Diversions August 21, 2014

Child Rearing Costs Could Hit a Quarter Million

A child born in 2013 can cost his parents about $245,340 for food, housing, child care, education and other child-rearing expenses by the time he hits 18.
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And that amount is more like $304,480 when adjusted for projected inflation, says the U.S. Department of Agriculture’s annual analysis of average family expenditures on children. The figures are meant to reflect the expenses and lifestyle of a middle-income family.

According to the survey results, which are published annually as the “Cost of Raising a Child” report, the cost represents an overall 1.8% increase from 2012, though percentages spent on each expenditure category remain the same.

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As in the past, the costs by location are lower in the urban South ($230,610) and rural ($193,590) regions of the country. Families in the urban Northeast incurred the highest costs to raise a child ($282,480).

For the year 2013, annual child-rearing expenses per child for a middle-income, two-parent family ranged from $12,800 to $14,970, depending on the age of the child. The report also notes that family income affects child-rearing costs. A family earning less than $61,530 per year can expect to spend a total of $176,550 (in 2013 dollars) on a child from birth up to age 18. Parents with an income between $61,530 and $106,540 can expect to spend $245,340; a family earning more than $106,540 can expect to spend $407,820 on raising a child.

For middle-income families, housing costs are the single largest expenditure on a child, averaging 30% of the total cost. Child care and education was the second-largest expense, at 18%, followed by food, which accounted for 16% of the total cost.

The average cost of housing for a child up to age 18 is $87,840 for a middle-income family in the urban West, compared with $66,240 in the urban South and $70,200 in the urban Midwest.

In 1960, the first year the report was issued, a middle-income family could have expected to spend $25,230 ($198,560 in 2013 dollars) to raise a child until the age of 18. Housing was the largest child-rearing expense both then and now. Health-care expenses for a child have doubled as a percentage of total child-rearing costs during that time. In addition, some common current-day costs, such as child care, were negligible in 1960.

Expenses per child decrease as a family has more children. Families with three or more children spend 22% less per child than families with two children.

Compliance August 20, 2014

English-Language SPDs May Not Violate ERISA

A court has dismissed a claim that a company violated federal law by not sending a Spanish-language retirement plan document to Hispanic participants.
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U.S. District Judge Ellen Lipton Hollander of the U.S. District Court for the District of Maryland, noted that the Employee Retirement Income Security Act (ERISA) provides: “A summary plan description of any employee benefit plan shall be furnished to participants and beneficiaries…” and the “summary plan description … shall be written in a manner calculated to be understood by the average plan participant.” The plaintiffs in the case claim that the “average participant in the Defendant Plan speaks and reads Spanish as his primary language, and requires translation assistance with reading or speaking English.”

According to the court opinion, ERISA contains no express requirement that a summary plan description (SPD) be provided in multiple languages, but a section of the law provides, “In the case of either (1) A plan that covers fewer than 100 participants at the beginning of a plan year, and in which 25% or more of all plan participants are literate only in the same non-English language, or (2) A plan which covers 100 or more participants at the beginning of the plan year, and in which the lesser of (i) 500 or more participants, or (ii) 10% or more of all plan participants are literate only in the same non-English language, so that a summary plan description in English would fail to inform these participants adequately of their rights and obligations under the plan, the plan administrator for such plan shall provide these participants with an English-language summary plan description which prominently displays a notice, in the non-English language common to these participants, offering them assistance.”

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Hollander pointed out that the regulation does not require that documents be provided in a foreign language, but rather, the documents must include a notice of assistance in the foreign language. But, she said it was more important to the case that the regulation applies only if a certain number or percentage of participants are “literate only in the same non-English language.”

Hollander found the plaintiffs in the case did not allege facts sufficient to demonstrate the applicability of the regulation. They allege that they are “40 Spanish-speaking employees” whose “first language” is Spanish, but their complaint contains no allegation regarding the number of total plan participants, the percentage of total plan participants who are only literate in Spanish, or even that they are only literate in Spanish. Therefore, Hollander found they do not state a claim for relief. Though she dismissed the claim, she allowed for the plaintiffs to file an amended complaint within 17 days following the submission of her order, “[b]ecause plaintiffs may be able to remedy the shortcomings of the Amended Complaint.”

Hollander also ruled the plaintiffs’ second allegation—that they were not provided summary plan descriptions within 90 days of becoming participants—even if true, does not give rise to a private cause of action under ERISA because the plaintiffs did not allege that they suffered any harm as a result.

One plaintiff also claimed he was not provided requested plan documents within the time requested by ERISA. He sent a request for plan documents to the plan’s recordkeeper, and the recordkeeper responded via letter that it was not the plan administrator, and any requests should be sent to the plan administrator. The plaintiff argued that the plan administrator was notified of his request by the recordkeeper’s reply, but Hollander pointed out that the reply did not specifically mention that he requested plan documents. Separately, the plaintiff sent a request to the plan administrator and received the documents four days past the 30-day ERISA deadline for responding to document requests, so Hollander ordered that the plaintiff was entitled to statutory damages of $100 per day, for up to four days, depending on when the documents were sent.

The opinion in Melendez v. Hatfield’s Equipment & Dedication Services, Inc. is here.

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