi, 47,600 employees have elected to take the buyout offered a few months back.  I recently commented on the enormity of this plan here.   According to the New York Times,  almost one third of GM's hourly employees and one half of Delphi's took the offer.  Ultimately GM plans to eliminate over 30,000 employees and the results of this offering will enable it to meet that goal earlier than expected.  Some additional facts:    

About 30,400 G.M. workers, who had at least 26 years on the job, took early retirement packages that include payouts of up to $35,000 and full benefits. The remaining 4,600 will receive either $70,000 or $140,000, depending on their experience, but give up all their benefits except their pensions;

Employees at both G.M. and Delphi who accept the deals have seven days to change their minds. Mr. Wagoner said that window had closed for nearly all of those who said they planned to leave and that he did not expect the final number to change significantly.

The program will cost G.M. about $3.8 billion but save it $8 billion a year. G.M. lost $10.6 billion last year.

Posted By Diane Pfadenhauer In Compensation & Benefits , Corporate Turnaround , Retirement | Permalink

A recent survey tells us that Americans want universal health coverage.  According to a committee, the Citizens' Health Care Working Group, established by Congress in 2004, 23,000 people weighed in with their thoughts.  The group was formed by Congress in the same legislation that created the prescription drug benefits under Medicare.  Essentially, its principles are:  that "...all Americans should have a set of health coverage benefits guaranteed by law. Those benefits should be "portable and independent of health status, working status, age (and) income." 

While an interesting concept, the group does not say how such health care will be paid for. Posted By Diane Pfadenhauer In Compensation & Benefits | Permalink

Janell Grenier over at Benefitsblog has a link to the IRS' proposed regulations for Dependent Care Reimbursement Plans.  Such plans are usually part of an employer's Section 125 Plan allowing employees to contribute money one a pre-tax for child care.  So what is permissible?  She notes:

The proposed regulations clarify that when it comes to school-related expenses, nursery school and preschool can qualify as employment-related expenses as well as before- and after-school care. The IRS goes on to note that a day camp will qualify even if the camp is a "specialty" camp, such as a camp devoted to just soccer or computer:

The IRS has received many inquiries about whether the cost of a day camp that specializes in a particular activity, such as soccer or computers, may be an employment-related expense. To provide certainty for taxpayers and enhance administrability, the proposed regulations provide that the full amount paid for a day camp or similar program may be for the care of a qualifying individual although the camp specializes in a particular activity.

However, what about kindergarten? The IRS says:

The proposed regulations clarify the existing rule that expenses for programs at the level of kindergarten and above, however, are primarily for education and, therefore, are not employment-related expenses.

This is timely guidance for plan administrators.  Often, there is a great deal of confusion on anything relating to the IRS! Posted By Diane Pfadenhauer In Compensation & Benefits | Permalink

This interesting article on the experiences of companies who implemented consumer directed health care plans shows generally that although companies claim success with the programs, enrollment is generally low.  Specifically:

• Less than 0.5% (about 170) of Microsoft Corp.'s 41,000 U.S. employees enrolled in an HSA-based plan that went into effect last January.
• At the 1,000 employee law firm of Preston Gates & Ellis, about 6% of the company's employees enrolled for the 2005 plan year. Enrollment for 2006, however, nearly doubled to 11%, and 96% of those who enrolled in 2005 stuck with the plan.
• SkyWest, Inc., the parent company of SkyWest Airlines, is in its second year with an HSA-based option. Of the 5,500 employees who have health coverage through the company, about 850 are enrolled in the HDHP - up from about 500 in 2005.

So what does this all mean?  My sense is that employers are engaged in significant communication strategies to promote these plans.  In addition, enrollment is generally low.  However, as plan costs continue to skyrocket and these are passed along to employees, we'll likely see more enrolling after other employees have kicked the tires and worked out the kinks before them.   This reminds me of enrollment in Section 125 plans - typically low enrollment.

Thanks to Janell Grenier at Benefitsblog for bringing this to our attention.

