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Older News | February 13, 2016

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Text of Fifth Circuit Decision: Administrator of Self-Funded Plans Not Subject to Texas Prompt Payment Law (PDF)
U.S. Court of Appeals for the Fifth Circuit

21 pages. "A Texas statute ... requires healthcare insurers to make coverage determinations and pay claims made by preferred healthcare providers within a specified time or face penalties.... HCSC is a mutual legal reserve company that operates in Texas as Blue Cross and Blue Shield of Texas ... BCBSTX acts as the administrator for employer self-funded plans ... [We hold that the Texas statute] is not applicable to BCBSTX's activities as administrator of the self-funded plans or state government plans[.]" [Health Care Service Corporation v. Methodist Hospitals of Dallas, No. 15-10154 (5th Cir. Feb. 10, 2016)]
CBO Releases Report on Private Health Insurance Premiums and Federal Policy
Health Affairs

"The CBO report examines the effect of 10 ACA regulations on insurance premiums. The CBO estimates that the individual mandate will have a significant effect on lowering premiums, by as much as 20 percent, because it drives healthy individuals into health insurance markets.... The CBO projects, on the other hand, that the employer mandate will not have a noticeable effect on premiums, as it will simply shift individuals from the non-group to the group market and does not increase the size of the pool."
Breach of Fiduciary Duty Tops FINRA Disputes Again
Good Risk Governance Pays

"According to dispute resolution statistics, published by the Financial Industry Regulatory Authority ('FINRA'), breach of fiduciary duty continues to lead the list of 'controversy types in customer arbitrations.' Negligence, failure to supervise, misrepresentation, breach of contract, suitability and omission of facts follow.... That breach of fiduciary duty allegations feature so prominently in FINRA customer disputes is notable since ERISA litigation patterns reflect a similar focus on how decisions are made by stewards of other people's money."
Text of IRS Notice 2016-18: February 2016 Update for Weighted Average Interest Rates, Yield Curves, and Segment Rates (PDF)
Internal Revenue Service [IRS]
2/12/2016 [Official Guidance]

"This notice provides guidance on the corporate bond monthly yield curve, the corresponding spot segment rates used under Section 417(e)(3), and the 24-month average segment rates under Section 430(h)(2) of the Internal Revenue Code. In addition, this notice provides guidance as to the interest rate on 30-year Treasury securities under Section 417(e)(3)(A)(ii)(II) as in effect for plan years beginning before 2008 and the 30-year Treasury weighted average rate under Section 431(c)(6)(E)(ii)."
BofA Shareholders to Vote on Deferring Executive Pay to Cover Legal Fines
Charlotte Observer

"The [SEC] has cleared the way for Bank of America shareholders to vote on a proposed requirement that its top executives have a portion of their annual pay deferred to cover future legal fines.... While it remains unclear whether the proposal will pass, shareholders at Citigroup failed to approve a similar proposal last year."
Medical Costs for BCBS Individual Plans Outpaced Premiums in 2015

"BCBS plans spent $20.7 billion on medical claims during the first three quarters, but took in just $20.4 billion in premiums, a sharp contrast from 2014 earnings in which premiums outpaced medical costs."
New York State Teamsters Mulls Filing for Benefit Reductions
Pensions & Investments

"In a Feb. 5 letter to 34,639 participants, trustees said the plan's actuary determined that it is projected to go insolvent within the next 19 years, placing it in 'critical and declining' status for the plan year that began Jan. 1. That status allows it to apply to the Treasury Department for approval of a plan to suspend benefits."
Thoughts About Recent DOL Guidance on ESG Factors and ERISA
Calvert Investments
2/12/2016 [Guidance Overview]

"In the updated guidance, the DOL uses a number of key words and phrases that are helpful to focus on as fiduciaries consider applying ESG criteria to investment selections or making economically targeted investments. Three of these key concepts are collateral benefits, tiebreakers, and primary analysis."
A Closer Look: Workplace Wellness Outcomes
International Foundation of Employee Benefit Plans [IFEBP]

"When it comes to measuring wellness program success ... employers are using value-on-investment (VOI) measures in addition to return-on-investment (ROI) numbers. Just over one-quarter (28%) of organizations are measuring their wellness program success with traditional ROI. Half are using at least one VOI measure to track success including employee engagement (30%), turnover (22%), absenteeism (18%), productivity (17%) and recruitment/referral rates (13%)."
Can Employees Be Disciplined When They Exceed the Frequency or Duration on Their FMLA Medical Certification?
FMLA Insights

