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Benefits in the News

Older News | August 31, 2015

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Text of CMS Emergency Request for OMB Approval of MLR Data Submission Requirements
Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS]
8/31/2015 [Official Guidance]

"Based on CMS's identification of more significant data discrepancies than previously anticipated, we are requesting an emergency revision to the risk corridors data validation information collection requirement. We are requiring all companies with QHP issuers to complete a checklist to attest that their submission complied with critical guidelines for risk corridors and MLR data submission. For companies with issuers whose reported claims or premium amounts for risk corridors and MLR differ from data collected for other premium stabilization programs by a greater magnitude than expected, CMS is requiring that issuers quantify these differences, and provide a written explanation of the magnitude of the discrepancy. We require these descriptions to be approved by an actuary.... We are requesting OMB review and approval of this collection by September 4, 2015, with a 180-day approval period. Written comments and recommendations will be considered from the public if received by [September 3, 2015]."
Text of IRS Proposed Regs: Minimum Value of Eligible Employer-Sponsored Health Plans
Internal Revenue Service [IRS]
8/31/2015 [Official Guidance]

"This document withdraws, in part, a notice of proposed rulemaking published on May 3, 2013 ... and replaces the withdrawn portion with new proposed regulations providing guidance on determining whether health coverage under an eligible employer-sponsored plan provides minimum value.... [T]hese proposed regulations incorporate the substance of the rule in the HHS regulations. They provide that an eligible employer-sponsored plan provides minimum value only if the plan's share of the total allowed costs of benefits provided to an employee is at least 60 percent and the plan provides substantial coverage of inpatient hospital and physician services. Comments are requested on rules for determining whether a plan provides 'substantial coverage' of inpatient hospital and physician services.... These regulations are proposed to apply for plan years beginning after November 3, 2014. However, for purposes of section 4980H(b), the changes to the minimum value regulations ... do not apply before the end of the plan year beginning no later than March 1, 2015 to a plan that fails to provide substantial coverage for in-patient hospitalization services or for physician services (or both), provided that the employer had entered into a binding written commitment to adopt the noncompliant plan terms, or had begun enrolling employees in the plan with noncompliant plan terms, before November 4, 2014."
The Big Box Retailers in Health Care: Hospitals
National Center for Policy Analysis Health Policy Blog
8/31/2015 [Opinion]

"[W]hy does everything cost more in a big box hospital? It's not because of hospitals have high overhead (Home Depot has high overhead). It's due to the lack of competition. Ninety-seven percent of hospital bills are paid for by third-parties, so hospitals don't have to compete on price."
The Problem with Proposed Sales of Health Insurance Across State Lines
The New York Times; subscription may be required
8/31/2015

"The trouble with the idea is that varying or numerous state regulations aren't the main reason insurance markets tend to be uncompetitive. Selling insurance in a new region or state takes more than just getting a license and including all the locally required benefits. It also involves setting up favorable contracts with doctors and hospitals so that your customers will be able to access health care. Establishing those networks of health care providers can be hard for new market entrants."
Text of IRS Temporary Regs: Administration of Multiemployer Plan Participant Vote on an Approved Suspension of Benefits Under MPRA
Internal Revenue Service [IRS]
8/31/2015 [Official Guidance]

"A participant vote requires the completion of three steps. First, a package of ballot materials is distributed to eligible voters. Second, the eligible voters cast their votes and the votes are collected and tabulated. Third, the Treasury Department (in consultation with the PBGC and the Labor Department) determines whether a majority of the eligible voters has voted to reject the proposed suspension.... [T]he Treasury Department is permitted to designate a service provider or service providers to facilitate the administration of the vote.... Because the ballot for each eligible voter is accompanied by a unique identifier, the plan sponsor cannot itself distribute the ballot. Instead, the plan sponsor is responsible for furnishing a list of eligible voters so that the ballot can be distributed on the plan sponsor's behalf.... [B]allot packages be distributed no later than 30 days after the application has been approved and specify that the voting period begins on the ballot distribution date.... The temporary regulations do not provide for the collection of votes using paper ballots ... Within 7 days after the end of the voting period ... the Treasury Department (in consultation with the PBGC and the Labor Department) will either certify that a majority of all eligible voters has voted to reject the suspension or, if a majority of eligible voters did not vote to reject the suspension, issue a final authorization to suspend."
Employee Plans Compliance Unit (EPCU) Summary Report: Prohibited Stock Allocations in ESOPs Project
Internal Revenue Service [IRS]
8/31/2015

"The purpose of this project was to verify compliance with the prohibited stock allocation (PSA) rules and to ensure Form 5330, Return of Excise Taxes Related to Employee Benefit Plans, is filed appropriate to the Form 5500.... A review of responses indicates returns identified as having a PSA shows the information was either reported in error or the conversion of the information into IRS systems was flawed. None of the plans identified had PSA issues."
Employee Plans Compliance Unit (EPCU) Summary Report: Proposed Amendment Timely Executed (PATE) Project
Internal Revenue Service [IRS]
8/31/2015

