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Benefit Plan Trends - Volume 61, Issue 11

Lundstrom Insurance Agency, Inc.

2205 Point Blvd., Suite 200
Elgin, Illinois 60123
Phone: (847) 741-1000
Fax: 847-428-8857

This publication intends to provide accurate information pertaining to the subject matter covered, however, it should not be considered as legal or tax advice. It is published and distributed with the understanding that neither the publisher nor Lundstrom Insurance Agency is rendering legal or tax advice. Before taking any action, you should always obtain specific advice and assistance from a competent attorney or tax advisor.

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Women in Tech Report Facing Ongoing Challenges

Companies are increasingly pursuing initiatives to raise the number of women working in information technology, but women who are currently employed in IT continue to report that struggles with pay inequity and work-life balance are holding them back, according the results of a survey conducted by talent recruitment firm Harvey Nash.

The survey of 681 female and male IT professionals from U.S. companies across a broad range of industries was conducted in August 2018. Nearly one-third (31%) of the professionals surveyed said their organization provides career development programs for women after they have been hired, and 29% of respondents reported that their company offers programs to support recruiting and hiring women in technology. In addition, 43% of the women surveyed said that the attention paid to gender equality in the workplace in the wake of the #MeToo movement has been making the technology industry more welcoming to women.

However, while 46% of all respondents said that diversity and inclusion are integral to their company's strategy, 39% said that their company's diversity efforts seem more like "checking a box." The findings also showed that the share of female respondents who claim their work environment remains unwelcoming appears to be increasing, rising from 30% in 2017 to 35% in 2018.

Researchers observed that although many companies are moving in the right direction on some gender issues, more needs to be done, particularly to close the gender pay gap and improve the working conditions for women in technology. For example, they noted, while 51% of the women surveyed in 2018 said they find working in technology financially rewarding, up from 35% two years ago; large differences in the perceptions of men and women remains, with 68% of male respondents, but just 30% of female respondents, saying they believe their company pays men and women equally.

In addition, the survey found that failing to pursue recruitment and career development programs for women can have far-reaching business implications for companies, and can directly impact retention. For example, 33% of female respondents, but 23% of male respondents, said an unsupportive environment was a deciding factor in their decision to leave their last job; and 23% of female respondents, compared to 13% of male respondents, reported that they had left their last job in part due to unfair treatment.

Researchers also noted that the technology industry's reputation for high-pressure assignments and long hours are reflected in the survey, as both female and male respondents ranked the demanding work environment as one of the top challenges of working in IT. The findings indicated that 44% of the men and 48% of the women surveyed perceive that family responsibilities threaten to slow their careers. However, 57% of the women, but just 28% of the men, surveyed said that having a family translates into lost opportunities for advancement or equal pay.


Employers Move Toward Managing Health Care Costs

Workers can expect to see their health care costs increase only moderately in 2019, as employers are turning away from shifting costs to employees, and toward addressing the underlying drivers of cost increases, according to the findings of an actuarial analysis conducted by professional services firm Aon.

The projections, released on October 15, are based on an analysis of actual employer-based health plan results data from Aon's Health Value Initiative database, which captures health care cost and benefit data for 497 large U.S. employers representing 10.9 million participants. The analysis showed that for 2018, the increase in employees' contributions to the cost of their health plans was at its lowest level over the last five years, as the combined increase in the share employees contribute to the cost of the health plan through premiums and the costs at the point of service rose just 1.6% in 2018. Projections for 2019 indicated that these costs are likely to increase slightly over their 2018 levels.

The analysis also revealed that in 2018, health care premiums rose 3.5%, but employers passed along a lower 2.2% premium increase to employees, while absorbing a larger 3.9% increase to company costs.  The results further indicated that after plan design changes and vendor negotiations, 2019 medical and pharmacy plans premiums are projected to increase 3.5%, or by the same percentage as in 2018.

Researchers emphasized that employers are increasingly seeking to manage health care costs by turning to personalized provider navigation and transparency solutions designed to help patients find high-quality, cost-effective care locally, or appropriate digital health and telehealth solutions.

The analysis found that around one-half of employers are considering adopting high-performance networks for addressing chronic conditions over the next three to five years; and that 29% of employers have already implemented center of excellence (COE) strategies for certain non-transplant procedures, while another 51% are considering doing so in the near future. Moreover, the findings showed that 15% of employers are already offering integrated delivery models to improve care delivery effectiveness, while another 54% of employers are currently piloting them; and 20% of employers offer value-based insurance design approaches, while another 59% are considering doing so in the future.

The results also suggested that the pharmacy market is changing to address the cost and transparency of drug pricing practices, and that more transparency into the entire pricing structure of market participants, including drug manufacturers and pharmacy benefit managers, is needed. Researchers noted, for example, that because rebates have come to make up a substantial portion of the total cost of branded products over the last five years, there has been a growing interest in determining how much of those rebates are passed on to plan participants at the point of sale.


Concerns about Corporate Culture and Diversity Grow

As the scope of board oversight becomes increasingly complex, public company directors are more engaged in overseeing topics ranging from corporate culture to cybersecurity, and are thinking more broadly about how diversity and social issues fit into their company's strategy, the results of PwC's Annual Corporate Directors Survey indicate.