"If this FMLA regulation at Section 308(e) (which allows you to contact the doctor regarding [an employees absence] pattern) is to have ANY meaning, it must mean that an employer has the right to discipline the employee for absences that exceed the physician's medical opinion. After all, we have given the doctor two chances to provide cover the for the employee -- [1] the initial certification and, with [a] letter explaining the pattern, [2] the recertification.... To be clear, this position is not without risk, particularly given that no courts have offered their opinion on the issue."
Congress Refuses ACA Funding, Slams Insurance Agents in the Wallet

"In December, Congress refused an administration request to provide insurers with $2.5 billion in bailout money to help cover their 2014 losses. Because these payments, part of the ACA's risk corridor program, haven't been paid to the insurers, the insurers in turn are reducing or eliminating agent commissions.... For agents who serve the small group market, business improved as the increasing cost of individual coverage made small group coverage more attractive."
Executive Pay Remains in Shareholder Proponents' Sights
Bloomberg BNA

"Companies likely will see proposals focused on single-trigger change-in-control stock vesting, clawbacks, mandatory stockholding and severance pay in the coming year ... [T]he SEC's work on a Dodd-Frank Act requirement in which public companies would have to adopt mandatory 'clawback' policies ... may result in fewer clawback proposals.... [T]he number of compensation-related proposals have decreased since the advent of say-on-pay votes in 2011, giving way to environmental, social and corporate governance resolutions[.]"
Growing Number of Employers Offering Paid Paternal Benefits to New Dads
Human Resource Executive Online

"As employees push for more job flexibility ... employers are being very cautious and strategic regarding paid leave, exploring different possibilities.... U.S. employers [may] eventually settle on offering FMLA's 12 weeks of time off as paid leave.... Financial-service companies, investment bankers, technology employers and start-ups have been on board with paid paternal leave for a while ... because it helps attract young talent. But other employers complain that it adds another fixed cost to their overstretched budget."
IRS Health Care Tax Tip 2016-18: Reporting Health Coverage on IRS Tax Forms
Internal Revenue Service [IRS]
2/12/2016 [Guidance Overview]

"While most taxpayers will simply need to check a box on their tax return to indicate they had health coverage for all of 2015, there are a few forms and specific lines on Forms 1040, 1040A, and 1040EZ that relate to the health care law."
MassMutual Sued Over Stable Value Fund Fees

"A 401(k) plan participant has filed suit against Massachusetts Mutual Life Insurance Company, alleging the firm collects tens of millions of dollars annually in undisclosed compensation due to the way it values the crediting rate for stable value funds offered to 401(a) and 403(b) retirement plans.... The lawsuit says MassMutual has the sole and exclusive discretion to determine the crediting rate for a given crediting period. MassMutual sets the crediting rate well below its internal rate of return (IRR) on the invested capital it holds in the SVAs, creating a substantial profit for itself, according to the complaint."
Multiemployer Pension Plan Lowers Threshold That Triggers Partial Withdrawal Liability Payments
Jackson Lewis P.C.

"Under the 70% Decline Rule, a partial withdrawal can occur when the employer's contribution base units decline by at least 70% and remain at or below that level over a three-year testing period. However, under the seldom utilized ERISA Section 4205(c), a multiemployer pension plan that covers mostly employees in the retail food industry may be amended to provide that a partial withdrawal is triggered by only a 35% decline in contribution base units instead of a 70% decline. This is the provision that the UFCW National Pension Fund has taken advantage of, and which may ensnare some of its unsuspecting participating employers."
Obama Administration Budget Proposals Would Again Impact Retirement and Health Benefits (PDF)
Groom Law Group

"[T]he 2017 package ... includes several new items of significance, including proposals to: [A]mend [ERISA] to permit unaffiliated employers to adopt a defined contribution multiple employer plan (MEP) that would be treated as a single plan for purposes of ERISA.... Account for geographic variation by increasing the threshold for the 'Cadillac Tax' ... Give the [PBGC] the authority to adjust premiums for multiemployer plans ... [P]rovide $6.5 million to allow three states to pilot and evaluate state-based 401(k)-type programs or automatic enrollment IRAs ... [P]rovide $100 million in new funding through the [DOL] to allow States and nonprofits to design, implement, and evaluate new approaches to expand retirement and other employer-provided benefit coverage ... [I]ncrease DOL's budget by 4.9% -- with a 64% increase for [EBSA] -- and the [IRS] budget by 12%."
Pension Commission Calls for New Jersey Public Worker Health Care Cuts

"The proposal calls for freezing the pension system and moving active public employees onto a cash balance retirement plan, but it hinges largely on reducing health care costs to free up cash.... The commission argues pension and health benefits need to be rethought to prevent them from swallowing 27 percent of the state's annual budget by 2022.... This year, it's 14.3 percent."
Private Health Insurance Market Reforms in the ACA (PDF)
Congressional Research Service [CRS]