"This EPCU project focused on plan sponsors who filed for a determination letter between December 2006 and January 2011, with a proposed caveat ... The focus of this project was to determine whether the designated caveat amendments were signed within the 90 day time frame, or if not, to determine the reason why.... An analysis of the closures indicate the majority of cases involved were found to be in compliance or were already under review through an examination process, SCP/VCP or by the Pension Benefit Guaranty Corporation (PBGC)."
Employee Plans Compliance Unit (EPCU) Summary Report: SIMPLE IRA Plan Follow-Up Project
Internal Revenue Service [IRS]
8/31/2015

"This project allowed EPCU to determine the effectiveness of contacting these sponsors of SIMPLE IRA plans. While a significant number of plans were timely amended (including extension), project results indicate as many as 25% of the amendments may be due to our contacts sent in 2006."
Retirement Plan Sponsors Seek a Breakup from Mutual Funds
Institutional Investor
8/31/2015

"Aside from the rise of index funds, it has taken hundreds of fee-related class-action lawsuits, two Department of Labor rules and numerous advances in recordkeeping technology to push down 401(k) fees. But plan costs are also coming down for a reason that has nothing to do with mutual funds themselves. The fact is, plan sponsors have been increasingly jettisoning mutual fund lineups in favor of more efficient retirement plan vehicles."
New EPCU Project: 401(k) Plans Reporting 4971(a) Tax
Internal Revenue Service [IRS]
8/31/2015

"A review of the Form 5330 return showed that excise tax was paid under IRC Section 4971(a) for late payment of required minimum contributions. The Form 5500 series return reports the plan contains a 401(k) feature and was not subject to the minimum funding requirements of IRC section 412. The EPCU will be mailing the contact letter and Information Request to plan sponsors. A closing letter will be issued to the plan sponsor upon completion of our review."
Employee Plans Compliance Unit (EPCU) Interim Report: Multiemployer Actuarial Certification Projects
Internal Revenue Service [IRS]
8/31/2015

"The purpose of this project is to collect and document actuarial certifications for multiemployer defined benefit plans required to be filed by PPA of 2006 and IRC Section 432.... MECA Project: 2008 was the first plan year certifications were required. At that time over 75% of the plans were in 'Green Status' indicating they were 'Neither Endangered nor Critical'. By 2009, the percentage of cases in 'Green Status' dropped to 31.80%; revealing a nearly complete reversal of plan funding. This was most likely due to the effects of the economic crisis. The 2012 filings show a significant improvement with 57.59% of certifications reporting their funding as 'Green Status'. Plans in the Critical, Seriously Endangered, or Endangered Status started to decline in number, which is a direct result of Legislative action under WRERA."
ACOPA Meets with PBGC on Form 501, Forced Cash-outs
American Society of Pension Professionals & Actuaries [ASPPA]
8/31/2015

"PBGC has found instances in which benefits are improperly transferred to individual retirement plans when a participant is a missing participant. In such cases, the plan administrator must follow PBGC's Missing Participant regulation, which requires that the plan either purchases an annuity for the participant or transfers the participant's benefits to PBGC, and in either case provides information to PBGC."
Changing Health Behavior: Engaging Employees as Consumers (PDF)
Buck Consultants at Xerox
8/31/2015

"In order to positively impact workforce health and reduce costs, employers must move their health programs beyond words to a state of consumer engagement and action. This article summarizes relevant concepts and findings from the fields of psychology, decision research, and social marketing and identifies best practices in developing consumer engagement. Employers can utilize this information when creating health care programs and tools to control costs and improve workforce health and productivity."
San Bernardino Pension Shift to Save $2.7 Million
Calpensions
8/31/2015

"Bankrupt San Bernardino approved a plan last week to disband the city fire department and annex the city to a large county fire district. Part of the expected savings is $2.7 million a year from avoiding future CalPERS rate increases. City firefighters now in CalPERS would be transferred to the San Benardino County Employees Retirement System. And the county system is said to face lower rate increases, because it has more quickly paid down pension debt."
Narrower Doctor Choices Coming for Group Health Plans
Forbes
8/31/2015

"Plans must narrow networks, researchers say, because insurers can no longer deny people coverage due to pre-existing conditions and must cover certain essential health benefits. While this means Americans are no longer discriminated against when it comes to buying health care coverage, it can lead to higher costs if they want a large number of doctor and hospital choices."
Fired Employee's FMLA Win Affirmed on Liability But $160k Award Vacated for Jury Trial on Damages
Wolters Kluwer Law & Business
8/31/2015

"Although the Eighth Circuit affirmed summary judgment for an employee as to liability on her FMLA entitlement and retaliation claims, in which she alleged that she was terminated after giving her employer notice of her need for a reduced schedule during her pregnancy, the court vacated and remanded the award of $49,769 in back pay, $30,876 in pre-judgment interest on the back pay, and $80,645 in liquidated damages.... [T]he Eighth Circuit observed that a jury should have determined whether the employee mitigated damages (and to what extent) and whether the employer acted in bad faith." [Wages v. Stuart Management Corp., No.14-2793 (8th Cir. Aug. 10, 2015)]
Large Foreign Banks at Risk of Ban on Pension Business Because of LIBOR Convictions
Pensions & Investments
8/31/2015

