Changing regulations — from the death of the fiduciary rule to the IRS clearing the way for a student loan benefit tied to 401(k)s — meant new paths for companies big and small. New employer initiatives — including the alliance between Amazon, Berkshire Hathaway and JPMorgan Chase, who announced plans to start their own healthcare company at the beginning of the year — shook up healthcare delivery and put more employers in the driver’s seat.
Meanwhile, scores of employers increased 401(k) matches, implemented student loan benefits, beefed up paid leave policies and made other changes to their benefits packages — both in response to savings from the Trump administration’s tax overhaul law and in a bid to keep and recruit talent.
Here are some of the biggest benefits moments of the year.
January: Amazon, Berkshire Hathaway and JPMorgan Chase announce new healthcare venture
Amazon, Berkshire Hathaway and JPMorgan Chase on Jan. 30 announce a partnership to cut healthcare costs and improve services for their U.S. employees. The companies, which together employ more than 1.1 million employees, announce plans to launch an independent operation that's intended to be free from profit-making incentives. While the three companies do not detail what their new company will do, they say in a statement that the entity’s focus will be on technology that will provide employees and their families with “simplified, high-quality and transparent healthcare at a reasonable cost.”
February: Tax reform spurs companies to make big benefits changes
Since the passage of the Tax Cuts and Jobs Act of 2017, which slashed the corporate tax rate to 21% from 35%, a variety of employers continue to invest their tax savings back into the workplace by way of enhanced employee benefits. From increased 401(k) matches to new training programs, employers see a plum benefits package as a necessity for attracting and recruiting employees. Likewise, these changes are more likely to impress workers than one-time bonuses, analysts say. Aflac, Anthem, Chipotle, Disney and Starbucks are among the companies that make benefits changes, citing savings from tax reform.
February: Apple announces plans to open health clinics for its employees
Apple quietly unveils its intent to set up a network of health clinics for employees and their families at the tech company’s Cupertino, California, headquarters. The company launched a website, acwellness.com, with some detail about its initiative and a careers page listing positions it’s looking to fill, including primary care doctor, exercise coach, care navigator and a phlebotomist to administer on-site lab tests.
In a surprising turn of events, a federal appeals court vacates the fiduciary rule on March 15, upending yet again a regulatory landscape that has changed dramatically since the Department of Labor put the regulation in effect last year. Judges from the Fifth Circuit Court of Appeals ― in a two-to-one decision ― rule that the Labor Department exceeded its regulatory authority in promulgating the regulation, which holds advisers to a higher standard.
April: Opioid treatment costs sound warning bells for employers
While policymakers from the local level up to the Trump administration struggle to combat opioid abuse, employers face their own opioid-related challenge: skyrocketing recovery costs.
Workers covered through employer health insurance received $2.6 billion worth of treatment for opioid addiction and overdoses in 2016 -- an eightfold increase from $273 million in 2004 — finds a new report published by the Kaiser Family Foundation. Some $2.3 billion was covered by insurance, although patients doled out $335 million. Those startling figures are the latest to sound warning bells for employers, spurring them to consider a number of strategies, including educating employees about opioid misuse, reviewing their programs and policies to better align with the collective opioid agenda and engaging with their health plans and PBMs to ensure they do their part.
Research finds that employees are socking away a record amount of money in their 401(k) accounts. The average 401(k) contribution reached a record 13.2% of pay in the first quarter of 2018, according to Fidelity Investments. Over the past year, 30% of 401(k) savers increased their contribution rates, with millennials leading the charge at 36%.
The Society for Human Resource Management’s annual benefits survey finds that employers offering paid parental leave increased significantly between 2016 and 2018 for every type of parental leave. The percentage of employers offering paid maternity leave increased from 26% in 2016 to 35% in 2018, and paid paternity leave increased from 21% to 29% over the same period. Meanwhile, adoption (20% to 28%), foster child (13% to 21%) and surrogacy (6% to 12%) leave also increased in the last two years. Dollar General, TD Bank and Unum are among the companies that added parental leave benefits for employees, while IBM, TIAA and Walmart are among those that expanded their programs.
