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Upfront - October 2010.

Summary paragraph: Articles that appeared in the UpFront section of the magazine.

Shift Shapers

Health-care cost-shifting, -sharing to continue in 2011

Nearly two-thirds of employers plan to increase health coverage cost-sharing next year for things such as deductibles, co-pays, and out-of-pocket maximums, according to a new Aon Consulting survey.

An Aon news release said the poll also found that 57% of companies will ask employees to contribute more for the overall cost of health care in 2011. On plan design (e.g., deductibles, co-pays, and out-of-pocket maximums), 46% of employers are shifting costs to employees equal to the overall renewal increase, while an additional 46% are shifting costs to workers that are less than the overall renewal increase.

For overall health-plan cost, 40% of employers say the additional worker contributions will be equal to the 2011 renewal increase, and 49% indicate that workers will be asked to pay less than next year's renewal hike.

According to the announcement, the poll also found an increase in monthly COBRA contributions for terminated employees.

The average monthly cost for employee-only HMO coverage for a terminated worker is $429 this year, compared with $399 in 2009. For employee plus family, the former employee is paying $1,251 a month this year, compared with $1,171 per month last year. As for PPO coverage, the average monthly cost for employee-only coverage is $449 in 2010, compared with $439 in 2009, and for employee plus family, the cost tops out at a monthly average of $1,310 this year, versus $1,275 last year, Aon said.

"The increased frequency and duration of COBRA use is creating a significant strain on the program, leading to higher costs," said John Zern, Executive Vice President and Health & Benefits Practice Director with Aon Consulting, in the news release. "Those who are unemployed, and facing uncertainty about employment prospects and future COBRA availability, are utilizing the program more than we've traditionally seen to treat a variety of conditions prior to potentially losing coverage. This, coupled with the high unemployment rate, is placing the COBRA program in a unique and unprecedented position."

Aon Consulting surveyed 1,079 employers nationwide in its 2010 Benefits Survey.

-- Fred Schneyer

More information is at (

Sham "Wow"?

DoJ sues adviser for role in sham benefit plans

The United States has asked a federal court to permanently bar a California man from promoting alleged sham pension-plan and welfare-benefit-plan tax fraud schemes.

The Department of Justice announced that the civil injunction suit against William Alexander of Pasadena, California, and his two companies -- Retirement Plan Services Inc. and Lyons Pensions Inc. -- alleges Alexander helps small-business owners adopt sham pension plans.

He allegedly falsely advised customers that they can claim significant deductions for purported contributions to these sham pension plans to reduce or eliminate their federal income taxes. The complaint also alleges that Alexander fraudulently re-characterized his customers' nondeductible personal expenses as purported deductible pension plan contributions.

In addition, the suit claims that Alexander advised his customers that they can re-characterize their salaries as pension plan contributions that he can refund to them through sham loans. According to the announcement of the action, Alexander helped customers adopt pension plans that illegally exclude rank-and-file employees. The complaint cites a letter Alexander allegedly sent to one of his clients, a California physician, in which Alexander explains that the goal is to "exclude the employees from this rich pension plan that I use for the owner."

The complaint further alleges that Alexander tried to conceal his pension plan scheme by purposely not filing required documents with the Internal Revenue Service and Department of Labor.

The announcement said Alexander's promotion of the pension-plan and welfare-benefit-plan tax fraud schemes has allegedly cost the government at least $30 million.

One example of misconduct cited in the complaint is a letter in which Alexander allegedly advised a married couple from Florida who are physicians "to look for old personal checks that you wrote from 1/1/02 through 9/15/03 that are personal checks that I could re-characterize as pension contributions." The complaint also quotes a letter that Alexander allegedly sent to a Los Angeles customer in which Alexander explains that between $50,000 and $60,000 that the customer had made as a down payment on her condominium had been re-characterized as a pension plan contribution. The complaint further alleges that Alexander helped a California cardiologist who made a purported $350,625 welfare-benefit-plan contribution get the funds back by using a sham loan.

-- PS

Just Wait till Next Year....

Salary increases set to rebound -- slightly

A recent survey by Hewitt Associates shows that companies are spending less on pay raises and variable pay awards in 2010 than they originally anticipated, but they are more optimistic about the future.

Base salary increases for salaried exempt workers were 2.4% in 2010 -- down from what employers originally projected in August 2009 (2.7%), but still higher than the record-low pay raises workers saw in 2009 (1.8%). However, for salaried exempt workers, salaried non-exempt workers, and executives, Hewitt's survey shows base pay increases of 2.9% in 2011, and non-union hourly and union employees can anticipate salary increases of 2.8%.

According to a press release, although 2010 salary increases are lower than expected, the number of companies freezing salaries this year was down significantly, and this trend is expected to continue into 2011. In 2010, 21% of organizations froze salaries, compared with nearly half (48%) in 2009. Just 10% of employers anticipate salary freezes in 2011.

In 2010, spending on variable pay as a percentage of payroll for salaried exempt workers was 11.3%, down from a record high of 12% in 2009. Spending in 2011 is expected to creep upward to 11.8% -- which would be the second highest increase since Hewitt began tracking the data in 1976, the announcement said.

About three-quarters of respondents (76%) are budgeting for spending on variable pay through improved company performance, while 12% are doing so through reduced merit increases and 10% by reductions in head count. Just 5% of companies are budgeting for variable pay through reduced spending on benefits, while 4% are doing so through pay freezes.

The survey indicates workers in some U.S. cities can expect to see salary increases higher than the national average in 2011. These cities include Washington, (3.4%), Houston (3.3%), and Pittsburgh (3.2%). Cities that can expect lower-than-average increases in 2011 include Philadelphia (2.5%) and Atlanta and Los Angeles (2.6% each).