"The Department of Labor is tentatively denying affiliates of Deutsche Bank AG, UBS AG and Royal Bank of Scotland Group the right to serve U.S. retirement plan clients because of criminal convictions related to LIBOR manipulations and other charges.... However, DOL officials ... proposed granting Deutsche Bank a temporary exemption for nine months, with several conditions. The other banks, whose sentencing on the criminal convictions is expected later, have not been offered a temporary exemption."
When Does ERISA Apply to Small Business Owner Benefit Plans?
DeBofsky & Associates, PC
8/31/2015

"The court noted that for the ERISA exemption to apply, the corporation would need to have been owned by one person and his or her spouse. In this particular situation, however, the plaintiff owned the company along with two others, so the ERISA exemption did not apply." [Silverman v. Unum Group, No. 14-CV-6439 (S.D.N.Y. July 30, 2015)]
Would Financial Advisors Really Abandon the Market Over Fiduciary Rules?
InsuranceNewsNet.com
8/31/2015

"After sales commissions were banned in the United Kingdom, the number of advisors shrank -- by about 11 percent to 31,000 advisors at the end of 2012 -- before rising again.... Is the financial services industry voicing a legitimate concern, or is it resorting to scare tactics to protect its own hide?"
Third Circuit Says ERISA Administrative Appeal Denial Letters Must State Plan-Imposed Time Limits
Proskauer's ERISA Practice Center
8/31/2015

"Given that three circuits already have ruled consistently on these issues, plan fiduciaries should make sure that administrative appeal denial letters specifically set forth plan-imposed time limits. Furthermore, given the courts' tendency not to penalize participants for failure to consult SPDs and plan documents when pursuing a claim for benefits, plan sponsors and administrators should consider whether there is other information pertinent to the claims process to which they should affirmatively alert participants when determining claims for benefits."
Has Faster Growth in Health Care Spending Returned?
Robert Wood Johnson Foundation
8/31/2015

"Recent data show 2014 GDP growth is expected to be 3.9 percent. Thus, there does not yet appear to be evidence of an underlying spike in health spending; such a spike may still occur but most of the recent bump can be explained by the ACA coverage expansion."
401(k) Plan Participants React Visibly to Market Dip
Aon Hewitt
8/31/2015

"[T]rading activity [on Friday August 21 was 2 times the normal level, while activity on Monday [August 24] was 7 times the normal level, the third highest day of trading since 2008.... Preceding Friday's market drop, the Aon Hewitt 401(k) Index showed no days of above normal trading in July or the beginning of August. The trading movement on Friday and Monday was out of equities and into fixed income."
Fewer People Pay IRA Early Withdrawal Penalty
U.S. News & World Report
8/31/2015

"The number of people paying the penalty for early withdrawals from their retirement account has declined significantly over the past five years from 1.2 million in 2009 to 690,780 in 2013. And the amount paid in penalties has been cut in half from $456 million in 2012 to $221 million in 2013 ... People whose adjusted gross income is between $50,000 and $75,000 and those earning from $100,000 to $200,000 were the most likely to take early withdrawals from their retirement accounts[.]"
Seeking to Avoid Community Rating Under Health Care Reform, Health Benefit Trusts Failed to Provide Sufficient Proof of 'Bona Fide Association' Status
Thomson Reuters / EBIA
8/31/2015

"The court's application of the 'commonality' test in this case illustrates the difficulty in satisfying the standard, especially for employer groups or associations that appear to be mere marketing organizations or interest group forums. But even for legitimate associations, this court imposes a demanding standard, requiring a showing of how employers participate in activities of the association beyond provision of benefits to employees." [Associated Industries Mgmt. Serv. v. Moda Health Plan, Inc., No. No. 3:14-cv-01711 (D. Or. July 16, 2015)]
IRS Private Letter Ruling Confirms Tax Treatment of Employer-Provided Annual Transit Passes
Thomson Reuters / EBIA
8/31/2015 [Guidance Overview]

"The employer (in this case, a city government) represented that it purchases annual Smart Cards from the local transit authority for each of its employees. Each card, which may be used during the calendar year for transportation on the transit authority's bus and rapid transit systems and cannot be used for any other purpose, includes a photo of the employee and cannot be transferred to another individual. The card is deactivated upon an employee's termination of employment.... [T]he IRS ruled that the Smart Cards are considered transit passes within the meaning of Code Section 132(f) and that employees may exclude the card's monthly fair market value from income, up to the statutory monthly limit."
Third Circuit Requires Benefit Denial Letters to Contain Plan Limitations Period
Seyfarth Shaw LLP
8/31/2015

