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Benefits in the News

Older News | March 4, 2015

arrow icon Transcript of Oral Argument Before the Supreme Court in King v. Burwell (PDF)
Supreme Court of the United States

97 pages. "[Justice Kennedy to attorney for petitioners]: Let me say that from the standpoint of the dynamics of Federalism, it does seem to me that there is something very powerful to the point that if your argument is accepted, the States are being told either create your own Exchange, or we'll send your insurance market into a death spiral.... The cost of insurance will be sky-high, but this is not coercion. It seems to me that under your argument, perhaps you will prevail in the plain words of the statute, there's a serious constitutional problem if we adopt your argument.... [Justice Kagan to attorney for petitioners]: But we are interpreting a statute generally to make it make sense as a whole, right? We look at the whole text. We don't look at four words. We look at the whole text, the particular context, the more general context, try to make everything harmonious with everything else. I think you said, even at the very beginning of this argument ... that, of course, context matters and context might make all the difference with respect to what those five words mean. And I think what we're suggesting is that, if you look at the entire text, it's pretty clear that you oughtn't to treat those five words in the way you are.... [Justice Scalia to Solicitor General Verrilli]: This is not the most elegantly drafted statute. It was ... pushed through on expedited procedures and didn't have the kind of consideration by a conference committee, for example, that statutes usually do. What would be so surprising if among its other imperfections, there is the imperfection that what the States have to do is not obvious enough? It doesn't strike me as inconceivable.... There were senators, were there not, who were opposed to having the Federal government run the whole thing, because they thought that would lead to a single-payer system ... And the explanation for this provision is it prevents the Federalization of the entire thing." [King v. Burwell, No. 14-1158 (4th Cir. July 22, 2014; cert. pet. granted Nov. 7, 2014)]
arrow icon At Oral Argument, Supreme Court Justices Sharply Divided Over ACA Subsidies
Associated Press

"The liberal justices peppered lawyer Michael Carvin almost from the outset of his argument to limit the subsidies.... When Solicitor General Donald Verrilli Jr. stepped to the lectern, the liberal justices fell silent, and Justices Samuel Alito and Antonin Scalia took over.... Kennedy voted to strike down the health law in 2012, but on Wednesday he asked questions of both sides that made it hard to tell where he might come out this time. He suggested that challenger Carvin's argument raised a 'serious' constitutional problem affecting the relationship between states and the federal government. On the other hand, he seemed less than convinced by Verrilli's reading of the law to allow the subsidies nationwide."
arrow icon How Many Employees are Covered by Disability Insurance at Work?
U.S. Bureau of Labor Statistics [BLS]

"In 1999, 36 percent of private industry workers had short-term disability insurance and 25 percent had long-term disability insurance. In 2014, 39 percent had short-term insurance and 33 percent had long-term insurance.... The percentage of workers in short-term disability plans in 2014 ranged from 19 percent for service workers to 53 percent for workers in management, professional, and related occupations. The percentage in long-term insurance plans ranged from 10 percent in service occupations to 57 percent in management, professional, and related occupations."
arrow icon COBRA Compliance Failures Cost Employers Millions (PDF)
Buck Consultants at Xerox

"Historically, courts have been hesitant to certify COBRA claims for treatment on a class action basis because proving a COBRA notice violation can involve individual, fact-specific issues. Plaintiffs have successfully established class certification in recent years, however, in lawsuits concerning systematic failures to comply with COBRA notice requirements.... Outsourcing COBRA administration to a TPA does not relieve the plan administrator of liability for COBRA-related errors. The plan administrator must monitor the TPA's systems and performance to ensure COBRA compliance."
arrow icon Changes to Determination Letter Process Have Begun
Internal Revenue Service [IRS]
3/4/2015 [Guidance Overview]

"We've made changes to the determination letter program for retirement plans effective February 1, 2015, beginning with Cycle E2 applications. These changes will improve the program's efficiency and consistency.... If your deficient application is closed and either the final response deadline or the postmark date of the submitted response occurs before the end of the plan sponsor's remedial amendment cycle, you will be given a set period of time to submit a new on-cycle application, with a new user fee."
arrow icon UnitedHealthcare Piloting Fitness App That Pays for Healthy Behavior
MedCity News

"As part of an effort to make health insurance a more tangible and consumer-oriented tool, UnitedHealthcare is in the process of developing a new app that offers financial incentives for users who practice healthful behavior. The Minneapolis-based insurer is currently piloting the iPhone app, Reward Me, in Arizona and Illinois, offering users a litany of rewards based on both usage of the app and achievements in four categories: healthy eating, relaxation, healthy activity and life style[.]"
arrow icon King v. Burwell: Supreme Court Oral Argument Updates