23 pages. "This report provides background information about the private health insurance market, including market segments and regulation. It then describes each ACA market reform. The reforms are grouped under the following categories: obtaining coverage, keeping coverage, cost of purchasing coverage, covered services, cost-sharing limits, consumer assistance an d other health care protections, and plan requirements related to health care providers. The Appendix provides details about the types of plans that are required to comply with the different reforms." [Report No. R42069, Feb. 10, 2016.]
Private Health Insurance Premiums and Federal Policy
Congressional Budget Office [CBO]

"CBO and the staff of the Joint Committee on Taxation (JCT) project that in 2016, the average premium for an employment-based insurance plan will be about $6,400 for single coverage and about $15,500 for family coverage.... Over the period from 2005 to 2014, premiums for employment-based insurance grew by 48 percent for single coverage and by 55 percent for family coverage....This report reviews the available evidence about premium levels and growth; analyzes the major federal subsidies, taxes, fees, and regulations that affect premiums; and examines how insurers' own actions affect premiums."
'Risk Adjustment' Threatens Obamacare
Peter Beilenson, in The Baltimore Sun
2/12/2016 [Opinion]

"Risk adjustment is intended to smooth out the unpredictability of the health insurance marketplace ... While well-intended, the implementation of this safeguard has had the unintended consequence of ... taking money from predominantly new, small, innovative plans ... and giving it to the big, established insurance carriers.... The simplest option is a percentage limit on risk adjustment payments assessed to insurance carriers."
Sen. Warren Accuses Annuity Providers of Double Talk on DOL Fiduciary Rule

"Sen. Elizabeth Warren [D-Mass.] urged [OMB] Director Shaun Donovan ... to 'quickly finalize' the [DOL's] rule to change the definition of fiduciary on retirement advice because large insurance companies and financial services firms have been exaggerating the negative impacts of the rule.... In her letter to Donovan and Labor Secretary Thomas Perez ... Warren states that while firms like Prudential Financial, Lincoln National, Jackson National and Transamerica have publicly chided DOL's rule to change the definition of fiduciary under [ERISA], they are telling their investors the rule 'will have no significant impact on their companies.' "
The Ongoing Saga of the ACA Contraceptive Mandate: Where Are We Now? (PDF)

"This very public debate that has involved federal authorities, the Supreme Court, interest groups and individuals has left many confused about where the mandate comes from, what it says and how it applies to different groups. In this white paper, [the authors] attempt to combine and summarize the complex and many times disjointed answers federal authorities have provided to these important questions."
The Dreaded Census Questionnaire: Fidelity Bond Requirements (PDF)
Ekon Benefits

"ERISA fidelity bond coverage is necessary protection for your employee benefit plan. Inadequate fidelity bond coverage, as listed on the annual Form 5500, could trigger a DOL audit. Your TPA is requesting this information ensure that your Plan's fidelity bond meets the bond amount requirements and that all plan officials requiring coverage are properly bonded."
It's (Not) All in the Genes (PDF)
Chelko Consulting Group
2/11/2016 [Opinion]

"Once genetic testing is perfected and predictive reliability established, can we believe that their revealed knowledge will be enough to make people change? Unfortunately, knowing what is right does not mean people will do what's right.... [T]ime after time, we see human frailty trump test results.... We must be creative, determined and persistent in our employee education, and in our related efforts to foster healthy habits. We're not just fighting healthcare costs. We're fighting for people's lives."
IRS Issues Private Letter Rulings on Reallocation of VEBA Assets
The Wagner Law Group
2/11/2016 [Guidance Overview]

"IRS has released two PLRs regarding VEBA funds that were originally intended to pay for retiree health benefits but will now be reallocated to provide health benefits for active employees.... Employers interested in using this strategy, however, should keep in mind the following: [1] Legally, PLRs may only be relied upon by the recipient. [2] For ERISA-covered benefit plans, all affected benefits generally must be provided under the same ERISA plan (and the plan needs to permit reallocation) to satisfy ERISA's exclusive benefit rule. [3] Although, in the first PLR, the employer must recognize income under the tax benefit rule, this same amount may be deducted from the employer's income when it is used to fund active employees' benefits." [See PLR 201530022 and PLR 201532037.]
Why Your 401(k) Adviser May Be Underpaid
QP Steno Blog
2/11/2016 [Opinion]

"They have to know all of the things that a standard financial advisor addition to everything retirement plan related.... They commit to improving themselves to better serve you.... They have a serious time commitment.... They will have a fiduciary liability."
Text of PBGC March 2016 Interest Rate Update for Benefits Payable in Terminated Single-Employer Plans
Pension Benefit Guaranty Corporation [PBGC]
2/11/2016 [Official Guidance]