"As a possible silver lining, the Third Circuit stopped short of requiring the inclusion of the limitations period for the most analogous state law claim. It noted that, while the issue was not before the court, such a requirement would require legal research into various state law for each claim and would potentially result in the administrator providing legal advice to claimants." [Mirza v. Ins. Admin. of America, Inc., No. 13-3535 (3d Cir. Aug. 26, 2015)]
IRS Private Letter Rulings Address Handling of VEBA Assets by Employers
Thomson Reuters / EBIA
8/31/2015 [Guidance Overview]

"An employer sought to amend its VEBA trust agreement -- under which assets could be used exclusively to fund retiree health plan benefits -- to provide that a portion of the assets would be segregated to fund benefits under the employer's active employee health plan.... The IRS reasoned that because Section 501(c)(9) permits VEBAs to pay active employee health benefits, the proposed amendment would not be an impermissible inurement."
EPCU Projects Are a Kinder, Gentler Way to Ensure Retirement Plans Comply with Tax Qualification Requirements
PLANSPONSOR
8/31/2015

"ideas for compliance check projects can come from other sources than tax filings, such as retirement plan practitioners' suggestions or questions for agents.... When [a] project is started, the EPCU prepares a prospectus that details its scope and actions, develops an information request, and prepares a Web page for plan sponsors that get a contact letter to learn more about the project.... During the compliance check, the EPCU tries to resolve any plan sponsor errors found by asking the plan sponsor to go through the Voluntary Correction Program or other EPCRS programs. Some cases may be referred for audit."
Open Government at PBGC
Pension Benefit Guaranty Corporation [PBGC]
8/31/2015

"PBGC's Open Government webpage highlights our commitment to increase transparency, participation and collaboration with our stakeholders. The page includes important PBGC data sets that are used to increase our accountability to the public, and to improve the public's awareness of our operations and how we carry out our mission."
Dodd-Frank and Executive Compensation: Where Are We Now?
Seyfarth Shaw LLP
8/28/2015 [Guidance Overview]

"[T]he SEC has adopted final rules requiring pay ratio disclosures, as well as proposing rules mandating 'clawbacks' of incentive compensation from executives at exchange listed companies in the event of a restatement in certain circumstances. The purpose of this [article] is to provide a summary of these final and proposed rules and the steps that companies should consider taking to prepare to comply with the new rules. Additionally, because Dodd-Frank was enacted more than five years ago and implementation has been slow, we include a summary of the Dodd-Frank provisions relating to executive compensation and their current status[.]"
Mark-to-Market Accounting for U.S. Corporate Pensions: Implementation and Impact
Pension Research Council, Wharton School of the University of Pennsylvania; free registration required
8/28/2015

"Corporate plan sponsors have an ongoing management challenge with defined benefit (DB) pensions. Among the many issues is how to properly account for their associated assets and liabilities, and to provide clarity regarding the plan itself while not diluting transparency into the underlying business performance of the corporate plan sponsors. Traditional generally accepted accounting principles (GAAP) for pensions is an overly complex mechanism, attempting to balance these two often conflicting goals. There is an alternative approach: MTM accounting."
Text of IRS Notice 2015-58: Application of the Cooperative and Small Employer Charity Pension Flexibility Act (PDF)
Internal Revenue Service [IRS]
8/28/2015 [Official Guidance]

9 pages. "This notice provides guidance on certain issues relating to the application of the Cooperative and Small Employer Charity Pension Flexibility Act (CSEC Act) ... [which] specifies minimum funding requirements and related rules that apply with respect to certain defined benefit pension plans maintained by groups of cooperatives and related entities and groups of charities.... CSEC plans are generally the same plans that are covered by the delayed effective date provisions for the PPA '06 funding rules ... (as amended by PRA 2010).... In addition, the CSEC Act includes some rules that apply solely to eligible charity plans and some rules that apply to all multiple-employer plans.... [T]he guidance in this notice under Sections 414(y) and 433 also applies for purposes of sections 210(f) and 306 of ERISA in the case of a CSEC plan ... that is an employee pension benefit plan within the meaning of section 3(2) of ERISA."
2014 Risk Corridors Validation Instructions (PDF)
Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS]
8/28/2015 [Official Guidance]

37 pages. "While conducting reviews of MLR and risk corridors submissions, CMS identified a number of material differences from data that issuers submitted for other programs, including reinsurance and risk adjustment. CMS also identified a number of errors that could lead to submissions that do not comply with CMS regulations or guidance. In order to resolve these differences ... CMS needs additional information to explain the data in issuers' MLR and risk corridors submission. Without this additional information, CMS will be unable to verify the accuracy of the submission and validate the data needed to operate the MLR and risk corridors programs."
IRS Form 8951 and Instructions: Compliance Fee for Application for Voluntary Correction Program (VCP) (PDF)
Internal Revenue Service [IRS]
8/28/2015 [Official Guidance]

Rev. September 2015. "Generally, a compliance fee is required with each Voluntary Correction Program (VCP) submission. Use Form 8951 to determine and submit the applicable compliance fee for the VCP submission."
Proposed IRS Regs Would Update and Clarify the Penalty for Nondisclosure of Reportable Transactions
The Tax Adviser
8/28/2015 [Guidance Overview]