The industries that can expect to see the highest salary increases in 2011 include accounting/consulting/legal (3.3%) and energy, aerospace, pharmaceuticals, construction/engineering, and real estate (3.2% each). The lowest increases are projected to be in education (2.3%), metals fabrication (2.6%), and automotive and forest/paper products (2.7% each).

Hewitt surveyed more than 1,450 large companies.

-- Rebecca Moore

Clothes Lines

Most think casual attire boosts productivity

Fifty-five percent of U.S. employee respondents to a recent survey said workers wearing casual attire are more productive than those wearing more traditional business clothes.

Only 19% said casual dressers in the workplace are "slackers." However, 38% of U.S. respondents said casual dressers in the workplace will never make it into senior management, and 64% said senior managers should always be more dressed up than their employees.

Thirty-seven percent of U.S. respondents indicated they wear traditional business attire at work, while 41% said they wear casual attire. Forty-four percent reported their employers have a designated day or time for wearing casual attire.

Nearly a third (32%) of U.S. workers surveyed said it is appropriate to wear shorts to work, but only 18% indicated it is appropriate to wear sandals or flip-flops. More than a third (35%) said it is OK to wear a Speedo or bikini at a work picnic or day at the beach.

The survey results also suggest Europeans have the most casual attitude about workplace attire.

More than 12,600 adults, ages 18 to 64 in the U.S. and Canada and ages 16 to 64 in 22 other countries, were interviewed for the survey. The 22 countries are: Argentina, Australia, Belgium, Brazil, China, France, Germany, Great Britain, Hungary, India, Indonesia, Italy, Japan, Mexico, Poland, Russia, Saudi Arabia, South Africa, South Korea, Spain, Sweden, and Turkey.

-- Rebecca Moore

Public Policies

Public administration, education employers lead in offering retirement seminars

MetLife has found that more than two-thirds (69%) of public administration employers and 51% of education employers offer retirement seminars to their employees, compared with 35% of employers overall.

The findings can be found in MetLife's most recent Benefits Benchmarking Tool, which also reveals that 61% of employees in public administration and 54% of employees in education have a formal retirement plan (compared with 47% of employees overall), and employees in both industry segments say that their retirement benefits are very important influencers of employee loyalty (85% of public administration employees and 72% of education employees).

According to MetLife, the tool indicates that, for companies with 5,000 to 9,999 employees looking to increase employee productivity, work/life balance and wellness programs could be the missing links. While only 25% of employers in this segment say that providing benefits to help employees with work/life balance is a very important benefits strategy, 52% of employees at these companies say these benefits would be very effective at improving their productivity at work.

Similarly, only 33% of employers in this company-size segment say that providing wellness programs is a very important benefit strategy, yet 45% of employees at these companies say that their productivity would be favorably affected by these programs. About half (49%) of employees at companies in the West say they are very satisfied with the benefits they receive through their employer, compared with 42% in the Northeast and Midwest, and only 39% in the South. The Benefits Benchmarking Tool indicates that the West's leading position may be a result of effective benefits communications. In the West, 38% of employees say their employers' benefits communications effectively educate them about their benefits, compared with only 29% of employees in the South.

-- Rebecca Moore

The Benefits Benchmarking Tool is available at (

Mind List

Beloit College releases "Mindset List" for the Class of 2014

Since August 1998, Beloit College's annual warning against dated references has reviewed the cultural milestones of a new college class.

Created by Beloit's Keefer Professor of the Humanities Tom McBride and former Public Affairs Director Ron Nief, the "Mindset List" started as a humorous way to remind professors of the world in which their new matriculates grew up, but has since become a catalogue of the rapidly changing worldview of each new generation.

The Class of 2014 (most born in 1992) has never found Korean-made cars unusual, and 500 cable channels have always been available even if they didn't promise entertainment. If they learned cursive in grammar school, it offered more to tradition than to any future function. Many used cell phones before they hit puberty, and have never needed wrist watches to tell the time. While they might have heard their parents mention "Dirty Harry," they are more likely to imagine an unhygienic co-worker than the Hollywood director they know by name.

Russia is more interesting in history lessons than current affairs, Czechoslovakia has never existed, and China always has provided many of their plastic goods and economic concerns.

Nonetheless, they plan to enjoy college (the males no doubt benefiting from a favorable gender ratio). Many will bring SmartPhones that -- in form and function -- bear more resemblance to computers than real telephones. These, and the laptops many schools now require of their students, will serve as yet another source of questionable information. Growing up with instant access to more information than most would care to explore or take the time to verify, many will have to adjust to their professors' schedules and rules, and some will be limited for the first time to using only printed sources for their research.

Those professors who might be tempted to think they are hip enough and therefore relevant and ready to teach the new generation might do well to remember that Kurt Cobain is now on the classic oldies station (or that "hip" is the topic of a Shakira song, not an adjective). The college Class of 2014 reminds us, once again, that a generation comes and goes in the blink of our eyes, which are, like the rest of us, getting older and older.

-- Sara Kelly

SIDEBAR: Excerpts from the 2014 Mindset List

* For these students, Benny Hill, Sam Kinison, Sam Walton, Bert Parks, and Tony Perkins have always been dead.

* John McEnroe has never played professional tennis.

* Doctor Kevorkian has never been licensed to practice medicine.

* Fergie is a pop singer, not a princess.

* They never twisted the coiled handset wire aimlessly around their wrists while chatting on the phone.

* Leno and Letterman have always been trading insults on opposing networks.

* Computers have never lacked a CD-ROM disk drive.

* Bud Selig has always been the Commissioner of Major League Baseball.

* Toothpaste tubes have always stood up on their caps.

Source: Robert Half Management Resources
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Geographic Code:1U9CA
Date:Oct 1, 2010
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