Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, February 24, 1991 TAG: 9102210499
SECTION: BUSINESS PAGE: E-2 EDITION: METRO
SOURCE: MAG POFF BUSINESS WRITER
DATELINE: LENGTH: Medium
A recent survey by Hewitt Associates, an international actuarial firm specializing in employee benefit plans, found that many employers have increased the level or duration of coverage from estimates they made in August when the Middle East crisis began.
Although not required by law, the majority of those 37 U.S. companies said they're continuing to pay those workers full or partial salaries. Hewitt said many are continuing medical coverage for activated employees and their dependents.
Hewitt said most employers think they will not be greatly affected because of the small number of workers called to active duty.
Norfolk Southern Corp. two weeks ago joined the ranks of major employers announcing such policies. The transportation company said it will provide $1,000 per month to augment military pay as well as current levels of medical, dental and life insurance benefits. War-related exclusions in the life insurance also will be waived. About 50 Norfolk Southern workers have been called to active duty, the company said.
The survey, conducted in mid-January, found:
31 of the employers are continuing pay wages to ease the financial burden on reservists.
26 of them make up the difference between military pay and regular pay for periods ranging from two weeks to indefinitely. Hewitt said the typical plan is to supplement pay for six months.
Another five companies said they provide full pay for periods of one week to one year. One of those firms has a plan for full pay for one month followed by supplemental pay for another 22 weeks.
Hewitt said 22 of the companies had lengthened the time for continuing pay to activated military personnel since August.
The survey also asked about extension of fringe benefits to workers on military leave.
Activated reservists are automatically covered under the military medical plan. Their dependents are covered immediately under Champus, the government's civilian health plan.
Although they are not required to provide additional coverage, 18 employers said they are continuing to provide medical insurance for employees and their dependents for periods ranging from one month to one year.
Another 15 employers are continuing coverage on some other basis. The remaining three discontinued medical coverage altogether, although the law requires them to offer coverage at the workers' cost.
Hewitt said 16 of the employers had increased the duration or level of coverage since August. Five others had reversed an earlier decision against extending this benefit at all.
Life insurance isn't an obligation either unless coverage is grant- ed for other types of leaves. Of the employers surveyed, 19 are continuing life insurance for both the worker and dependents at active contribution levels for periods ranging from one month to the duration of the leave.
Four others are providing employer-paid coverage only, and seven are continuing coverage on some other basis. Seven employers are not continuing coverage.
Since the August survey, 18 employers had increased the duration or level of life insurance coverage. Nine who were unsure of, or had decided against, continuing coverage have extended life insurance for some period of time.
All employers with defined benefit pension plans have complied with a legal requirement to credit reservists for vesting and benefit accruals.
Of the 37 companies in the survey, 36 also offer some type of defined contribution pension plans. They are required to credit reservists with vesting during active military duty, but the circumstances of each defined contribution plan determine whether they must also credit benefit accruals.
Hewitt said nine of the employers offer a profit-sharing plan, and seven of them will make some contribution for the employee on military leave.
Thirty-four employers offer some type of savings plan, such as a 401(k). In general, Hewitt said, those companies that continue pay are allowing deferrals into the plan for as long as the pay continues. Three will allow reservists to make up contributions missed during military leave.
Two companies allow hardship withdrawals from the 401(k) plan although military duty isn't an explicit ground for hardship. Six others allow withdrawals in normal fashion.
Five employers allow reservists to suspend loan repayments to a 401(k) during the leave, and several others said they are deciding this on a case-by-case basis. Nine companies require reservists to follow their normal loan repayment schedules.
Hewitt said some employers in the survey are going beyond their usual policies to assist dependents of activated reservists.
One company, for example, has established a trust fund to help families with grants or loans. Several employers said they are making a special effort to remain in contact with the families during the course of Desert Storm.
by CNB