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Benefits in the News

Older News | July 3, 2015

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Sound the Alarm: The Private Insurance Exchanges Are Coming!
Physicians for a National Health Program [PNHP]
7/2/2015 [Opinion]

"The most important measure already taken by many employers is to increase cost sharing, especially by requiring high deductibles that must be paid before most benefits kick in.... The use of narrower provider networks also helps to reduce the employers' contribution to health care payments.... As if the deterioration in employer-sponsored plans has not already been enough, this switch to using a defined contribution voucher in private insurance exchanges will be a disaster for affordable health care for employees and their families."
District Court Holds That Providers Lack Standing to Sue ERISA Plans If the Patients Remain Liable to the Provider
Seyfarth Shaw LLP
7/2/2015

"The court concluded that Plaintiffs' patient agreements did not constitute assignments of the right to sue under ERISA because: [1] mere agreement for direct payment to a provider, without more, is not a valid assignment; [2] Plaintiffs' patient agreements did not manifest an intent to assign ERISA rights, and [3] the risk of non-performance did not run with right to receive payment." [Brown v. Blue Cross Blue Shield of Tennessee, Inc., No. 1:14-CV-00223 (E.D. Tenn. June 9, 2015)]
Plan Selections by County in the Health Insurance Marketplace
Assistant Secretary for Planning and Evaluation [ASPE], U.S. Department of Health and Human Services [HHS]
7/2/2015

"The dataset provides the total number of Qualified Health Plan selections by county for the 37 states that use the HealthCare.gov platform, including the Federally-facilitated Marketplace, State Partnership Marketplaces and supported State-based Marketplaces for the Marketplace open enrollment period from November 15, 2014 through February 15, 2015, including additional special enrollment period (SEP) activity reported through February 22, 2015."
Submitting Your Own ACA Reporting Forms? The IRS has Homework for You!
Lockton
7/2/2015 [Guidance Overview]

"Employers submitting their own Reporting Forms, third parties submitting Reporting Forms on behalf of others, and developers of filing software (combined, Submitting Entities) are required to complete the following steps prior to being able to electronically submit any Reporting Forms: [1] Register with the IRS's e-services website ... [2] Obtain an AIR Transmitter Control Code (TCC), a unique identifier authorizing each Submitting Entity to submit the Reporting Forms, and [3] Pass a series of technical/system tests to ensure that Reporting Forms will be properly submitted when due.... Conflicting guidance suggests that employers submitting their own paper Reporting Forms may need to complete the first two steps but not the third step."
CMS Webinar: 2014 Reinsurance Payments: Issuer Reports and Timeline
Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS]
7/2/2015 [Guidance Overview]

28 presentation slides; June 15, 2015. Topics: [1] Provide issuers with an overview of the June 30, 2015 Issuer Reinsurance Payment Report; [2] Walk through the schedule of reinsurance payments for 2014; and [3] Describe any adjustments to reinsurance payments.
Case Study: Diagnosing Effective Deferred Compensation Programs for a Governmental Hospital's Executives
Milliman
7/2/2015

"Upon seeing the current age and service data of the initial group to be covered, Milliman recommended that only 'post-plan effective date service' be counted toward meeting the vesting requirements. This would allow a 'golden handcuff' feature to be attached to the program. Projections were illustrated under two different vesting schedules ... and three separate investment return scenarios ... This gave the client an idea of the variances in ultimate employer costs and benefits paid depending on their selection of plan design, vesting schedule, and investment return assumption under various 'actual' market conditions. The study included sensitivity analysis of selected assumptions on the cost projections and the consequences of variances between actual investment returns on any assets accumulated under the plan compared to assumed returns."
Which Country Ranks First in Retirement Readiness?
Aegon
7/2/2015

"India ranks first in Retirement Readiness with 44% of Indian workers [who say they] are confident they will retire with a comfortable lifestyle. Globally this number is just 22%. This is the second time in a row that India has ranked first amongst the 15 countries surveyed, as 70% of Indians (index of 7 out of 10) this year, are financially prepared for retirement and are optimistic about future prosperity."
The Relationship Between Automatic Enrollment and DC Plan Contributions: Evidence from a National Survey of Older Workers
Center for Retirement Research at Boston College
7/2/2015

"[A]utomatic enrollment is associated with a higher proportion of workers included in DC plans; however, automatically enrolled workers are less likely to contribute to their DC plans than voluntarily enrolled workers. Auto enrollment is also associated with lower employee contribution amounts and rates. However, the employers of auto-enrolled workers are more likely to contribute to their employees' accounts than are the employers of voluntarily enrolled workers. Additionally, employer contribution amounts and rates are higher among workers who are automatically enrolled. Even so, the combined effect is that the retirement accounts of automatically enrolled older workers receive, on average, $900 less in combined annual contributions and have contribution rates that are 1.6 percentage points lower than those of voluntarily enrolled workers."
SEC Fact Sheet: Listing Standards for Clawing Back Erroneously Awarded Executive Compensation
U.S. Securities and Exchange Commission [SEC]
7/2/2015 [Guidance Overview]