June: Amazon, Berkshire Hathaway and JPMorgan name Atul Gawande as head of company
Amazon, Berkshire Hathaway and JPMorgan Chase tap Atul Gawande, the surgeon and journalist who has written extensively about America’s failure to grapple with an inefficient healthcare system, to head their new healthcare company.
July: NBGH, employers team up to tackle employee engagement in benefits
The National Business Group on Health announces its collaboration with more than 20 major U.S. employers — including AmeriGas — in the launch of the “Leadership Forum on Employee Experience,” an initiative striving to bolster employee engagement and improve workers’ experience with employer-provided health and well-being benefits and programs. Employee engagement is a major pain point for employers — and it’s made worse by the disconnect between how employers think they’re doing and how employees feel they’re being engaged, explains Ellen Kelsay, chief strategy officer at NBGH, pointing to recent Aflac data noting that 83% of employers believe they do a good job in benefits education, whereas only 75% of workers agree.
July: House passes bills expanding health savings accounts
The House of Representatives passes two healthcare bills that would expand the use of health savings accounts, a move that, if advanced, could significantly drive higher employee enrollment in high-deductible health plans that feature HSAs. Some provisions of the measures, if they ultimately become law, “could have a large impact” on employee enrollment in high-deductible health plans that feature HSAs, according to Paul Fronstin, director of health research for the Employee Benefit Research Institute.
August: IRS clears way for student loan benefit tied to 401(k)
A private letter allowed a plan from an unnamed employer — which is later confirmed to be Abbott — to tie retirement contributions to student loan repayment contributions. The private letter ruling isn’t precedential but begins to allay concerns from employers interested in offering a tax-free student loan benefit through their 401(k) programs in a way that complies with the law. Unlike a direct student loan benefit, which is considered taxable income, the arrangement approved by the IRS in its letter lets companies put equivalent pretax funds into a worker’s 401(k) account.
September: The Benefits Professional of the Year is…
EBN announces its Benny Award winners of 2018, which recognize individuals for excellence in the employee benefits/human resources field. Facebook’s senior benefits director, Renee Albert, is named EBN’s 2018 Benefits Professional of the Year. Since Albert joined the social media giant about five years ago, she has led the company to catch up on its traditional benefits by instituting a 401(k) match and beefing up medical and life insurance options, as well as focusing attention on quality of life and family benefits including caregiving, fertility benefits, paid leave and bereavement policies. The other winners are:
Benefits Leadership in Healthcare: Candace Shaffer, director of benefits at Purdue University
Benefits Leadership in Retirement: Jodi Budnick, senior vice president of talent at Optanix
Judges’ Choice: Milt Ezzard, vice president of global benefits at Activision Blizzard
October: DOL proposes rule easing multiple employer plan restrictions
The Department of Labor on Oct. 22 releases a proposed rule that would make it easier for small businesses to offer retirement plans to employees. The proposed regulation would allow small businesses to form multiple employer plans, in which companies band together to offer 401(k) plans to their employees. The arrangements are currently allowed for employers with an affiliation or connection, such as companies with a common owner or members of the same industry trade association. Under the proposed rule, MEPs could be formed by associations of employers in a city, county, state or a multistate metropolitan area, or in a particular industry nationwide, according to the DOL.
November: Major employers join forces to move the needle on paid leave
Nearly 50 major employers join forces to move the needle on one of the workplace’s biggest benefits issues: paid leave.
The National Business Group on Health announced its collaboration with dozens of large U.S. employers in the launch of the “Leave Optimization Forum,” an initiative to “help employers enhance leave management programs to better meet the needs of a diverse and changing workforce.” Members include Amazon, Aon, Cign2a, Darden, Dell, Facebook, General Electric, General Mills, PepsiCo, Prudential, Unum and Willis Towers Watson.
Healthcare giant CVS Health closed its $70 billion deal to buy Aetna Nov. 28, ending months of review from state and federal regulators. The deal, which brings together one of the nation’s largest pharmacy chains and one of the largest health insurers, has lofty goals. Among them: better managed care, new points of access to the medical system and healthier communities. But will those be accomplished, or will it leave employers and employees on the hook for higher healthcare costs? For the most part, insiders are skeptical it will drive down costs for employers or employees.
The new normal for brokers means consulting with their clients on benefit strategies and priorities in a new world, helping them address employees’ financial situation and making sure that benefit offerings adapt to current times.