The survey of 714 directors representing a cross-section of U.S. companies from over a dozen industries was conducted in the summer of 2018. Researchers pointed out that from charges of cheating to meet government targets, to sexual harassment, to defrauding customers, corporate culture problems have recently threatened the reputations of a number of high-profile companies. When asked to identify the factors that contribute to problems with corporate culture, the leading response of the directors surveyed was the tone set by the executive team (87%), followed by the tone set by middle management (79%), an excessive focus on boardroom results (74%), compensation plans that drive bad behavior or undesirable outcomes (67%), and a lack of communication or transparency from management (66%).

Although more than 80% of the directors polled said their company has taken some action to address culture concerns, just 17% said their company has revised its compensation plans. The most commonly cited approaches to tackling culture problems were enhancing employee training (60%) and improving whistleblower programs (42%). Moreover, just 21% of respondents said their company has reviewed and/or amended its crisis management plan for dealing with the risk of a reputational crisis arising from culture issues, and only 19% reported that they had implemented a culture or engagement component of the company's strategic plan.

The directors were also asked in the survey how they evaluate their company's culture. Almost two-thirds of respondents said they use their intuition or "gut feeling" from interacting with management (64%), and/or employee turnover statistics (63%).

In addition, the survey asked the directors whether they support incorporating social issues into their company's strategy, and, if so, which issues should be emphasized. While 29% of respondents said they think shareholders are too focused on corporate social responsibility, significant percentages agreed that their company should take certain issues into account when forming company strategy, including health care availability and cost (36%), resource scarcity (31%), human rights (28%), and income inequality (15%).

The findings clearly showed that most directors value board diversity: 94% of respondents agreed that diversity brings unique perspectives to the boardroom, 84% said they think diversity enhances board performance, and 81% agreed that diversity improves relationships with investors. The results further indicated that most of the directors surveyed support initiatives to promote diversity and inclusion in the workplace, with 66% saying that public companies should be doing more to promote gender/racial diversity, and only 9% saying that companies should be doing less. However, 45% of respondents admitted that their company does a fair or poor job of developing diverse executive talent, and 39% reported that their company's overall efforts to recruit a diverse workforce are only fair or poor.

In addition, the survey looked at how board members are dealing with the growing threat of cyber attacks. Nearly all respondents (95%) said that their board or company has taken steps to prepare for potential cybersecurity incidents. When asked to identify these measures, 67% of respondents said their board receives increased reporting on cybersecurity metrics, 57% said that the resources or budget dedicated to cybersecurity has increased, and 56% said that third-party advisors have been engaged.


How Delaying Retirement Can Affect Longevity and Health

Delaying retirement appears to increase longevity among men in particular, but it does not seem to have any significant impact on the likelihood of developing health problems like diabetes and depression, a study published in October by the Center for Retirement Research at Boston College has concluded.

The working paper, "How Does Delayed Retirement Affect Mortality and Health?" was written by research economists Alice Zulkarnain and Matthew S. Rutledge. The authors observed that older Americans have been retiring later for a number of reasons, including because work is becoming less physically demanding, employers have shifted from defined benefit to defined contribution pensions, and Social Security's incentives are changing. The researchers cautioned, however, that understanding the implications of working longer for mortality and health is complicated, because people who are healthier tend to work longer than people who are less healthy.

Taking advantage of a natural experiment in which a policy was implemented in the Netherlands that incentivized a broad cohort of early baby boomers in their sixties to delay retirement, the study used Dutch administrative data to explore the links between work and health outcomes related to depression and diabetes, applying an instrumental variable approach that took into account the joint relationship between work and mortality.

The findings showed that delayed retirement reduced the five-year mortality rate for men ages 62-65 by 2.4 percentage points, which represents a 32% reduction relative to the five-year mortality rate for non-working men of the same age. The authors noted, however, that the ultimate effect on male life expectancy depends on how permanent the effect is, as this reduction in mortality would increase life expectancy at age 60 by about three months if the effect applied only to the ages studied, but longer if the effect was permanent. For women, the results were inconclusive.

Moreover, the study found no significant relationship between delayed retirement and the health conditions studied, which suggests that these conditions were not responsible for the mortality reduction. The researchers speculated that this could be because depression and diabetes are not as acutely life-threatening as some other conditions, adding that further research is needed to identify the conditions through which the positive effect of working on mortality manifests itself. They also pointed out that the relationship between working and mortality could manifest itself through a variety of conditions, which may make it difficult to find a significant result for any one condition.

Based on these findings, Zulkarnain and Rutledge concluded that policies that delay retirement may increase longevity, especially for men, while having no detectable effect on depression or diabetes for people in their sixties. They recommended that U.S. policymakers who are considering changing the Social Security program to encourage workers to delay retirement take into account the possibility that doing so could extend the lives of retirees, and weigh the potential effects of reduced mortality on the benefits that are ultimately paid out.



The information contained in this newsletter is for general use, and while we believe all information to be reliable and accurate, it is important to remember individual situations may be entirely different. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. This newsletter is written and published by Liberty Publishing, Inc., Beverly, MA. Copyright © 2018 Liberty Publishing, Inc. All rights reserved.





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