"[L]isted companies would be required to develop and enforce recovery policies that in the event of an accounting restatement, 'claw back' from current and former executive officers incentive-based compensation they would not have received based on the restatement. Recovery would be required without regard to fault. The proposed rules would also require disclosure of listed companies' recovery policies, and their actions under those policies.... [T]he listing standards would apply to incentive-based compensation that is tied to accounting-related metrics, stock price or total shareholder return. Recovery would apply to excess incentive-based compensation received by executive officers in the three fiscal years preceding the date a listed company is required to prepare an accounting restatement."
Text of SEC Proposed Rule: Listing Standards for Recovery of Erroneously Awarded Compensation (PDF)
U.S. Securities and Exchange Commission [SEC]
7/2/2015 [Official Guidance]

198 pages. "[The SEC is] proposing new Exchange Act Rule 10D-1 to set forth the listing requirements that exchanges would be directed to establish pursuant to Section 10D of the Exchange Act ... [along with] rule amendments to Regulation S-K, to the forms by which foreign private issuers file their Exchange Act annual reports, and for certain investment companies, to Form N-CSR and Schedule 14A. These amendments would require disclosure of the listed issuer's policy on recovery of incentive-based compensation and information about actions taken pursuant to such recovery policy."
California and Massachusetts Employers Feverishly Prepare for Paid Sick Leave (PDF)
Buck Consultants at Xerox
7/2/2015 [Guidance Overview]

9 pages. "[California] Employers that have 'unlimited' vacation or PTO policies ... would still need to track paid sick time accrual and usage, and report the amount of available sick leave on employees' pay stubs or other payday documents. If they opt to frontload the paid sick time, they may avoid tracking accrual by hours of work but would still have to track and report sick leave use and availability.... [Massachusetts employers] may require certification of the need for sick time if an employee uses that time for more than 24 consecutively scheduled work hours. Employers cannot delay the taking of leave or withhold payment for earned sick time because they have not received the certification."
Text of PBGC Announcement Extending Deadlines Due to Severe Storms, Tornadoes, Straight-line Winds and Flooding in Arkansas
Pension Benefit Guaranty Corporation [PBGC]
7/2/2015 [Official Guidance]

"This Disaster Relief Announcement provides relief relating to PBGC deadlines ... [to] any person responsible for meeting a PBGC deadline ... that is located in the disaster area for which the [IRS] has provided relief in DAL-2015-78, June 29, 2015 ... or [who] cannot reasonably obtain information or other assistance needed to meet the deadline from a service provider, bank, or other person whose operations are directly affected by the Severe Storms, Tornadoes, Straight-Line Winds and Flooding that began on May 7, 2015, in Arkansas.... The relief generally extends from May 7, 2015 through August 31, 2015."
Massachusetts Issues Regulations on Earned Sick Time for Student Workers and Faculty
Holland & Knight
7/2/2015 [Guidance Overview]

"The new Massachusetts Earned Sick Time Law outlines regulations that govern sick time accrual and use as it relates to student workers and faculty. The final regulations exempt most student workers from coverage under the law.... [A]ll full-time, part-time and adjunct faculty are entitled to earn and accrue paid sick leave."
Pension Finance Update as of June 30, 2015 (PDF)
October Three Consulting
7/2/2015

"Higher interest rates produced positive results for pension sponsors in June, and for the first half of 2015 generally. Both model plans ... saw improvements in funded status last month and are solidly above water so far in 2015, with Plan A ahead more than 6%, and Plan B up 3% through June[.]"
IRS Health Care Tax Tip 2015-38: Get to Know the Small Business Health Care Tax Credit
Internal Revenue Service [IRS]
7/2/2015 [Guidance Overview]

"To be eligible for the credit, you must: [1] have purchased coverage through the Small Business Health Options Program -- also known as the SHOP marketplace; [2] have fewer than 25 full-time equivalent employees; [3] pay an average wage of less than $50,000 a year; [4] pay at least half of employee health insurance premiums.... Even if you are a small business employer who did not owe tax during the year, you can carry the credit back or forward to other tax years." [Updated July 1, 2015.]
Employers See Opportunities After King v. Burwell Decision
Mercer/Signal
7/2/2015

"More employers believe the decision will have a positive effect than a negative effect -- 29% compared to 17% -- although a slight majority (54%) doesn't believe this ruling affects them one way or the other.... Just under half of all respondents that currently offer coverage to early retirees -- 45% -- say they are considering steering retirees to the public exchange or have already begun to do so.... Employers are much less likely to consider the public exchange as an alternative source of coverage for currently eligible part-time employees.... Relatively few respondents -- 16% -- believe that the increase in the number of Americans with health insurance has affected their employees' ability to access health care -- so far."
Supreme Court to Rule on Preemption of Vermont Health Care Reporting
Thompson SmartHR Manager
7/2/2015

"Sixteen states are developing similar databases to which all payers must report, and the 2nd Circuit's holding creates 'a gaping hole' in those databases, by cutting out data for tens of millions of Americans covered by self-insured plans, according to Gobeille's brief. Because most Americans who receive health insurance coverage from their employers are covered by self-insured plans, 'an all-payer claims database that omits self-insured plans cannot be considered accurate or comprehensive.' " [Gobeille v. Liberty Mutual Ins. Co. (2d Cir. Feb. 4, 2014, cert. pet. granted June 29, 2015)]
Risk Adjustment Program Requiring Large Payments from Massachusetts Insurers
Lowell Sun
7/2/2015