"The proposed regulations ... clarify the phrase 'decrease in tax' [1] as reflecting the difference between the amount of tax reported on the filed return and a hypothetical return without the reportable transaction, taking into account 'adjustments that result mechanically from backing out the reportable transaction' and [2] as including 'any other tax that results from participation in the reportable transaction but was not reported on the taxpayer's return,' such as an excise tax on excess individual retirement account contributions."
2015 Global Survey of Accounting Assumptions for Defined Benefit Plans
Towers Watson
8/28/2015

"The vast majority of long-term bond yields experienced a downward trend and discount rates followed suit. The average projected benefit security ratio decreased for the majority of countries ... The majority of surveyed countries have implied life expectancies between 20 and 30 years. The impact of the differences in this assumption will vary depending on whether the typical payment form is lump sum or annuity."
Larger Issuers, Larger Premium Increases: Health Insurance Issuer Competition Post-ACA
Technology Science
8/28/2015

"[T]he largest issuer in each marketplace had a 75% higher premium increase from 2014 to 2015 compared to other same-state issuers ... On average, the largest issuers raised rates by 23.9%, while the other issuers only raised rates by 13.7%. Moreover, the largest issuers' premium increase affects a larger proportion of plans ... and [does] not seem justified from the standpoint of incurred claims-to-premium ratio[.]"
Few Health Savings Accounts Owners Choose to Invest That Money
Kaiser Health News
8/28/2015

"About two-thirds of health savings accounts offer individuals the ability to use an investment option ... Yet few consumers are taking advantage of the investment options. The EBRI study found that 6.4 percent of people with HSAs invested their health savings account contributions in mutual funds or other financial vehicles. The remainder left the contributions in savings accounts, where their money isn't at risk from market fluctuations."
Auditors' Tests of Beginning Balances When a Small Plan Becomes a Large Plan
Belfint Lyons & Shuman, CPAs
8/28/2015

"The auditor must obtain an analysis of the participant accounts for as many years as necessary to build up the opening balances, possibly from inception of the plan. The analysis ought to show, for each year, the additions and deductions to the individual participant accounts, in total and by individual participant, the employer contribution, withdrawals, forfeitures, investment income and realized and unrealized gains and losses, and plan expenses.... For a defined contribution plan, it is particularly important to test the allocation of the employer contribution, forfeitures, and investment income, gains, and losses to the individual participant accounts for a sufficient number of preceding years to obtain satisfaction that the opening balance is correct."
Generational Differences in Planning for Retirement: A Checklist for Plan Sponsors (PDF)
National Association of Government Defined Contribution Administrators [NAGDCA]
8/28/2015

"[This] publication serves as a handy checklist for plan sponsors to better understand the behaviors, attitudes and communication preferences each demographic group has when it comes to retirement planning. Suggested communication points are included that plan sponsors might incorporate into participant materials and meetings."
Fiduciary Rule's Failure, in One Flowchart
U.S. Chamber of Commerce
8/28/2015 [Opinion]

"[This infographic] maps out the restrictions the agency's proposed change to the definition of fiduciary puts on consumers, employers and financial advisors. For starters, the change threatens to restrict retirement plan choice for small businesses. In addition, it may severely limit the advice that financial experts can afford to share with the owners of those small businesses and their workers, due to increased complexity and costs associated with the expansion of the definition."
State Law Claim for Invasion of Privacy Escapes ERISA Preemption
Williams Mullen
8/28/2015

"A federal court recently held that the plaintiff's claims under state law survived ERISA preemption, and remanded the case to state court to determine the plaintiff's claims for invasion of privacy and unfair business practices arising from the administrator's disclosure of her medical records to her employer.... While each of the federal circuits will have its own case precedents interpreting the Supreme Court's Davila holding, the ruling in Rose is representative of the preemption analysis." [Rose v. HealthComp, Inc., No. 15- 619 (E.D. Cal. Aug. 10, 2015)]
Told 'You Can't Take Time Off' After Taking Leave to Care for Son, Teacher Has FMLA Claims Revived
Wolters Kluwer Law & Business
8/28/2015

"[T]he appeals court found that [the teacher] never requested an accommodation, was not a qualified individual, and failed to provide adequate comparator evidence. However, his FMLA interference and reprisal claims were supported by his principal's alleged comments suggesting he would suffer repercussions if he took any more time off to care for his son[.] [Preddie v. Bartholomew Consolidated School Corp., No. 14-3125 (7th Cir. Aug. 24, 2015)]"
Many Employees Unaware of Workplace Wellness Programs
Wolters Kluwer Law & Business
8/28/2015

"Only 34 percent of U.S. workers said they have a health and wellness program at work, even though 70 percent of employers say they offer this type of program, according to recent research ... Nearly half (45 percent) of employee respondents said that if their company did offer a workplace wellness program, they would participate. However, these respondents all believe that a program is unavailable at their job."
Sixth Circuit: In Subrogation Dispute, SPD Was Enforceable in Absence of Plan Document
Practical Law Company
8/28/2015