"The March 2016 interest assumptions under the benefit payments regulation will be 1.25 percent for the period during which a benefit is in pay status and 4.00 percent during any years preceding the benefit's placement in pay status. In comparison with the interest assumptions in effect for February 2016, these interest assumptions are unchanged."
IRS Provides Relief for Mid-Year Amendments to Safe Harbor Plans (PDF)
VOYA Financial
2/11/2016 [Guidance Overview]

"This notice does not require any additional notice or election opportunities for changes to information that is not required safe harbor notice content even if that information is provided in the plan's safe harbor notice. Also it does not modify the existing safe harbor notice content requirements.... The IRS is requesting comments on additional guidance that may be needed with respect to mid-year changes to safe harbor plans. Specific comments are requested with regard to mid-year changes for plans involved in mergers and acquisitions or plans that include an Eligible Automatic Contribution Arrangement (EACA)."
A Better Way to Evaluate Retirement Plans
David Blanchett, CFA and Thomas M. Idzorek, in Morningstar Advisor

"[The authors] created a methodology for estimating the effectiveness of a plan at the individual participant level, which in turn can be rolled up into ... a Retirement Plan Effectiveness Score.... [R]obust estimation techniques [are used] to determine the appropriate retirement plan 'target balance' based not only on age and plan tenure but also gender, compensation, and other variables. Comparing the participant's current balance to a customized target balance yields the relative funded status, and combining these individual participant metrics produces the Retirement Plan Effectiveness Score."
401(k) Custodial Contracts Must Be Disclosed, Judge Says
Bloomberg BNA

"Considering an issue of first impression, Judge James Knoll Gardner of the U.S. District Court for the Eastern District of Pennsylvania held that a custodial agreement between a 401(k) plan and Nationwide Trust Co. qualified as a formal document under which the plan was established and operated. Although noting it was a 'close question,' Gardner said the custodial agreement was therefore subject to the statutory disclosure requirements of [ERISA]." [Askew v. R.L. Reppert, Inc., No. 11-cv-04003 (E.D. Penn. Feb. 5, 2016)]
San Francisco's 2016 Minimum Health Care Spending Requirements (PDF)
Xerox HR Services
2/11/2016 [Guidance Overview]

"San Francisco's Office of Labor Standards Enforcement has issued the minimum health care spending requirements for 2016. The requirements apply to San Francisco employers with employees who work in the city."
Healthy? You'll Spend More on Health Care in Retirement
The Wall Street Journal; subscription may be required

" 'Excellent health, ironically, can actually raise an individual's lifetime health spending' simply because healthier people can generally expect to live longer ... [A] 65-year-old man with Type 2 diabetes should have about $88,300 accumulated for medical costs, versus $114,900 for a tobacco user and $143,800 for someone in good health. The reason: With diabetes, his life expectancy is 78, versus 81 for a tobacco user and 87 for a 65-year-old man in good health.... While healthier people can generally expect to pay higher lifetime medical bills, their projected monthly and annual health-care expenditures are below those of people in poorer health."
Study: Favorable Ruling for House of Representatives in ACA Challenge Would Cost $47 Billion
Wolters Kluwer Law & Business

"A ruling in favor of the Republican-led House of Representatives in its lawsuit challenging the [ACA's] cost-sharing reduction payments could cost the federal government $47 billion over 10 years. An analysis funded by the Urban Institute ... also determined that such a ruling could eventually cause insurers to pull out of the marketplace altogether."
Summary of President's FY2017 Budget Proposal
Michael Kitces in Nerd's Eye View

"[T]he proposals provide some indication of what could be on the chopping block, should any legislation happen to be going through Congress that needs a 'revenue offset' to cover its cost. Key provisions that could be changed in the future include: [1] Elimination of back door Roth IRA contributions ... [2] Introduce Required Minimum Distribution obligations for Roth IRAs ... [3] Elimination of Stretch IRA rules for non-spouse beneficiaries ... [4] Limit new IRA contributions for large retirement accounts (over $3.4M) ... [5] Repeal of net unrealized appreciation rules for employer stock in an employer retirement plan."
Are Retirement Plan Sponsors Too Afraid of Longevity Annuities?