"[T]he state Connector Authority issued notifications to inform 16 companies in the 650,000-person merged market of the new payments and charges under a risk adjustment program mandated under Obamacare. Boston-based Minuteman Health covers 15,000 people in Massachusetts and New Hampshire and is being hit with a charge of $3,064,679. 'It represents about 71 percent of our total premium for 2014,' CEO Tom Policelli [said] ... Connector officials say the program will result in $61 million in transfers among insurers ... [or] about 3 percent of the $1.98 billion in merged market premiums[.]"
Ten Things to Know About Telemedicine
The Alliance
7/2/2015

"[1] It's 'unstoppable'.... [2] It typically costs less, although savings can vary.... [3] It's more than one kind of care.... [4] It's moving to the workplace.... [5] A $49 price tag is common for primary care... [6] When family members can't be at the bedside of a critically-ill family member, some hospitals now provide updates via telemedicine.... [7] Rural hospitals and skilled nursing facilities use telemedicine... [8] It's a quick solution for minor ailments.... [9] Most people can connect.... [10] It's growing fast."
SEC Issues Proposed Rule on Mandatory Clawbacks
Meridian Compensation Partners, LLC
7/2/2015 [Guidance Overview]

"[T]he Proposed Rule would apply to all current and former Section 16 officers who earned 'incentive' compensation during a three-year 'look back period' ... The Dodd-Frank Act defines excess incentive-based compensation as 'the amount by which incentive compensation previously paid to the executive officer exceeds what would have been paid to the executive officer under the restated financial statements.'... [T]he SEC staff broadly interpreted this provision to also mean incentive compensation linked to the achievement of a specific stock price or to total shareholder return (TSR).... [W]hat would have been a company's stock price or TSR if it had initially issued correct financial statements is not known or knowable. Undaunted by this challenge, the SEC staff crafted the Proposed Rule to require a public company to 'estimate' this stock price or TSR through any reasonable method."
Cancel Your Plans for the Independence Day Weekend So You Can Study the SEC's Proposed Compensation Clawback Rules!
Winston & Strawn LLP
7/2/2015 [Guidance Overview]

"The proposal would require each company to adopt its recovery policy no later than 60 days following the date on which the listing exchange's listing rule becomes effective.... The proposed rules would apply to incentive-based compensation based on stock price or total shareholder return.... [T]he proposed rules would give companies the discretion not to recover excess incentive-based compensation received by executive officers if the expense of recovery would exceed the amount to be recovered ... However, the rules would require extensive disclosure of the circumstance of any decision not to pursue recovery."
Leakage from 401(k) Loans, Defaults Is Greater Than Previously Thought
BenefitsPro
7/2/2015

"[According to a recent study,] 20 percent of people at any one time have loans outstanding from their 401(k) plans, while nearly 40 percent have borrowed at some time or other within the past five years.... In addition, 10 percent of 401(k) loans are not repaid, usually because the borrower has moved on to a new employer.... The study's authors estimated that loan default leakage from retirement plans adds up to $6 billion every year."
How the Same-Sex Marriage Ruling Impacts Employee Benefits
Ascende
7/2/2015

"There are a number of questions that will need to be answered in future guidance.... In the event any employee benefit plans require changes, what would be the effective date of the change? What deadline might apply to making such changes? Will new 'change in status' events be created for mid-year election changes to Section 125 cafeteria plans?"
Pharmaceutical Industry Payments to Doctors Are Ingrained, According to CMS Data
National Public Radio
7/2/2015

"That doctors receive big money from the pharmaceutical industry is no surprise. The latest data released by [CMS] shows that such interactions are widespread, with not only doctors, but thousands of dentists, optometrists, podiatrists and chiropractors receiving at least one industry payment from August 2013 to December 2014. What is being seen for the first time now is how ingrained pharmaceutical companies and their sales reps are in the lives of those who write prescriptions for their products.... 768 doctors received payments on more than half of the days in 2014. More than 14,600 doctors received payments on at least 100 days in 2014."
CBO Analysis of Approaches to Reduce Federal Spending on Military Health Care (PDF)
Congressional Budget Office [CBO]
7/2/2015

22 presentation slides. Topics include: [1] Recent proposals to restructure TRICARE; [2] Slowing the growth of health care costs: options examined by CBO; [3] Cumulative budgetary effects of policy options that would raise military retirees' cost sharing, 2015 to 2023; [4] Potential for savings in other approaches.
IRS Rule for Premium Payment Plans Could Have 'Devastating Effects' on America's Small Businesses
National Association for the Self-Employed [NASE]
7/2/2015 [Opinion]