"In the midst of a discussion of context and the consequences of petitioners' reading, Justice Kennedy ... pointed out that, under petitioners' reading, the federal government would be all but forcing states to create their own exchanges. That's true not just for the headline reason covered by this case -- that their citizens would be denied benefits -- but for a very perceptive reason that Justice Kennedy added: namely, state insurance systems will fail if the subsidy/mandate system created by the statute does not operate in that particular state. For Kennedy, that seemed to make this case an echo of the last healthcare decision, where the Court concluded that it was unconstitutional coercion for the federal government to condition all Medicaid benefits in the state on expanding Medicaid therein. Simply put, Kennedy expressed deep concern with the federalism consequences of a reading that would coerce the states into setting up their own exchanges to avoid destroying a workable system of insurance in the state." [Update continues at this link.]
arrow icon Anthem's Data Breach Affects Many Non-Anthem Plans: What Employers Need to Know
Sutherland Asbill & Brennan LLP

"Many employers and individuals have ignored publicity regarding the data breach because their health plan is not labeled 'Anthem.' However, because Anthem did the back-office work for (and therefore had information on file for) many other insurers and third-party administrators, the data breach potentially affects their plans as well ... Since the breach involves many associates and over 10 years of data, there may be multiple agreements to consider." [Editor's note: article includes a list of plans and locales that may be affected.]
arrow icon Mutual Funds Cut Expenses by Shifting Billions to Collective Trusts

"Mutual fund companies ... have slashed fees on their most popular funds by shifting billions of dollars into collective trusts not regulated by the [SEC]. The growing shift to collective trusts could prove a weapon for actively managed mutual funds losing out to low cost passive investment products such as the exchange-traded funds ... For investors, one drawback is less transparency about the risks and performances of their holdings."
arrow icon Expansion of D.C. Accrued Sick and Safe Leave Act Creates New Hurdles for Employers
Ogletree Deakins
3/4/2015 [Guidance Overview]

"In expanding the scope of the original law the ASSLA amendments have created a number of additional pitfalls for D.C. employers [including:] ... [T]he definition of 'employee' has been expanded to include, for the first time, restaurant and bar workers who receive regular tips.... [T]he definition of employer [has been] expanded to include businesses that use temporary staffing agencies ... [I]nstead of having to work for one year and 1,000 hours during that same year in order to accrue and use leave, employees only need to be employed for 90 days to use leave. Additionally, employee leave begins to accrue on the first day of employment[.]"
arrow icon IRS Publication 4285: SEP Checklist (Rev. 2-2015) (PDF)
Internal Revenue Service [IRS]
3/4/2015 [Guidance Overview]

"Every year it's important that you review the requirements for operating your Simplified Employee Pension (SEP) plan. Use this checklist to help you keep your plan in compliance with many of the important rules [with links to] additional information (including examples) on how to find, fix and avoid each mistake."
arrow icon IRS Publication 4284: SIMPLE IRA Plan Checklist (Rev. 2-2015) (PDF)
Internal Revenue Service [IRS]
3/4/2015 [Guidance Overview]

"Every year it's important that you review the requirements for operating your Savings Incentive Match Plan for Employees of Small Employers (SIMPLE) IRA plan. Use this checklist to help you keep your plan in compliance with many of the important rules [with links to] additional information (including examples) on how to find, fix and avoid each mistake[.]"
arrow icon In King v. Burwell, an Easy Answer to the ACA's Definition of 'Exchange'
The Brookings Institution
3/3/2015 [Opinion]

"King v. Burwell, the case that could torpedo the [ACA], is otherwise not particularly interesting. Rather it is a case that only a law professor, and a rather pedantic one at that, could love. No constitutional issue will be decided, and unlike the court's last encounter with the ACA, the power of Congress to do whatever it did in the Act is unquestioned. The question is exactly what did Congress do, or intend to do, when it passed the legislation and, in particular, did it intend a system which would become unworkable if a number of states refused to participate by creating exchanges. To state the question this way is to provide the answer." [King v. Burwell, No. 14-1158 (4th Cir. July 22, 2014; cert. pet. granted Nov. 7, 2014)]
arrow icon Time to Get Ready for OIG Marketplace Reviews
Bloomberg BNA

"A recent document from the OIG affirmed that the marketplaces will be the chief focus of the OIG's ACA oversight in 2015, and upcoming reviews will look at payment accuracy, eligibility and information security.... [T]he OIG will review all financial assistance payments made through the marketplaces, such as premium tax credits and cost-reduction payments. Additional reviews will target payments made to marketplace navigators as well as those made to contractors."
arrow icon IRS Issues Annual Lineup of Legal Changes for Qualified Plans: The 2014 Cumulative List (PDF)
Groom Law Group, via Taxes The Tax Magazine
3/3/2015 [Guidance Overview]

