Compliance March 18, 2016

7th Circuit Says Advocate's Plan Is Not a Church Plan

The appellate court maintained that, under ERISA, a church plan must be established by a church, and Advocate Health Care Network's DB plan was not.
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The 7th U.S. Circuit Court of Appeals has ruled that the defined benefit (DB) plan sponsored by Advocate Health Care Network does not qualify as a church plan exempt from many provisions of the Employee Retirement Income Security Act (ERISA).

The appellate court noted that Advocate is not a church, nor was its predecessor. According to the opinion, Advocate formed in 1995 as a 501(c)(3) non-profit  corporation from a merger between two  health systems—Lutheran General HealthSystem and Evangelical Health Systems. Today, Advocate is affiliated with both the Metropolitan Chicago Synod of the Evangelical Lutheran Church in America and the Illinois Conference of the United Church of Christ, but it is not owned or financially supported by either.

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Using much the same logic as the 3rd U.S. Circuit Court of Appeals in Kaplan v. St. Peter’s Healthcare System, the 7th Circuit decided a church plan established by a church and maintained by a church is a church plan, and a church plan established by a church and maintained by a church-affiliated organization is a church plan—but a church plan established by a church-affiliated organization and maintained by a church-affiliated organization is not a church plan. The appellate court in Advocate agreed with the 3rd Circuit that, according to the language of ERISA, for church plan exemption, there are two requirements—establishment and maintenance—and only the maintenance requirement is expanded by the use of the word “includes.”

The 7th Circuit affirmed a district court’s opinion. The appellate court’s decision in Stapleton v. Advocate Health Care Network and Subsidiaries is here.

Data & Research March 18, 2016

Financial Wellness Needs Diverse Among Employee Groups

Financial wellness needs can be age-based, income-based, or based a number of other factors, so any financial wellness solution needs to address the broad spectrum of needs, says Brian Murphy with Fidelity.
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Research from Fidelity Investments reveals how retirement plan participants define financial wellness and what they need to feel financial stability.

Based on a focus group of 65 participants in Fidelity administered plans and a survey of 483 retirement plan participants, Fidelity found one-third had not heard the term “financial wellness” before participating in the research. Only 12% have heard of financial wellness at their workplace, while most heard of it through the media or elsewhere.

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Asked for definitions of “financial wellness,” key themes emerged from participants’ responses, including “being not stressed out about money issues,” “having savings/emergency funds,” and “saving for the future.”

While “not being stressed” and “being on track for retirement” were key conditions of being financially well, being free of debt, having enough income to cover expenses and having an emergency fund all were secondary.

Brian Murphy, SVP of employee insights for Fidelity in Boston, tells PLANADVISER the biggest takeaway from the survey is the combination of the diversity of needs among participants with the consistency of emotions.

Financial wellness needs can be age-based, income-based, or based a number of other factors, so any financial wellness solution needs to address the broad spectrum of needs, he says. Murphy gave a few examples:

  • A worker living paycheck to paycheck wants to be able to pay bills and have a little left over to save or enjoy; having a budget and emergency savings is important;
  • Millennials may also be living paycheck to paycheck, balancing a desire to live in the moment with the need to look forward to expenses such as buying a home; they need to learn how to balance living today with saving for the future; and
  • Some employees make good basic financial decisions, but they have trouble with trade-offs between paying down debt, saving for children’s college and saving for the future.

The key emotion for all is feeling a lack of control over near-term decisions, a lack of confidence and a lack of stability. Fidelity says this is true across all demographics and income levels.

NEXT: Managing emotions and driving engagement

The overwhelming majority (83%) of participants in the study agree that being financially well helps them feel physically well.

Murphy explains that emotions employees feel about finances turn into stress, and if they are not brought under control, this leads to distress, “which really becomes a problem.” The study revealed that employees do not leave stress at door when they come to work; it remains a distraction on the job and impacts productivity. Some employees have to use work time to handle financial issues and some even miss days of work to deal with them. “In addition, financial distress can lead to physical issues as well, that turns into another impact for both individuals and employers, so managing emotions becomes critical,” he says.

“So financial wellness is about providing content, tools and support to help employees make better near-term decisions. This will help their emotional state,” Murphy adds. “Managing behavior and emotions are equally important.”

According to the study results, most participants are aware of financial wellness programs or resources offered at their workplace; however, in most cases, being aware of the programs doesn’t necessarily lead to usage.   

“Engagement is one of toughest challenges across all benefits,” Murphy notes. “We’re seeing employers putting more emphasis on financial wellness and working with providers to help drive engagement.”

Murphy offer four areas of best practices to drive engagement in financial wellness programs:

  • Personalization – Given the breadth of employees, the financial wellness solution has to include a broad range of needs, but participants will only engage if they feel it is personalized to them. Murphy suggests using provider data to make financial wellness programs relevant to each need.
  • Be at right place at right time – Employees go to different places for information. Financial wellness topics and solutions should be found on websites and blogs, for example, so employers do not miss an opportunity to engage employees. In addition, Murphy says, employees are more receptive to financial education at key life moments, for example, after having a baby or getting divorced. These are good times to engage employees.
  • Simple and engaging content – most employees aren’t financial knowledge seekers, so employers need to present content in a way that is simple, interactive and personalized or employees won’t engage.
  • Employer advocacy – if the employer is really behind the program, employees know the employer cares and thinks financial wellness is important for them, so engagement increases.

Fidelity anticipates a full release of study results next month.

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