"11 companies were offering QLAC products to plan participants as of September of last year. MetLife was the first -- and so far only -- insurer to issue a group QLAC for DC plans ... As of last month three plan sponsors are 'in the process of implementing it ... and we have several others that are going through the negotiation process.' ... [W]hile some [plan sponsors] are confident their provider-selection process would stand a challenge under ERISA ... others say they need additional clarity from the DOL on the process of selecting a provider[.]"
Final Obama Budget Proposal Heavy on Retirement Account Changes (Again!)
Slott Report

"Having seen none of his 14 retirement account-related proposals from last year's budget enacted, the President has included them all again in this year's budget. In addition, this year's budget features one additional significant retirement account-related change.... [This article includes] a complete list of the 15 provisions in the President's budget that directly relate to retirement accounts. For each, you'll see whether they are new or carryovers from previous years, a description of each, as well as some commentary to provide insight and perspective."
Iowa Proposes State-Sponsored Retirement Plan for Private Sector Employees
Globe Gazette

"About 42 percent of Iowa's private sector employees don't have access to an employer-sponsored retirement plan ... Retirement Savings Iowa would not require employer contributions. Through payroll deductions, it would put 3 percent of an employee's wages in the plan unless the employee chose to opt out. The plan would have tax advantages similar to an IRA[.]"
The Impact of Opt-Out Incentives on ACA Affordability Calculations
ERISAdiagnostics, Inc.
2/11/2016 [Guidance Overview]

"Until final regulations are issued, employers with opt-out arrangements in effect before December 16, 2015 do not have to reflect opt-out incentives in affordability calculations nor include on the 1095-C.... Employees can include the opt-out incentive in the cost of coverage should they apply for a premium subsidy. Proposed and final regulations are expected to address both conditional and un-conditional opt-out incentives."
Is the QSERP Dead? Proposed Rules Target Individual Benefit Formulas
Hanson Bridgett LLP
2/11/2016 [Guidance Overview]

"Under the proposed rules, to satisfy coverage using the average benefits test, the rate group must, in addition to passing the numeric tests, be based on a formula that applies not only to the HCE for whom the rate group is established, but also to a group that represents a reasonable business classification. According to the IRS, a benefit formula that applies solely to an HCE identified by name won't meet this requirement."
Obama Proposes Cadillac Tax, PBGC Premium Changes
Business Insurance; free registration required

"Under the proposal, in any state where the average premium for 'gold' coverage on the state's individual health insurance marketplace exceeds the Cadillac-tax threshold, the tax trigger would be set at the level of that average gold premium.... [T]he administration says it wants to hold the line on premiums employers pay the [PBGC] and shift to the agency's Board -- comprised of the secretaries of Labor, Treasury and Commerce -- the authority to set premium levels. Congress last year sharply raised PBGC single-employer premiums, but the administration says more hikes are not necessary."
List of Multiemployer Plans That Have Filed 'Critical and Declining' Status Notices with the DOL
Pension Rights Center

"Each plan listed [on this page] has notified the [DOL] that it is in 'critical and declining' status and eligible to make certain retiree benefit reductions. Click the name of each plan ... to see the notice."
Fiscal Year 2017 Federal Budget: The ACA's Excise Tax
Segal Consulting

"[The budget proposal would modify the Cadillac Tax] threshold to be the greater of either the current law threshold ... or a 'gold plan average premium' to be calculated and published for each state.... For health Flexible Spending Arrangements (FSAs), the cost of coverage with respect to salary reduction contributions would be defined as the average amount elected for the year by similarly-situated employees (rather than amounts actually contributed on an employee-by-employee basis)."
FY 2017 Congressional Budget Justification by the Employee Benefits Security Administration (PDF)
Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]

45 pages. "[$6,500,000 is] requested to support multiple pilots to implement new and different approaches to increasing retirement coverage in States, particularly for workers who are traditionally unable to access employment-based retirement benefits. Funds are requested through FY 2018 to allow sufficient time for inter-agency collaboration to craft grant solicitations that meet technical and evaluation requirements; the posting of grant solicitations with time to allow selected States to develop effective grant proposals; providing technical briefings and conducting outreach to better inform potential grantees; and the evaluation of proposals based on solicitation criteria to select grantees."
Small Business Retirement Plan Options: 401(k) Plans vs. SIMPLE and SEP IRAs
Employee Fiduciary

"401ks are not the only retirement plan option for small businesses -- IRA-based alternatives exist. These alternatives should be considered when a business does not need the key virtues of a 401k plan -- high contribution limits and design flexibility -- but wants to help employees save for retirement. Like a 401k plan, these alternatives offer automatic payroll deduction, making retirement savings easy." [Charts outline contribution limits and pros/cons for each type of plan.]
It's That Time Yet Again: Creditable Coverage Disclosures to CMS Due by February 29 (PDF)
Xerox HR Services
2/10/2016 [Guidance Overview]

"Each year, group health plan sponsors that provide prescription drug coverage to individuals eligible for Medicare Part D must disclose to [CMS] whether that coverage is 'creditable' or 'non-creditable.' The disclosure obligation applies to all plan sponsors that provide prescription drug coverage, even those that do not offer prescription drug coverage to retirees. Calendar year plans must submit this year's disclosure to CMS by February 29, 2016."
Evaluating Auditor Proposals
Fiduciary Plan Governance, LLC

