“…….where the employee fails to return certification, the regulations clearly state “No Soup for You!” Well, something close, at least: if the employee never returns the certification, according to the regs, “the leave is not FMLA leave.” 29 C.F.R. 825.313(b). ”
Day: October 20, 2012
Verizon To Transfer $7.5 Billion In Pension Benefits Through Annuity Purchase
In another corporate move to reduce pension liability risk, Verizon Communications Inc. said Wednesday that it is buying a group annuity to provide benefits to about 41,000 Verizon management retirees.Under the arrangement, Verizon will transfer about $7.5 billion in pension plan obligations to Prudential Insurance Co. of America by purchasing the annuity. The agreement covers plan participants who retired and began receiving pension benefits before Jan. 1, 2010. Verizon will contribute about $2.5 billion to the plan in connection to the transaction.“The transaction is expected to further Verizon’s objective of derisking the pension plan while improving the company’s longer-term financial profile,” New York-based Verizon said in a statement.Verizon’s move follows that of General Motors Co., which earlier this year said that it would purchase a group annuity — also from Prudential — to cover benefits of tens of thousands of participants in its pension plan for salaried employees.“The size of the pension settlement actions announced in 2012 is redefining the market,” Ari Jacobs, senior partner and global retirement solutions leader at Aon Hewitt in Norwalk, Conn., said in a statement.“In the U.S., the entire volume of pension liabilities annuitized in recent years has been about $1 billion per year and no single transaction has exceeded $1 billion since the 1980s,” Mr. Jacobs said. “The transactions by Verizon and GM are orders of magnitude larger than this and likely to be important in the continuing trend in pension derisking and settlement strategy.”Aon Hewitt served as Verizon’s lead strategy partner in the transaction.%%BREAK%%Earlier, experts said more employers will take such actions. Through purchasing an annuity and transferring the benefit obligations to an insurer, employers will save on costs such as premium payments to the Pension Benefit Guaranty Corp., as well as fees and costs associated with offering and administering their pension plans.In addition, employers taking such actions no longer will be exposed to fluctuating interest rates and investment results that can cause major changes in their pension plans costs and contributions.
Editor’s Note: Can a GASB 45 liability be transferred to an annuity? Or a group annuity with various political subdivisions participating through an Interlocal Agreement?
Employers Opt For Medical Tourism – By John Goodman
In Priceless, I hazarded a guess that employers could cut the cost of hospital care in half by engaging in medical tourism. It’s a variation on what is sometimes called “value-based purchasing” or “reference pricing.” In its pure form, the employer picks a low-cost, high quality facility and covers all costs there. If the employee chooses another hospital, the employee must pay the full extra cost of the more expensive choice. In Priceless, I argued that to take full advantage of the opportunities available, the patients must be willing to travel.
Several large companies are already trying the idea out. As Jim Landers explains:
Wal-Mart Stores Inc., the nation’s largest employer, will jump into medical tourism next year by offering insured employees no-cost heart and spine surgeries at Scott & White Memorial [in Temple, Texas] and seven other hospitals across the country…By using a hospital in the new narrow network, patients could save as much as $5,000 or more…
The hospitals in Wal-Mart’s network — including the Cleveland Clinic and Geisinger Medical Center in Danville, Pa. — have gained national reputations for both quality and value. Physicians and surgeons work under financial incentives rewarding improved patient outcomes.
Here is the complete network:
- Temple’s Scott & White Memorial — Texas (cardiac surgeries, spine surgeries)
- Mayo Clinic’s three hospitals (organ transplants)
- Cleveland Clinic (cardiac surgeries)
- Geisinger Medical Center (PA) (cardiac surgeries)
- Mercy Hospital Springfield — Springfield, Mo. (spine surgeries)
- Virginia Mason Medical Center — Seattle (cardiac surgeries, spine surgeries)
This is actually an expansion of a program already under way. And Wal-Mart is not alone:
- Wal-Mart developed a relationship with Mayo Clinic in 2007 for transplant and lung volume reduction surgeries.
- Lowes began an initiative in 2010 when it began offering workers the option to travel to Cleveland Clinic for cardiac procedures.
- PepsiCo announced in December of 2011 that it planned to offer its employees the option to travel to Johns Hopkins Medicine in Baltimore for cardiac and complex joint replacement surgeries.
Writing at Tom Emerick’s blog, Brian Klepper sums up the trend this way:
Health care organizations should not underestimate the significance of Wal-Mart’s (Center of Excellence) program. It is one of many signs suggesting that, after 40 years of being impervious to market forces, the health care bubble could burst. All it would take to change health care as we have come to know it is for more employers to collaborate and follow Wal-Mart’s, Lowes’ and PepsiCo’s leads. They would stop doing business with health care organizations that are unaccountable and don’t provide measurable value, and transfer that business to those that do.