In this issue:

• Employer’s Holiday Office Party Liability
• New Maryland Pregnancy Discrimination Law
• Key Differences Between HSAs and FSAs
• Helping 401(k) Plan Participants Become Better Investors

New Maryland Pregnancy Discrimination Law

Effective October 1, 2013, Maryland law requires employers with 15 or more employees to “reasonably accommodate” an employee’s disability caused or contributed to by pregnancy.

Under this new Maryland law, disabilities caused or contributed to by pregnancy are treated as temporary disabilities for all job-related purposes, including under any health or temporary disability or sick leave plan of the employer, and the law requires that written and unwritten employment polices and practices must be applied to any disability due to pregnancy on the same terms and conditions as they are applied to other temporary disabilities.

If an employee requests a pregnancy-related reasonable accommodation, covered employers must now explore with the employee all possible means of providing the accommodation, including:

• Changing the employee’s job duties
• Changing the employee’s work hours
• Relocating the employee’s work area
• Providing mechanical or electrical aids
• Transferring the employee to a less strenuous or less hazardous position
• Providing leave

Covered employers must also post in a conspicuous location, and include in any employee handbook, information concerning an employee’s rights to reasonable accommodations and leave for a disability caused or contributed to by pregnancy.

The law also provides that employers may avail themselves of the kind of “undue hardship” responses to accommodation requests that generally are available under the Americans with Disabilities Act.

For more information or if you need assistance in complying with this new law, please contact Michael Lanham, Client Services Manager at mlanham@hri-online.com or 443-321-7726.

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Key Differences Between HSAs and FSAs

Confusion between an HSA (Health Savings Account) and an FSA (Flexible Spending Account) remains high. According to a recent survey by financial services firm Fidelity Investments, 73% of respondents said an HSA is pretty much the same thing as a health FSA or were unsure, and the “use it or lose it” provision of FSAs was one of the most commonly misunderstood differences between the account types.

Unlike an FSA, all HSA balances carry over from year to year, allowing account holders to accumulate their savings for qualified health care needs. However, 69% of respondents incorrectly believed they would lose unspent money in an HSA at the end of the year.

The key differences between the two types of accounts are explained below.

Health Savings Accounts (HSAs), which help individuals save for future qualified medical expenses, must be linked to high-deductible health insurance plans. HSA accounts are employee-owned, and contributions can be made by the employer, the worker, or both, using pretax dollars. Funds employees withdraw to pay for healthcare services are not taxed. Amounts saved in an HSA accumulate over time (there is no “use it or lose it” rule).

Flexible Spending Accounts (FSAs), like HSAs, also allow employees to deduct pretax dollars from their paychecks to pay for eligible out-of-pocket healthcare expenses. FSAs do not need to be coupled with high-deductible plans. However, participants have to spend annual contributions by the end of the year or they forfeited the remaining funds. As of new IRS guidance, employers that offer FSA programs now have the option of allowing workers to roll over up to $500 of unused funds at the end of the plan year.

If you have questions about High-Deductible Health Plans, Health Savings Accounts or Flexible Spending Accounts, please contact Chris Rutzebeck, Benefits Consultant at chris@hri-online.com or 443-321-7738.

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Helping 401(k) Plan Participants Become Better Investors

There are many challenges 401(k) participants face in becoming better investors. Charlie Ellis, founder of the international consulting firm Greenwich Associates, outlines the most common ones:

• Confirmation bias. We actively seek and retain information that confirms what we already believe.
• The “our crowd” effect. If our friends believe what we believe, then we all must be correct.
• Hindsight bias. In hindsight, it wasn’t really our fault. We attribute bad investment outcomes to things we can understand, rather than to unpredictable market events.
• Failure to admit defeat. We don’t cut our losses early. Once an investment decision is made, we like to see things through.
• Fight or flight reactions. We let emotions drive our most important investment decisions.

As an employer, how can you help your employees become better investors despite these challenges? Consider including the following points in your next employee 401(k) education session:

• Risk appropriation allocations. Investments should be allocated based on a participant’s ability to bear risk while considering his age and retirement goals. Allocations should be reviewed annually.
• Never stop saving. Regardless of market fluctuations, participants need to continue to save and invest.
• Actively managing emotions. Since participants will be emotional at market tops and bottoms, they should be encouraged to develop a strategy to manage their emotions at these times. For example, encourage them to make a commitment to get professional investment advice when they feel the urge to make an investment change at market tops or bottoms.

If you have any questions or concerns about your current 401(k) plan or deferrals, please contact Alison Lalla, Pension Administrator at alalla@hri-online.com or 443-321-7713.