Posted By Diane Pfadenhauer In Compensation & Benefits | Permalink

This is one of those years when companies have to consider their options when planning the Fourth of July Holiday. Since the holiday falls on a Tuesday this year, some employers will be giving Monday and Tuesday off, while others will be giving only Tuesday off. This survey from my buddies at HRNY (the SHRM Chapter in New York City) shows that:

- 45.9 percent of respondents will give both Monday and Tuesday off
- 54.1 percent of respondents will be giving just Tuesday off

So, let me guess how many people required to work on Monday will really be working hard.....

The results of the HRNY Fourth of July Holiday Survey can also be found on their website.

Posted By Diane Pfadenhauer In Compensation & Benefits , Policies & Procedures , Trends | Permalink

According to a recent Hewitt survey, we are now beginning to see the effects of automatic 401(k) enrollment. In 2004, "participation by workers who had less than a year on the job rose to nearly 36 percent in 2005 from 30 percent in 2004. It attributed the increase to more companies automatically enrolling newcomers."

Despite this increase in enrollment, the survey tells us some other interesting points about 401(k) enrollment. First, about 22% of participants don't even contribute enough to obtain an employer match. Only about 30% contribute just enough to obtain the match.

In addition, here were the average 401(k) balances, for various age groups: those 20-29 had saved an average of $10,640, those age 30-39 had $39,470, those 40-49 had $86,990 those 50-59 had $126,980, and those 60 and older had $108,950. I suppose that this must also be influenced by employee tenure - those with their employers longer are likely to have saved more. Even still, better start saving!

Posted By Diane Pfadenhauer In Compensation & Benefits | Permalink

Some companies have begun to eliminate or reduce co-payments for prescriptions drugs for chronic ailments in their health plans. According to this article in the Boston Globe:
"Right now, this country's number-one approach to the high cost of healthcare is to make employees pay more... but cost sharing is a blunt instrument and the evidence actually shows that if you make people with chronic illnesses pay more, they stop buying the lifesaving things they need and companies wind up paying more."

In addition:
"Concerned about escalating health insurance premiums, Marriott International Inc. began eliminating co-payments on generic drugs for workers with chronic conditions such as asthma, diabetes, and heart disease last year. The benefit, for 75,000 US employees and their dependents, includes a 50 percent cut in co-payments for brand-name drugs."

It is not uncommon for someone who is fully insured with a chronic condition to take a half a dozen prescriptions. At $20 each and a spouse and children, all of these prescriptions add up. When money is tight, people are less likely to fill a prescription. Thankfully, at least some companies understand that a few bottles of statins cost far less than a quadruple bypass.

Posted By Diane Pfadenhauer In Compensation & Benefits , Trends | Permalink

Later this year Scott's Miracle Grow will join the many employers attempting to discourage its employees from smoking. However, unlike most employers who focus on positive reinforcement or at the most charge smokers more for health insurance, Scott's is going a bit farther. According to this article:

"In October, the company will begin randomly testing employees and giving pink slips to those who test positive for nicotine. The company announced the ultimatum in November, saying it was giving employees a year to quit, and offered to help with smoking-cessation programs. Scott's officials say it's part of a larger effort to help their employees become healthier. "

"Our company cares deeply about our work force and has a broad vision for promoting employee wellness. That's why we built a $5 million on-site fitness facility and offer a variety of programs aimed at motivating people to eat well, exercise regularly and eliminate unhealthy habits like smoking," said Scott's spokeswoman Su Lok.

While there is no law in Ohio, where Scott's is based, that would prohibit an employer for terminating an employee because her or she smokes, just don't try this in New York.

Posted By Diane Pfadenhauer In Compensation & Benefits | Permalink

The IRS recently issued a sample Roth amendment for 401(k) plans In other words, if an employer wishes to allow participants to make Roth elective deferrals in their 401(k) plans and, therefore, amend their plan accordingly, this will serve as an acceptable amendment for your plan.

Posted By Diane Pfadenhauer In Compensation & Benefits | Permalink

I've gotten several inquiries lately about what some perceive to be a "new" HIPAA notice which was to be distributed to plan participants as of April 14th of this year. Everyone take a deep breath. All we are talking about here is the requirement that all plan participants must be notified at least once every three years with the privacy notice or with information on how to obtain the notice. Assuming you already did this three years ago (or two years ago for smaller plans), it's just time to reissue the notice (or next year for those smaller plans).