"A new [IRS] policy imposing a $100 a day fine per employee on small businesses that offer traditional health reimbursement accounts (HRAs) goes into effect [July 1] and the consequences could be crippling for America's smallest employers....The bipartisan Small Business Healthcare Relief Act ... would provide a remedy to this situation by enabling small businesses to continue to use [HRAs] which allow employers to provide pre-tax dollars to employees to pay for medical care and services."
Millennials Want to Save, But Many Lack Funds to Do So
National Association of Plan Advisors [NAPA]
7/2/2015

"For nearly all workers, income correlated to their willingness to contribute to a 401(k) plan; among Millennials, the average earnings of savers ($57,000) was more than double that of non-savers ($28,000).... Millennials were also the most likely to say they would increase their DC plan contributions if they got a raise, with 61% of that age cohort saying they would, compared with 40% of Baby Boomers. Four in 10 Millennials also said they had increased their 401(k) contribution amounts over the past year, compared with 21% of Boomers."
Change in Average 401(k) Account Balances from January 1, 2014 Through July 1, 2015 (PDF)
Employee Benefit Research Institute [EBRI]
7/2/2015

This report shows the change in average 401(k) account balances, grouped by age and tenure, from January 1, 2014 through July 1, 2015, counting only those participants who had an account balance at the end of 2013.
Selected Characteristics of Savings and Thrift Plans for Private Industry Workers
U.S. Bureau of Labor Statistics [BLS]
7/2/2015

"This [report] looks at the growth in the prevalence and at selected characteristics of employer-provided savings and thrift plans in private industry in the United States.... Eligibility requirements ... Vesting requirements ... Rollovers to employee's savings and thrift plans ... Loans from an employee's savings and thrift plans ... Methods of retirement benefit distribution."
Text of CMS Quick Start Guide: Request for Reconsideration Form for Risk Adjustment and Reinsurance (PDF)
Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS]
7/1/2015 [Guidance Overview]

Dated June 30, 2015; version 1.6. "There is a three-level Administrative Appeals process for Risk Adjustment (RA) and Reinsurance (RI): [1] Request for Reconsideration; [2] Informal Hearing before the [CMS] Hearing Officer; [3] Review by CMS Administrator (or delegate)." [Available online: Request for Reconsideration (Risk Adjustment and Reinsurance).]
Supreme Court Decision Provides New Financial Planning Opportunities
Michael Kitces in Nerd's Eye View
7/1/2015

"The Supreme Court's decision creates several immediate new planning opportunities for same-sex married couples, particularly those who were previously married in another state but have been recently living in a state that did not recognize (or one of the 13 that outright banned) their marriage. Those couples will now be able to do everything from filing joint income tax returns, to benefit from the marital deduction for state estate and inheritance tax purposes, to get divorced if the couple decides to separate. In fact, for many such couples, a major planning issue will simply be unwinding the strategies previously in place to handle the fact that their marriage wasn't recognized, but are no longer necessary!"
State Court Considers Fiduciary-Like Liability for 403(b) Non-ERISA Plans
Business of Benefits
7/1/2015

"What school districts had never paid close attention to was their potential liability under non-ERISA, state-law-based legal claims, such as breach of contract, negligence, and other similar duties.... Though these discussions ... had always taken the nature of a nerdish argument between lawyers who really needed to get a life, a Wisconsin court has shown us that this could be a matter of very real concern to public schools.... What the [Wisconsin Court of Appeals] found was that an action alleging a failure to exercise ordinary care in the administration of a 403(b) plan, if proven, may entitle the Retirees to relief in state court."
It's Time to Bust the Myth That Assumptions Drive Pension Costs
Pensions & Investments
7/1/2015 [Opinion]

"The woefully misguided -- and dangerous -- idea that assumptions drive costs leads decision-makers down a perilous path. Cost management is not achieved by 'managing' actuarial assumptions. Costs are determined by what actually happens, not by what we assume or predict will happen.... The cost of a pension plan, paid by making contributions over time, is a function of the pensions paid out and of the investment earnings of the fund. Period. Costs are not a function of assumptions."
First-Year Results from Reinsurance and Risk Adjustment Programs
Health Affairs
7/1/2015

"Nationally, many of the new cooperative plans received risk adjustment programs, but others paid into the risk adjustment program. The Blue plans, traditionally the insurer of last resort in many states, generally did well in the reinsurance programs but had mixed results in the risk adjustment program. Certainly insurers that have to pay in to the program will not be pleased, and we can expect to hear from them. There may also be mistakes in the data. Insurers can appeal results they believe to be incorrect."
Updated PCORI Fees Due by July 31
Cheiron
7/1/2015 [Guidance Overview]

"This fee will continue to be adjusted in the future until it is no longer payable. For self-insured plans, the return must be filed by July 31 of the calendar year immediately following the last day of the plan year. For plan years ending on and after January 1, 2014 and before October 1, 2014, the fee, payable by July 31, 2015 is $2.00 multiplied by the average number of covered lives. For plan years ending on and after October 1, 2014 and before January 1, 2015, the fee, payable by July 31, 2015, is $2.08 multiplied by the average number of covered lives. The $2.08 fee amount also applies for plan years ending on and after January 1, 2015 and before October 1, 2015, payable by July 31, 2016."
Part-Time Private Industry Workers Less Likely to Have Access to Benefits in 2013
U.S. Bureau of Labor Statistics [BLS]
7/1/2015