"This case is a reminder that, notwithstanding Amara, there are circumstances when the parties to a litigated ERISA dispute should expect a court to enforce an SPD's terms over other purported plan documents.... As the court appears to acknowledge, it is not uncommon (particularly in the health plan context) for a plan to be established and maintained without both a formal plan document and an SPD. If, as in this case, the plan's administrators intend for the same document to serve as both the plan and SPD (an arrangement that would seem to be disfavored under Amara), that document should satisfy ERISA's requirements for both plan documents and SPDs." [Nat. Elevator Inc. Health Benefit Plan v. Moore, No.14-04048 (6th Cir. Aug. 25, 2015)]
Re-evaluating Value in Health Plan Management (PDF)
Chelko Consulting Group
8/28/2015 [Opinion]

"One [pharmacy benefit manager] recently estimated plan sponsors are wasting $4.9 billion annually as a result of inadequate management of specialty medications in the medical benefit. Most of this waste could be avoided by applying the utilization and trend-management programs that are traditionally found in the pharmacy benefit to the medical benefit.... [T]he results of [these] efforts will be more limited unless they are coupled with a new resolve regarding something most benefit managers have not considered: namely, providing different levels of plan coverage for the same specialty drug when it is used for different conditions."
Third Circuit Rules That Plan Must Give Notice of Limitations Period
Duane Morris LLP
8/28/2015

"The Court of Appeals ruled that the regulation [under ERISA Section 503] should be construed broadly and in favor of [the plan participant making a claim for benefits] because ERISA is a remedial statute and noted that both Courts of Appeals to have addressed the issue (the Sixth Circuit in 2014 and the First Circuit in 2011) have required disclosure of the plan-imposed time limit. In addition, practical considerations supported such an interpretation of the regulation, as imposing a requirement on plan administrators to inform claimants of deadlines for judicial review in documents that they are likely to actually read (i.e., adverse benefit determinations) results in only a trivial burden." [Mirza v. Ins. Admin. of America, Inc., No. 13-3535 (3d Cir. Aug. 26, 2015)]
Second Circuit Provides Test for Whether Severance Pay Policy Is an ERISA Plan
The Wagner Law Group
8/28/2015

"The Second Circuit concluded that the employer's policy represented a multi-decade commitment to provide severance benefits to a broad class of employees under a wide variety of circumstances and required individualized review whenever potentially eligible employees were terminated. This review requires managerial discretion and individualized evaluation. As a result, the Second Circuit found that the employer assumed the obligation to pay severance benefits on a regular basis, and, therefore, faced periodic demands on its assets that required long-term administration and control." [Okun v. Montefiore Medical Center, No. 13-3928 (2d Cir. July 17, 2015)]
Summary of Recent ERISA Appellate Court Decisions, August 27, 2015
Springer & Roberts LLP
8/28/2015

"The Second Circuit held that a Section 502(a)(1)(B) claim may be brought against the claims administrator who has discretion to make final benefit determinations, Section 502(a)(3) may impose a fiduciary duty arising indirectly from the [Mental Health Parity Act], and simultaneous claims under Section 502(a)(1)(B) and 502(a)(3) may proceed. The Third Circuit ... held that court orders remanding benefit claims to the administrator do not constitute final and appealable decisions under 29 U.S.C. Section 1291 ... and that a denial letter's failure to include the plan's time limitation to file a civil action renders it unenforceable. The Sixth Circuit held that a Summary Plan Description may be a controlling plan document (because apparently Amara is so 2011)."
How Can Employee Benefits Play a Role in Corporate Branding?
Grooms Benefit Solutions
8/28/2015

"[E]mployees who are very satisfied with their benefits are almost four times more likely to be very satisfied with their jobs. Further, almost 70% of employees with a comprehensive benefits program would recommend their place of employment (versus 46% with less benefits).... '[B]enefits that are perceived as fair and competitive will motivate employees to be more committed because the organization is signaling its own commitment to them.' "
U.S. Puts Deutsche Bank, UBS, RBS Pension Businesses on Notice
Bloomberg
8/28/2015

"The [DOL], in mid-July letters ... told Deutsche Bank AG, UBS Group AG and Royal Bank of Scotland Group Plc that it had tentatively rejected their requests to keep managing U.S. pension money. The banks, which admitted guilt earlier this year over manipulating foreign exchange or benchmark interest rates, were required to seek the department's permission to maintain their Qualified Professional Asset Manager status. Such a rejection would be a departure for the Labor Department, and the tentative decision comes early in a process that allows for additional bank response and public comment."
Some Variable Annuities Could Disappear From IRAs
InsuranceNewsNet.com
8/28/2015