"Evaluating responses to your plan auditor request for proposals can be done simply and efficiently if you lay out the criteria you consider most critical in advance and assign a weight in terms of importance to each. This approach creates a framework of objectivity before you begin reviewing the proposals.... [The authors] suggest you also determine if there are any 'non-starters' in the criteria that would eliminate a candidate regardless of how it responds in other areas."
Corrections to CBO's Analysis of Replacement Rates for Social Security
Congressional Budget Office [CBO]

"[R]eplacement rates were defined to be initial benefits as a percentage of average late-career earnings; for those calculations, earnings consisted of the last five years of earnings that were at least half of a worker's average indexed earnings, adjusted for growth in prices. The estimates reported in December inadvertently included years with earnings below those intended amounts.... The corrected version shows substantially lower mean initial replacement rates for retired and disabled workers[.]"
HIPAA Phase 2 Audits Include Business Associates
International Foundation of Employee Benefit Plans [IFEBP]

"Here's a closer look at Phase 1 and Phase 2 audits and the background information you'll need to prepare for a possible audit."
Pension and Health Plans: 2015 Year End Review (PDF)
Schulte Roth & Zabel LLP
2/10/2016 [Guidance Overview]

Topics include: [1] The 'Cadillac Tax'; [2] Delayed ACA reporting; [3] Legal challenges to the ACA; [4] Repeal of automatic enrollment; [5] Expanded preventive care services; [6] Substantial hospital inpatient services and minimum value; [7] Pace Act; [8] ACA fees and penalties; [9] Nondiscrimination for fully insured health plans; [10] IRS determination letter program; [11] Form 5500 filing deadlines remain the same; and [12] NYC Commuter Benefits Law.
Obama Asks Congress for $100M Proposal on MEPs
Bloomberg BNA

"President Barack Obama is asking Congress for a $100 million legislative proposal that would expand access to retirement accounts and 'sow the seeds' for future retirement models that would provide portable benefits coverage through innovations in multiple employer pension plans. Legislation would expand coverage in two ways: through innovation grants to spur the provision of new multiple-employer benefit models and the creation of open multiple employer plans[.]"
Investment Considerations Under ERISA for Defined Contribution Plan Fiduciaries (PDF)
Blitman & King, LLP, for Euclid Specialty Managers

17 pages "While ... a self-directed defined contribution plan carries less fiduciary risk than a traditional defined benefit plan ... too many plan sponsors are underestimating the fiduciary responsibilities -- and thus liability risk -- when offering a defined contribution plan.... [This whitepaper highlights] some of the fiduciary responsibilities faced by plan sponsors of defined contribution plans under ERISA."
Retirement Security Proposals Included in the President's FY 2017 Budget (PDF)
The White House Blog

40 pages. Retirement security proposals begin on page 14, and include: [1] Automatically enroll Americans without access to a workplace retirement plan in an IRA; [2] Provide tax cuts for auto-IRA adoption, and for businesses that choose to offer more generous employer plans or switch to auto-enrollment; [3] Expand retirement savings options for long-term, part-time workers; [4] Encourage state retirement savings initiatives; [5] Increase coverage by supporting new, more flexible benefit models; and [6] Give the PBGC the authority to adjust premiums.
Text of IRS Notice of Proposed Rulemaking and Public Hearing: Additional Limitation on Suspension of Benefits Applicable to Certain Pension Plans Under the Multiemployer Pension Reform Act of 2014
Internal Revenue Service [IRS]
2/10/2016 [Official Guidance]

16 pages. "One specific limitation governs the application of a suspension of benefits under any plan that includes benefits directly attributable to a participant's service with any employer that has withdrawn from the plan in a complete withdrawal, paid its full withdrawal liability, and, pursuant to a collective bargaining agreement, assumed liability for providing benefits to participants and beneficiaries equal to any benefits for such participants and beneficiaries reduced as a result of the financial status of the plan. This document contains proposed regulations that would provide guidance relating to this specific limitation.... Comments must be received by March 15, 2016. Outlines of topics to be discussed at the public hearing scheduled for March 22, 2016 must be received by March 15, 2016."
Multiple Employer Plans: What's in It for Participants? (Quite a Lot)
Russell Investments

"The President's 2017 Budget proposal ... includes support for the idea of open multiple employer plans (MEPs). The MEP concept has received a lot of attention in recent months: for small employers looking for an easy and effective vehicle to offer workplace-based retirement saving, MEPs may well be a good fit. They could prove to be a good structure for participants, too."
Congress Must Take Action on Retirement Income 'Fiduciary Regulation'
Securities Industry and Financial Markets Association [SIFMA]
2/10/2016 [Opinion]