"In March 2013, nearly three-fourths (74 percent) of full-time private industry workers had access to retirement benefits, compared with just 37 percent of part-time workers. Similarly, 85 percent of full-time workers had access to health insurance through their employers, compared with only 24 percent of part-time workers. Full-time workers were also much more likely than part-time workers to have access to paid holidays, sick leave, and vacations."
CMS Posts Full Year of 2014 'Open Payments' Financial Data
Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS]
7/1/2015

"[CMS has] published 2014 Open Payments data about transfers of value by drug and medical device makers to health care providers. The data includes information about 11.4 million financial transactions attributed to over 600,000 physicians and more than 1,100 teaching hospitals, totaling $6.49 billion.... The Open Payments program, created by the [ACA], requires drug and device manufacturers to report transfers of value (i.e., payments, honoraria or research grants) to health care providers, as well as other industry-related investments providers may have. The program relies on voluntary participation by physicians and teaching hospitals to review the information submitted by these companies."
CMS Summary Report on Transitional Reinsurance Payments and Permanent Risk Adjustment Transfers for the 2014 Benefit Year (PDF)
Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS]
7/1/2015

49 pages. "99.7 percent of issuers who set up EDGE servers successfully submitted the data necessary to calculate reinsurance payments and risk adjustment transfer.... [F]or the 2014 benefit year, reinsurance contributions exceeded the requests for reinsurance payments; therefore we have increased the coinsurance rate to 100 percent. For the 2014 benefit year, over $7.9 billion in reinsurance payments will be made to 437 issuers nationwide."
Description of Health Benefits for Members of Congress and Designated Congressional Staff (PDF)
Congressional Research Service [CRS]
7/1/2015

"[B]eginning January 1, 2014, Members and designated congressional staff are no longer able to purchase FEHB plans as active employees; however, if they enroll in a health plan offered through a small business health options program (SHOP) exchange, they remain eligible for an employer contribution toward coverage ... This report summarizes the provisions of the final rule and describes how it affects current and retired Members and congressional staff. OPM has indicated that Members and congressional staff are still eligible for other health benefits related to federal employment, and these additional health benefits are outlined in this report." [Report No. R43194, dated June 17, 2015]
CBO: Because of Our Massive Uncertainty on the ACA's Myriad of Impacts, We Have No Clue What a Repeal Would to Do the Deficit
Benefit Revolution
7/1/2015 [Opinion]

"[T]he government's report concludes that it cannot accurately project whether a repeal of PPACA would increase, reduce or have no impact on federal deficits. But, when compelled to give one answer, their best guess is that it would increase the deficit by 1.9%. Stated alternatively it would increase our national debt by 0.75% -- well within their margin of error.... A reading of [recent] headlines leads one to believe that a repeal would clearly and decisively be a horror.... [In] reality the actual impact is not something the CBO was nearly so certain of[.]"
Supreme Court to Consider ERISA Preemption of State Health Care Reporting Requirements
Mayer Brown LLP via Lexology
7/1/2015

"This issue is important to the business community because of its potential to subject plan administrators to a multiplicity of burdensome state reporting requirements ... Even on its own, Vermont's reporting scheme imposes a litany of complex requirements on ERISA plans, including rules governing the content, timing, coding, and encryption of the reports. And as explained in the petition for certiorari, a ruling in this case could potentially impact the reporting requirements of at least sixteen states -- plus others that are considering similar legislation." [Gobeille v. Liberty Mutual Ins. Co. (2d Cir. Feb. 4, 2014, cert. pet. granted June 29, 2015)]
What All Employers Need to Know About the Upcoming 'Cadillac' Excise Tax
InsideCounsel
7/1/2015

"While most employers have not focused on the Excise Tax, a few have been forward looking and creative in seeking to reduce its potential impact on them.... [P]opulation health strategies look to bend the cost curve by making employees healthier.... Some employer plans are changing the paradigm and contracting directly with the providers who are willing to go at risk for the cost and quality of services they provide or provide flat fee pricing for a suite of services needed to treat a particular condition."
Text of GASB Fact Sheet on Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, and Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions (PDF)
Governmental Accounting Standards Board [GASB]
7/1/2015 [Guidance Overview]

3 pages. Topics include: [1] What types of OPEB are covered by the Statements? [2] What are the main provisions of the Statements? [3] What makes OPEB a liability? [4] Does the GASB require governments to fund OPEB? [5] When do the new OPEB Statements take effect?
Text of GASB Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans
Governmental Accounting Standards Board [GASB]
7/1/2015 [Official Guidance]

122 pages. "The scope of this Statement includes OPEB plans -- defined benefit and defined contribution -- administered through trusts that meet the following criteria: [1] Contributions from employers and nonemployer contributing entities to the OPEB plan and earnings on those contributions are irrevocable. [2] OPEB plan assets are dedicated to providing OPEB to plan members in accordance with the benefit terms. [3] OPEB plan assets are legally protected from the creditors of employers, nonemployer contributing entities, and the OPEB plan administrator. If the plan is a defined benefit OPEB plan, plan assets also are legally protected from creditors of the plan members."
Text of GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions
Governmental Accounting Standards Board [GASB]
7/1/2015 [Official Guidance]