"Variable annuities (VAs) with no income guarantees will 'probably be eliminated' from [IRAs] under the [DOL's] proposed conflict of interest rule, [Ryan Krueger, head of U.S. life insurance research for Keefe, Bruyette & Woods] said.... 'We'll take a look at it, we'll adjust, we'll adapt, we'll find a path forward and ... I really believe that what's going to continue to happen is market share is going to continue to move from second- and third-tier providers to first-tier providers,' said Larry D. Zimpleman, chairman and CEO of Principal Financial."
Two-Thirds of Participants Want Advice for Their 401(k)
Pensions & Investments
8/28/2015

"Sixty-seven percent of respondents said they would like personalized investment advice for their 401(k) plan ... However, only 12% indicated they currently get this type of professional advice in managing their retirement assets.... On their own, only 44% of the total indicated they were 'extremely/very' confident in their ability to make the correct decisions. With the help of a financial professional, that figure increased to 73%."
Examining Cash-Balance Plans' Investment Risk (PDF)
Segal Rogerscasey
8/27/2015

"Contrary to the common perception, cash-balance plans do not represent a low-risk arbitrage opportunity, but rather are a leveraged investment in risk assets, similar to a traditional DB plan. While cash-balance plans can provide greater design transparency, portability and more even benefit-accrual patterns, plan sponsors still face investment risk and return tradeoffs that need to be professionally managed."
New Guidance on Reenrollment of 2015 Enrollees
Timothy Jost, in Health Affairs
8/27/2015 [Guidance Overview]

"Insurers will get a list of their enrollees ... The guidance includes talking points that insurers can use to reach out to the enrollees on this list, advising them how to address each of the potential issues that may affect them. Of particular importance is getting individuals who have not yet filed form 8962 to reconcile their 2014 tax credits to file their taxes and the form.... The FFM will passively auto-enroll 2015 enrollees who continue to be eligible for coverage for 2016 and do not actively enroll, if their QHP insurer has provided the FFM with a 2016 reenrollment crosswalk template to indicate in what plan the 2015 enrollees will be reenrolled."
Market Performance and Pension Contributions Drive Rise in CEO Pay
The Conference Board
8/27/2015

"[T]he median total compensation of CEOs of U.S. public companies in the Russell 3000 index soared 11.9 percent in 2014 over the previous year and as much as 34.7 percent over 2010. Equity awards (excluding stock options) represent 34.7 percent of the total value of the CEO pay package, and the median grant-date value of stock awards grew about 25 percent in 2014.... Only a small part of CEO earnings comes from base salary; performance-based components now dominate.... Most CEOs on the top 25 list are not from large companies ... More and more companies have been introducing cash flow as a performance metric in their short-term incentive (STI) design[.]"
How Much Can Qualifying Longevity Annuity Contracts Improve Retirement Security? (PDF)
Employee Benefit Research Institute [EBRI]
8/27/2015

"[This] article provides analysis of the ability of QLACs to provide an effective longevity hedge for Boomers and Gen Xers who are simulated to participate in an in-plan offering either through a 10-year series of laddered purchases or as a one-time purchase based on the accumulated value of employer contributions from the current employer.... [E]ven at today's historically low interest rates, the purchase of these products may provide a significant increase in retirement readiness for the longest-lived quartile, compared with only a small reduction for the general population. Sensitivity analysis on the QLAC premiums resulting from likely increases in future interest rates provides even more favorable results."
Text of IRS Proposed Regs: Reportable Transactions Penalties under Section 6707A
Internal Revenue Service [IRS]
8/27/2015 [Official Guidance]

"This document contains proposed regulations that provide guidance regarding the amount of the penalty under section 6707A ... for failure to include on any return or statement any information required to be disclosed under section 6011 with respect to a reportable transaction. The proposed regulations are necessary to clarify the amount of the penalty under section 6707A, as amended by the Small Business Jobs Act of 2010. The proposed regulations would affect any taxpayer who fails to properly disclose participation in a reportable transaction."
Draft Form 5500-EZ Shows IRS Seeks More Compliance Information
Ascensus
8/27/2015 [Guidance Overview]

"Changes from the 2014 Form 5500-EZ proposed in the 2015 draft include the following. [1] New Line 4c asks for the name and phone number of the plan's trustee or custodian. [2] Line 6 asks for information on total participants, active participants, and participants separating from service who are not fully vested. [3] New Lines 13-16 request information on plan amendments, IRS opinion or advisory letters, required minimum distributions paid to five-percent owners, unrelated business taxable income (UBTI), and in-service distributions granted during the plan year."
Weighing the Cost of Health Care & Value-Based Choices
Marathon Health
8/27/2015

"The first step in becoming an informed healthcare consumer is planning ahead. When patients understand their benefit plan, payment responsibilities, and the healthcare options available to them at work and in their community, they are well on their way to being a savvy decision-maker and proactive manager of their health."
Increasing Employee Cost-Sharing (PDF)
Marsh & McLennan Agency LLC
8/27/2015

"Since the dawn of consumerism, however, opponents have been concerned that employees may decide not to seek care at all. Ultimately, if a participant does not get necessary care, the result can be more costly care down the road because of complications from untreated conditions. Studies to date do indicate that as cost-sharing is introduced, utilization is decreased. Unfortunately, these studies do not indicate whether participants are reducing necessary or unnecessary care."
Blue Cross and Blue Shield of New Mexico Will Not Offer Individual Products on the New Mexico Health Insurance Exchange in 2016
The Business Journals
8/27/2015