Generally, the HIPAA Privacy Notice gives plan participants information about how the plan will deal with protected health information.

Here's the general rule:
Covered entities are required to provide a notice in plain language that describes:
1. How the covered entity may use and disclose protected health information about an individual.
2. The individual's rights with respect to the information and how the individual may exercise these rights, including how the individual may complain to the covered entity.
3. The covered entity's legal duties with respect to the information, including a statement that the covered entity is required by law to maintain the privacy of protected health information.
4. Whom individuals can contact for further information about the covered entity's privacy policies.
5. The notice must include an effective date.

Providing the Notice:
1. A covered entity must make its notice available to any person who asks for it.
2. A covered entity must prominently post and make available its notice on any website it maintains that provides information about its customer services or benefits.
3. Health Plans must also:
- Provide the notice to individuals then covered by the plan no later than April 14, 2003 (April 14, 2004, for small health plans) and to new enrollees at the time of enrollment.
- Provide a revised notice to individuals then covered by the plan within 60 days of a material revision.
- Notify individuals then covered by the plan of the availability of and how to obtain the notice at least once every three years.

A covered entity may e-mail the notice to an individual if the individual agrees to receive an electronic notice.

So, how should remind ourselves to do this every three years? Why not just send out these materials with open enrollment materials every year? For more information, you can access this publication on the Department of Health and Human Services Website. For their HIPAA page, go here.

Posted By Diane Pfadenhauer In Compensation & Benefits | Permalink

According to yesterday's WSJ, a growing number of states are now requiring plans to increase the age of dependent children covered by health insurance plans. It used to be that eligibility for dependent children ended at 19, or sometimes 23 or so for full time college students. Some of these laws require coverage up to the age of 30. The reason - according to the Kaiser Family Foundation, adults between the ages of 19 and 34 are the fastest growing group of uninsured.
Here are some of the details:
- New Jersey - effective this Monday; a dependent may be covered until age 30, as long as he/she has no dependents.
- Colorado - effective in January, 2006; under certain conditions children can be covered to age 25 even if not enrolled in an educational institution
- New Mexico - Allows coverage to age 25
- Utah - Allows coverage to age 24
- Maine - a Bill is pending that would allow coverage to age 24 if the child has a mental or physical disability that prevents them from being enrolled in a post-secondary institution
- New Hampshire - Similar legislation as Maine is pending for children of any age who are mentally or physically incapable of earning a living.

Posted By Diane Pfadenhauer In Compensation & Benefits | Permalink

Today's Newsday has several interesting articles covering the growing divide between public sector and private sector pensions and planning for retirement. Aside from the typical sensationalistic media hype that portrays "poor" public sector workers being compared to their "rich" private sector counterparts, the articles show the growing disparity between the two groups in terms of pension benefits. According to the article: "...the gap between public and private employees is widening as American corporations scramble to cut back or eliminate traditional pension plans. Only about one of every five private sector employees still has one, and every month more major U.S. corporations announce the end of their plans. But similar sacrifices haven't been seen in the public sector: 90 percent of the nation's government workers are covered by a traditional pension plan as of 1998, the most recent figures available.... By one estimate, the average public pension in New York State offers more than twice the payout that private pensions do."

A few other interesting tidbits:
¬?When a private sector pension goes belly-up, the PBGC steps in and provides the benefits - typically a much smaller amount than the original pension. When the public sector pension runs out of money, it is typically tax increases that fund the deficit.
¬?401(k) plans and other defined contribution plans found in the private sector don't have any guarantees.
¬?"In New York municipal workers in the state pension system retiring in 2004 after 35 to 39 years of employment collected more than $44,000 a year - or 74 percent of their final average salaries - from their pensions alone. A typical private pension, coupled with Social Security, replaces no more than 67 percent of salary. Police and firefighters pulled in an average of nearly $78,000, also 74 percent of their final average salaries. And teachers collected nearly $67,500, or 76 percent of their final average salary, if they worked at least 35 years in the system, according to the teachers' pension plan report for the year ending June 2005."
¬?Public employees contribute relatively little. Only workers hired after July 1976 contribute anything to t