310 pages. "This Statement establishes standards for recognizing and measuring liabilities, deferred outflows of resources, deferred inflows of resources, and expense/expenditures. For defined benefit OPEB, this Statement identifies the methods and assumptions that are required to be used to project benefit payments, discount projected benefit payments to their actuarial present value, and attribute that present value to periods of employee service.... In addition, this Statement details the recognition and disclosure requirements for employers with payables to defined benefit OPEB plans that are administered through trusts that meet the specified criteria and for employers whose employees are provided with defined contribution OPEB."
Penalties Increase for Distribution Reporting Failures
Ascensus
7/1/2015 [Guidance Overview]

"The [Trade Preferences Extension Act] increases the tiered penalties associated with failure to timely file information returns and payee statements required under IRC Sec. 6721 and 6722. This applies to failures for reporting distributions from retirement plans and IRAs on Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., and distributions of income to certain foreign persons on Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding. The penalties apply to IRS filing failures and failures to furnish the correct statements (Copy B) to distribution recipients (payees)."
Prior-Period Adjustment in Transitioning to GASB Statement No. 68 (PDF)
Gabriel Roeder Smith & Company
7/1/2015 [Guidance Overview]

5 pages. "[GASB] Statement No. 68 became effective for employer fiscal years beginning after June 15, 2014 ... Incorporating the requirements of Statement No. 68 will be a significant change to pension accounting and reporting by state and local governments. The purpose of this memo is to assist governmental employers that sponsor or contribute to a pension plan by providing an overview of the prior-period adjustment necessary to transition their financial statements from Statement No. 27 to Statement No. 68."
PBGC Partition Rules Give Clear Guidance, Will Help Preserve Plans (PDF)
Bloomberg BNA Pension & Benefits Reporter, via Pension Rights Center
7/1/2015

"The rules aren't burdensome and let endangered plans understand the procedures they must follow before the PBGC can use its authority to approve partitions, [said W. Andrew Douglass, of Polsinelli PC].... Thomas C. Nyhan, [Central States Pension Fund's] executive director, said the plan's trustees are currently reviewing the guidance and 'will be working expeditiously to develop a fair rescue plan. Once that has been completed, we will be filing that rescue plan with Treasury and notifying all of our pension fund participants. We expect for that to happen sometime this summer.' "
FASB to Address Net Pension Costs on Income Statements
Pensions & Investments
7/1/2015

"FASB members considered three modified alternatives for presenting net pension cost, with additional components such as service cost, interest cost and expected return on assets. The project will add service cost to the employer compensation costs already included in income statements. Cost components that are eligible to be capitalized would be limited to service cost. Companies would also have to disclose which other components are included, following guidelines that FASB officials are working on as part of a separate project on disclosure frameworks for defined benefit plans."
Three Retirement Loopholes That Are Likely to Close
TIME
7/1/2015

"President Obama's 2016 budget proposal suggests that future Roth conversions be limited to pre-tax money only, effectively killing most back-door Roths.... Most recent tax-related bills have included a provision to kill the stretch IRA and replace it with a law requiring beneficiaries other than spouses to withdraw the money within five years.... Obama's budget also proposed to eliminate 'aggressive' Social Security claiming strategies[.]"
CMS Publication: Explanation of Data Elements in the Issuer Risk Adjustment Transfer Report (PDF)
Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS]
7/1/2015 [Official Guidance]

Dated June 30, 2015. "This document provides a description of each data element provided in the Issuer Risk Adjustment (RA) Transfer Report. Data included in this report reflect amounts calculated based on the risk adjustment formulas outlined in regulation and is provided for informational purposes (78 FR 15410 and 45 CFR Part 153). They do not constitute specific obligations of Federal funds to any particular plan or issuer."
Summary of the Quarterly Survey of Public Pensions: Q1 2015 (PDF)
U.S. Census Bureau
7/1/2015

"For the 100 largest public-employee pension systems in the country, cash and security holdings totaled $3,397.8 billion in the first quarter of 2015, surpassing the all-time high of $3,365.4 billion set in the second quarter of 2014. Compared to the same quarter in 2014, assets for these major public pension systems increased 5.0 percent from $3,237.5 billion."
What Fiduciary Advocates Can Learn from SCOTUS Ruling on Marriage
Institute for the Fiduciary Standard
7/1/2015 [Opinion]

"The Administration's case for strengthening ERISA via the [DOL's] proposed conflict of interest rule is compelling. It quantifies the macro level harms in billions of dollars to millions of retirement account holders. Yet there is too little candid personal discussion from individual investors about their concerns. This silence is not because investors are unconcerned.... Deeply held views discourage open and personal discussion about personal finance just as discussion of sexual orientation was once considered taboo. Yet new attitudes have started to undermine old taboos."
Text of CMS Reinsurance Payment Report Job Aid (PDF)
Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS]
7/1/2015 [Official Guidance]