"The bipartisan bills would strengthen consumer protections for retirement savers while also maintaining access to quality financial advice for small businesses and low- and middle-income Americans.... The bills would also require advisors to communicate key information -- including full and fair disclosure on compensation and all investment fees to ensure investors are well-informed. And, consistent with the [DOL's] goals, the bills punish advisors who fail to act in their client's best interest by holding them liable for damages and imposing financial penalties."
U.S. Supreme Court Ruling: ERISA Equitable Relief Not So Equitable?
Troutman Sanders

"The moral of the story is that self-insured plans that wish to enforce their subrogation and ... recovery rights must act quickly before the proceeds from any law suit against a third party to recover the medical expenses have been commingled with the plan participant's other assets.... [It] remains to be seen if the same tracing requirement that applies to third party settlements in the subrogation context extends to overpayments from pension and disability plans. Lastly, the Court's ruling could spur legislative initiatives to expand the ERISA remedies available to plan fiduciaries." [Montanile v. Bd. of Trustees of Nat. Elevator Ind. Health Benefit Plan, No. 14-723 (U.S. Jan. 20, 2016)]
Feds Want to Become an Active Purchaser

"The proposed reforms, tucked into the 2017 Notice of Benefit and Payment Parameters released by [CMS] late last year, suggest that CMS wants to trade a wide array of plan choices on the federal exchange for more tailored options.... These standardized options for bronze, silver and gold plans would include a single provider tier, a fixed in-network deductible, a fixed annual limitation on cost sharing, and standardized copayments and coinsurance for a key set of essential health benefits ... Insurers would not be required to offer standardize options in 2017 and 'would retain flexibility to offer non-standardized plans.' "
ERIC Report Card for Health Care and Retirement Provisions in the President's Proposed 2017 Budget: Needs Improvement
The ERISA Industry Committee [ERIC]
2/10/2016 [Opinion]

"The ERISA Industry Committee (ERIC) is disappointed President Obama did not use his 2017 fiscal year budget to promote important proposals that would allow the employer-provided health and retirement benefits system to grow. 'The budget is an ideal time to propose measures that improve and support the employer-sponsored retirement and health care system, like full repeal of the 40 percent excise tax and taking PBGC premiums "off-budget",' said Annette Guarisco Fildes, president and CEO, ERIC."
2015 in Review: ERISA Civil Enforcement Recoveries Remain Low, Criminal Investigations Continue to Rise
Sutherland Asbill & Brennan LLP

"The DOL reported total monetary recoveries of $696.3 million in FY 2015, an increase of $96.6 million over FY 2014. While this was a significant increase ... the total monetary results for FY 2015 still lagged behind the 15-year average of approximately $1.3 billion in annual recoveries.... In FY 2015, almost half of the $96.6 million improvement -- $46.7 million -- came from the Informal Complaint Resolution System, which has been steadily replacing Prohibited Transactions Corrected and Plan Assets Protected as the largest source of recovery."
FY 2017 Budget Proposal Would Tax ESOP Dividends Twice
The ESOP Association

"Since 1985, individuals who work for a company that offers an ESOP have avoided double taxation on the dividends they receive. The Administration's proposal would eliminate that incentive, thereby hurting companies and employees alike."
More Managed Accounts in 401(k) Plan Lineups, But Client Understanding Lags
Financial Planning

"In the past four years, the number of employers offering managed accounts more than tripled but Fidelity found that 49% of individuals don't understand how managed accounts work.... When employees are asked what the biggest benefit is of using managed accounts in their retirement plan, 48% said that managed accounts are constantly monitored by a professional."
The Proposed Budget and Health Care: A Quick Rundown
Health Affairs

"One proposal would attempt to curb surprise balance bills by out-of-network providers by requiring hospitals to take steps to match patients with in-network providers and requiring physicians who regularly provide services in a hospital to accept an appropriate in-network rate as payment in full. Another proposal would allow HHS to develop uniform definitions and principles for standardizing medical billing and making it more transparent. Self-insured non-federal governmental plans would be prohibited from opting out of various federal consumer protection laws, such as the Mental Health Parity Law.... The Internal Revenue Service budget request includes $402 million in ACA funding, including $105 million for taxpayer services, $20 million for enforcement, and $277 million for operations support."
Are You Ready for a Cash Balance Plan? (PDF)
Retirement Management Services

"What is a cash balance plan? ... How much can I contribute for myself each year? ... Those contributions are really high -- is this legal? ... Where is the money invested? ... How is the plan funded? ... What happens if I can't afford to fund the plan for a particular year? ... Can I give key employees a higher allocation than the rest of my staff? ... Should I terminate my 401(k) plan and just have a cash balance plan?"
Parity of Mental Health and Substance Use Benefits with Other Benefits: Using Your Employer-Sponsored Health Plan to Cover Services (PDF)
Substance Abuse and Mental Health Services Administration [SAMHSA], U.S. Department of Health and Human Services [HHS]
2/10/2016 [Guidance Overview]