"According to the insurer, the premium rates BCBSNM charged for individual insurance products in 2014 and 2015 did not cover the claims costs the insurer incurred -- ultimately resulting in a $19.2 million loss.... The decision comes after the Office of the Superintendent of Insurance (OSI) formally denied the insurer's 51.6 percent premium rate increase earlier this month."
Effects of Financial Incentives on Workplace Wellness Program Participation and Utilization of Health Care Services and Spending (PDF)
Employee Benefit Research Institute [EBRI]
8/27/2015

"Participation in health risk assessments (HRAs) increased by 50 percentage points among members of unions that bargained in the incentive ... Participation in the biometric screening program increased 55 percentage points when financial incentives were provided. Biometric screenings led to an average increase of 0.31 annual prescription drug fills, with related spending higher by $56 per member per year. Otherwise, no significant effects of participation in HRAs or biometric screenings on utilization of health care services and spending were found."
Obamacare Is Facing Another Big Threat: Accounting
Quartz
8/27/2015

"The creation of ACA health exchanges may be the final nail in the coffin for retiree health-care benefits. The exchanges make it easier for states to phase out health-care plans because pre-Medicare retirees now have other, affordable options.... About 70% of governments offer health benefits to retirees. That suggests it's likely the state retiree population could be large enough -- even 1 million could make a significant difference -- to skew the exchange population older (and likely sicker) and increase premiums."
Impacts of Recent Market Volatility on DB Plan Funding (PDF)
Buck Consultants at Xerox
8/27/2015

"[The authors] recommend sponsors proactively review year-end projections of their plans' funded status and impacts on their balance sheet, 2016 accounting expense, contribution requirement and PBGC premiums.... [It's] also possible other important items could be triggered, such as benefit restrictions on accelerated forms of payment. Plan sponsors likely will want to review these outcomes under a variety of possible year-end asset return and discount rate scenarios to have a better understanding of what to budget for and how volatile results can be under the current market conditions."
Five Ways to Improve Employee Savings and Participation Rates
Manning & Napier
8/27/2015

"[1] Auto-enroll all employees into the plan on an annual basis.... [2] Increase the default deferral percentage.... [3] Incorporate opt-out auto escalation.... [4] Incentivize increased savings by adopting stretch matching contributions.... [5] Make employee financial wellness and engagement a year round campaign rather than an annual benefits enrollment consideration."
What Role Can Annuities Play in Easing Risks in Public Pension Plans? (PDF)
National Institute on Retirement Security [NIRS]
8/27/2015

36 pages. "This paper ... finds that: [1] Public DB pensions are highly cost efficient.... [2] Public DB pension plans provide significant consumer protections in state law, while annuities have different consumer protections in state regulation and insurance law.... [3] Longevity annuities focus on the insurance value and are less expensive than fixed income annuities."
The Future of Employee Premium Assistance Through Waivers Under the ACA
Health Affairs
8/27/2015

"For states that seek to protect and expand the [employer-sponsored health insurance] market, combining public dollars with employee and employer contributions is an attractive alternative. Using a State Innovation Waiver ... a state could create a [Health Insurance Premium Payment Program] that ... would take some of the money currently spent on tax credits and reduced cost sharing in a state-based exchange or the federally facilitated marketplace and redirect it to pay a portion of the employee premium cost and underwrite some of the out-of-pocket expenses."
A Healthy Side of Health Insurer Mega-Mergers
The Wall Street Journal; subscription may be required
8/27/2015 [Opinion]

"Anthem's proposed merger with Cigna following Aetna's acquisition of Humana has set off alarms about lack of competition in the health-insurance industry. But policy makers should consider the potential benefits of industry consolidation. The greater efficiency and market power of larger insurance plans could lower prices for consumers by offsetting the bargaining power of health-care providers."
SEC Approves Final Rules for Pay Ratio Disclosure
Holland & Knight
8/27/2015 [Guidance Overview]

"Companies should consider drafting 'pay ratio' as early as in connection with the 2016 proxy season disclosure, not necessarily to include the disclosure in their 2016 proxy materials, but to begin to understand the context of the disclosure and to strategically consider whether supplemental ratios or other information will assist with interpreting the pay ratio disclosure in a meaningful way given the company's business circumstances."
SEC Adopts Final Pay Ratio Rules (PDF)
Alston & Bird LLP
8/27/2015 [Guidance Overview]

"The rules only cover employees who are employed as of a date within the last three months of the registrant's fiscal year.... The rules exclude workers who provide services to the registrant or its consolidated subsidiaries as independent contractors or leased workers if the workers are employed by an unaffiliated third party and their pay is determined by that unaffiliated party.... The rules allow registrants to exclude individuals who became employees of the registrant as a result of a merger or acquisition that occurred during the fiscal year."

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