Dated June 30, 2015. "This document provides a description of each data element provided in the Issuer Reinsurance (RI) Report. Data included in this report reflect amounts calculated based on the risk adjustment formulas outlined in regulation and is provided for informational purposes ... They do not constitute specific obligations of Federal funds to any particular plan or issuer."
Text of SEC Memo: Extended Analysis of Potential Effect on Pay Ratio Disclosure of the Exclusion of Different Percentages of Employees (PDF)
Division of Economic and Risk Analysis, U.S. Securities and Exchange Commission [SEC]
7/1/2015

"In [Table 1 of] the original analysis, Staff considered the exclusion of different percentages of employees.... [This report extends that analysis] to show the effects of excluding percentages greater than 20%, and up to 95% (in 5% increments).... In the original analysis, Staff considered the exclusion of different percentages of employees under two scenarios: Scenario I (all excluded observations are below the median) and Scenario II (all excluded observations are above the median). [This report extends] Table 1 to show the effects of excluding percentages of employees under three intermediate scenarios[.]"
Law Expands Exemptions from Early Distribution Tax to Certain Federal Employees
Ascensus
7/1/2015 [Guidance Overview]

"President Barack Obama has signed into law the Defending Public Safety Employees' Retirement Act (H.R. 2146), which broadens the definition of 'qualified public safety employee' for purposes of exemption from the 10 percent additional tax on early distributions from retirement plans, and adds federal defined contribution (DC) plans to this exemption."
Prompt Correction of Elective Deferral Errors Is Now Less Expensive
Pension Consultants, Inc.
7/1/2015 [Guidance Overview]

"The previous correction method for these types of errors was for the plan sponsor to make a contribution to each affected participant's account equal to 50% of the missed deferral opportunity plus any missed employer matching contribution plus earnings. The new method eliminates or reduces the required contribution for the missed deferral opportunity when the error is caught and corrected quickly."
Text of GASB Statement No. 73, Accounting and Financial Reporting for Pensions and Related Assets That Are Not within the Scope of GASB Statement 68, and Amendments to Certain Provisions of GASB Statements 67 and 68
Governmental Accounting Standards Board [GASB]
7/1/2015 [Official Guidance]

140 pages. "This Statement establishes requirements for defined benefit pensions that are not within the scope of Statement No. 68, Accounting and Financial Reporting for Pensions, as well as for the assets accumulated for purposes of providing those pensions. In addition, it establishes requirements for defined contribution pensions that are not within the scope of Statement 68. It also amends certain provisions of Statement No. 67, Financial Reporting for Pension Plans, and Statement 68 for pension plans and pensions that are within their respective scopes. The requirements of this Statement extend the approach to accounting and financial reporting established in Statement 68 to all pensions, with modifications as necessary to reflect that for accounting and financial reporting purposes, any assets accumulated for pensions that are provided through pension plans that are not administered through trusts that meet the criteria specified in Statement 68 should not be considered pension plan assets."
Text of IRS Notice 2015-43: Interim Guidance under the Expatriate Health Coverage Clarification Act of 2014 (PDF)
Internal Revenue Service [IRS]
6/30/2015 [Official Guidance]

9 pages. "This notice provides interim guidance on the application of certain provisions of the [ACA] to expatriate health insurance issuers, expatriate health plans, and employers in their capacity as plan sponsors of expatriate health plans, as defined in the Expatriate Health Coverage Clarification Act of 2014 (EHCCA).... [T]he Departments have determined that issuers, employers, and plan sponsors need additional time and guidance to modify their current arrangements to comply with the EHCCA's requirements. Until the issuance of further guidance and except as otherwise provided in this notice, taxpayers are generally permitted to apply the requirements of the EHCCA using a reasonable good faith interpretation of the EHCCA. In particular, until the issuance of further guidance, treatment of an expatriate health plan, as defined in [ACA] Implementation FAQs Part XIII, Q&A-1, and FAQs XVIII, Q&A-6 and Q&A-7, as an expatriate health plan for purposes of the EHCCA is generally a reasonable good faith interpretation. However, these good faith rules do not apply with respect to the PCORI fee and the [ACA] section 9010 fee."
A Close Look at the Universe of ERISA-Regulated 403(b) Based on Their Form 5500 Audit Reports (PDF)
Investment Company Institute [ICI]
6/30/2015

54 pages. "In 2012, the average ERISA 403(b) plan offered 23 core investment options -- of those, about 10 were equity funds, three were bond funds, and seven were target date funds. Nearly all plans offered at least one equity and bond fund, about 70 percent of plans offered a suite of target date funds, and 84 percent offered fixed annuities.... [If] all investments in ERISA 403(b) plans are counted (no matter how small), ERISA 403(b) plans have an average of 41 investment options.... Mutual funds held 47 percent of ERISA 403(b) plan assets in 2012. Variable annuities held 27 percent of assets, and fixed annuities were 26 percent."
ACA and Narrow Networks
Healthcare Economist
6/30/2015

"[A]lthough only 36% of networks are narrow with respect to primary care physicians, for oncologists 59% of networks are narrow. Thus, access to high cost oncology services is more limited. It is not clear whether narrow networks are moving patients towards oncology specialist or simply reducing patient access to care."
Montgomery County, Maryland Passes Earned Sick and Safe Leave Bill
Proskauer's Law and the Workplace
6/30/2015 [Guidance Overview]