"If you are someone who is trying to figure out how to use your health coverage provided by your employer to pay for your mental health or substance use [MH/SU] services -- this sheet is for you.... In this document, we explain MH/SU parity, answer questions about the parity law, and provide ways to learn more. We hope you use this information to get the mental health and substance use services you and your family need paid for (either fully or partially) by your health plan."
Subsidizing Student Health Insurance with Stipends: New Agency Guidance and Relief
Mintz Levin
2/10/2016 [Guidance Overview]

"The guidance does not say which subsidy type arrangements create [employer payment plans (EPPs)] and which do not. All we know is that not all arrangements whereby a school subsidizes coverage under student health plans will be EPPs. It appears that, if the student is an employee, and the amounts are paid towards student health insurance coverage, then the subsidy is an EPP. If the student not an employee, then a stipend towards student health insurance coverage will not be an EPP because there is no employer-employee relationship with which to create an EPP."
Text of IRS Disaster Relief Announcement ARK-2016-04, for Victims of Severe Storms, Tornadoes, Straight-line Winds and Flooding in Arkansas
Internal Revenue Service [IRS]
2/10/2016 [Official Guidance]

"Victims of the severe storms, tornadoes, straight-line winds and flooding that took place beginning on Dec. 26, 2015, in parts of Arkansas may qualify for tax relief ... Individuals who reside or have a business in Benton, Carroll, Crawford, Faulkner, Jackson, Jefferson, Lee, Little River, Perry, Sebastian, and Sevier Counties may qualify for tax relief.... [C]ertain deadlines falling on or after Dec. 26, and on or before May 16, 2016, have been postponed to May 16, 2016. This includes 2015 income tax returns normally due on April 18."
Text of PBGC Disaster Relief Announcement 16-03, In Response to Severe Storms, Tornadoes, Straight-Line Winds and Flooding in Arkansas
Pension Benefit Guaranty Corporation [PBGC]
2/10/2016 [Official Guidance]

"This Disaster Relief Announcement provides relief relating to PBGC deadlines ... [to] any person responsible for meeting a PBGC deadline (e.g., a plan administrator or contributing sponsor) that is located in the disaster area for which the [IRS] has provided relief in ARK-2016-04, Feb. 8, 2016, in connection with filing extensions for Form 5500 series returns ... The disaster area consists of Benton, Carroll, Crawford, Faulkner, Jackson, Jefferson, Lee, Little River, Perry, Sebastian, and Sevier Counties."
Text of Sixth Circuit Opinion: No Lifetime Health Benefits for Moen Retirees (PDF)
U.S. Court of Appeals for the Sixth Circuit

"[T]he Moen-UAW collective bargaining agreements do not provide unalterable healthcare benefits for life to the [plaintiff retirees] and their dependents.... First and foremost, nothing in this or any of the other CBAs says that Moen committed to provide unalterable healthcare benefits to retirees and their spouses for life.... Second, ... everything they say about the topic was contained in a three-year agreement.... Third, each of the last three CBAs says that '[c]ontinued hospitalization, surgical and medical coverage will be provided without cost to past pensioners and their dependents prior to March 1, 1996.' ... Fourth, while the authors of the CBAs opted not to say that retiree healthcare benefits were vested for life, they explicitly vested pension benefits for qualifying retirees.... Fifth, the agreements contain reservation-of-rights clauses that evidence an intent not to vest and that apply to employees and retirees.... Sixth, these principles yield a similar conclusion when applied to the plant closing agreement.... Seventh, the above analysis not only respects the language of the relevant agreements and Tackett, but it also brings our court into alignment with other circuits around the country." [Gallo v. Moen, No. 14-3918 (6th Cir. Feb. 8, 2016)]
'Panda Days' and Paid Time Off: What Perks Perk Up Employees
OneExchange from Towers Watson

"Perks are essential in attracting and retaining talent, and companies are offering more and more varied perks to hire the very best they can. Nearly 3 in 5 (57%) job seekers reported benefits and perks being among their top considerations before accepting a job ... The perks vary widely, but common themes emerge among the most popular benefits, namely parenting, lifestyle, education or skill building, and cash perks."
Text of Treasury Department Notice: Reopening of Comment Period on Central States Pension Fund Application to Reduce Benefits
U.S. Department of the Treasury
2/9/2016 [Official Guidance]

"On October 23, 2015, the Department published a notice of availability and request for comments regarding an application to Treasury to reduce benefits under the Central States, Southeast and Southwest Areas Pension Plan in accordance with the Multiemployer Pension Reform Act of 2014 (MPRA). The purpose of this notice is to reopen the comment period and provide more time for interested parties to provide comments. Comments must be received on or before March 1, 2016."

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