"All employees based or working in the County are entitled to accrue safe and sick leave at a rate of one [1] hour for every thirty [30] hours worked, subject to caps. The Bill provides that employers with five [5] or more employees must provide up to 56 hours per year of paid sick and safe leave to employees. Employers with fewer than five [5] employees are only required to provide up to 32 hours of paid sick and safe leave and twenty-four [24] hours of unpaid sick and safe leave per year.... Employers are permitted to decide whether to provide the entire balance of sick leave to employees at the beginning of the year or whether to provide the leave as it accrues throughout the year."
Should the 15-Year 403(b) Catch-Up Election Be Eliminated?
PLANSPONSOR
6/30/2015

"[T]he election is among the most difficult to calculate in the defined contribution arena, requiring contribution data for the entire working career of an individual employee.... 15-year catch-up calculations are one of the primary issues identified in IRS audits, and lack of compliance appears to be widespread; and ... legitimate utilization of the election is often low ... [M]ore and more plan sponsors who previously permitted the 15-year catch-up election have simply decided to eliminate it ... [It] is indeed an elective, and not a mandatory, plan provision, so it may be eliminated via plan amendment[.]"
Voya Restricts Variable Annuity Sales Under Regulatory Pressure
Investment News
6/30/2015

"As of Monday, Voya's 2,200 registered representatives are no longer allowed to sell a type of variable-annuity contract known as an 'L share' if the annuity contract includes riders ... L-shares typically charge higher ongoing fees in exchange for a shorter-than-normal period of time before clients can withdraw their premium payments or exchange their contracts without paying a surrender charge. They also can come with a rich compensation stream for broker-dealers and their affiliated financial advisers."
Interim Web Notice on Cross-Reference Changes to Parts 2560, 2570 and 2571 of DOL Regs
Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]
6/30/2015 [Official Guidance]

"ERISA authorizes the Secretary of Labor to assess civil monetary penalties for certain statutory violations and to make certain other determinations. EBSA regulations specify the Department's procedures for such actions.... EBSA intends to amend its procedural regulations to update the cross-references. In the meantime, the chart below indicates the correct section of the OALJ rules that should be used in applying EBSA's procedural regulations. With the exception of the outdated cross-references, the EBSA rules cited above remain in effect."
Optimal Equity Glidepaths in Retirement
Christopher J. Rook, via SSRN
6/30/2015

"The optimal static retirement glidepath would be the one that performs better than all others with respect to some metric. When systematic withdrawals are made from a retirement portfolio, glidepaths are often assessed via the probability of ruin (or success). Our goal here is to derive the optimal static glidepath with respect to this metric. It is a result new to the literature and the shape will be of special interest to retirees, financial advisors, retirement researchers, and target-date fund providers."
Text of SEC Guidance on Definition of the Terms 'Spouse' and 'Marriage' After Windsor
Securities and Exchange Commission [SEC]
6/30/2015 [Official Guidance]

"[T]he Commission will read the terms 'spouse' and 'marriage,' where they appear in the federal securities statutes administered by the Commission, the rules and regulations promulgated thereunder, releases, orders, and any guidance issued by the staff or the Commission, to include, respectively, [1] an individual married to a person of the same sex if the couple is lawfully married under state law, regardless of the individual's domicile, and [2] such a marriage between individuals of the same sex. This guidance is consistent with Windsor[.]"
The Hows, Whys, and Right and Wrong Way to Use Asset Allocation
Fiduciary News
6/30/2015

"Perhaps asset allocation isn't what we think it is. Perhaps asset allocation is, and always has been, something more subtle, more instinctual, then we have imagined in these past few decades. Maybe there's a reason to keep asset allocation around that has nothing to do with the way it's thought of today, but harks back to an earlier era."
Five Lingering Threats to Obamacare
The Hill
6/30/2015

"[1] Repeal ... [2] Marketplaces failing ... [3] Rising costs ... [4] Enrollment challenges ... [5] Another lawsuit."
Supreme Court to Consider ERISA Implications of Vermont Health Care Claims Database
Bloomberg BNA
6/30/2015

"Vermont argued that these types of databases -- which several states use to collect information from medical providers and insurance companies -- are useful in shaping health-care policy, evaluating existing health-care programs and improving the quality and affordability of patient care. VHCURES hit a roadblock in 2014, when the U.S. Court of Appeals for the Second Circuit issued a split ruling striking the program down as preempted by ERISA. According to the two-judge majority, VHCURES placed a significant burden on reporting, which the majority called a 'core ERISA function'." [Gobeille v. Liberty Mutual Ins. Co. (2d Cir. Feb. 4, 2014, cert. pet. granted June 29, 2015)]
Massachusetts Paid Sick Leave: Final Regs Issued
Proskauer's Law and the Workplace
6/30/2015 [Guidance Overview]

"The ballot measure originally required employees only to make a good faith effort to give advance notice of foreseeable use of paid sick leave. However, the regulations now clarify that employees must give notice, except in particular situations in which advance notice might be infeasible. For unforeseeable absences, the employee must give notice that is reasonable under the circumstances."

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