"A summary of the key new items on the 2014 Cumulative List [is] set forth [in this article]. Notably, the 2014 Cumulative List deletes all items that were reviewed by the IRS during the prior Cycle E submission period.... [E]ach plan sponsor should: Review the plan document (and existing amendments) against the 2014 Cumulative List and ensure that the document has been updated for all required and optional plan changes (including legal and design changes). In the event of any missed amendment, an EPCRS filing should be considered."
arrow icon Putting a Stop to Retirement Plan Leakage
Milliman Retirement Town Hall

"[P]roposals that have been suggested include: [1] Raise the age requirement for early withdrawal from 59-1/2 to 62 to match the earliest Social Security retirement age; [2] Limit balances for in-service withdrawals to only employee contributions; [3] Tighten hardship rules even more and only allow hardships in case of 'unpredictable events,' for both 401(k) plans and IRAs; [4] Remove cash-outs altogether (this will mostly likely be met with resistance from plan sponsors because small balances can be expensive and burdensome to administer)."
arrow icon Nonqualified Plan Beneficiary Was Not Determined by Terms of Qualified Plan

"A decision from the 9th U.S. Circuit Court of Appeals confirms a lower court ruling that a retirement plan membership letter and beneficiary designation form for a nonqualified plan 'did not clearly and unequivocally incorporate by reference the entirety' of the terms of a plan sponsor's qualified retirement plan. For this reason, the terms of the qualified plan cannot determine a beneficiary under the nonqualified plan, the court ruled." [E & J Gallo Winery v. Rogers, No. 13-55327 (9th Cir. Feb. 23, 2015; unpublished)]
arrow icon The Value of Improving Employee Well-Being
Towers Watson

"[This article] explore[s] the business value of health and productivity initiatives in today's business environment. Key insights include: [1] How health and productivity programs link to employee engagement, can improve workforce health, and also deliver key cost and competitive advantages. [2] How strengthening executive leader and manager effectiveness help drive wellness program engagement. [3] Practical actions that organizations can take to build a culture of health and employee well-being."
arrow icon The Busy Reader's Guide to Amicus Briefs in King v. Burwell
National Review

"[On] March 4, 2015, the Supreme Court will hear argument in King v. Burwell about the legality of tax subsidies for insurance plans bought somewhere other than exchanges 'established by the State.' The case has certainly merited a great deal of attention from amici: 21 amicus briefs support petitioner/plaintiffs, and 34 briefs support the government.... [R]eaders are likely to be too busy to read all 55 briefs, but fear not, gentle reader: [this author] shall guide you."
arrow icon As King Case Begins, House Republicans Offer an Important Obamacare Alternative
The Brookings Institution
3/3/2015 [Opinion]

"[T]he outline includes a commitment to several insurance protections for Americans with health concerns. These include prohibitions on insurers imposing lifetime limits on benefits, or unfairly cancelling coverage, or discriminating against individuals with pre-existing conditions.... [T]he Ryan-Kline-Upton outline embraces a refundable, advanceable tax credit for health coverage meaning the assistance would be available to those paying little or no tax and would be available when premiums are due.... The House chairmen's plan would also give states an 'off ramp' from the ACA to pursue their own vision of coverage and avoiding federal mandates as they do so."
arrow icon ASPPA Comment Letter to IRS on Program for Pre-Approved Defined Benefit Plans (PDF)
American Society of Pension Professionals & Actuaries [ASPPA]
3/3/2015 [Opinion]

"ASPPA recommends that the IRS [1] extend the submission deadline for pre-approved defined benefit plans to a date that is at least 5 months after the issuance of the Listing of Required Modifications (LRMs) or other IRS guidance regarding the parameters for pre-approved cash balance plans ... [2] permit integrated and non-integrated Master and Prototype (M&P) plans to be combined into one adoption agreement; and [3] expand the volume submitter program by permitting minor modifier submissions of mass submitter plans in a manner consistent with what is permitted for M&P plans and for volume submitter 403(b) plans."
arrow icon American Academy of Actuaries Comment Letter to Actuarial Standards Board on Second Exposure Draft of the Modeling ASOP (PDF)
American Academy of Actuaries Pension Committee
3/3/2015 [Opinion]

"We are concerned that ... attempting to enumerate the components of modeling to develop what is essentially a checklist ... creates the false impression of uniformity of the modeling process. At the same time, this enumeration could either lead actuaries to do unnecessary validation work, or provide unhelpful disclosure as to why such additional work is inappropriate.... [O]nly models above some minimal level of complexity should be explicitly covered by the ASOP ... It is unclear why this ASOP is needed in situations involving straightforward calculations[.]"
arrow icon State Exchange Problems Present ACA Concerns That Exist Beyond King v. Burwell
Solutions Law Press
3/3/2015 [Opinion]

"This mounting evidence of serious cost, financing and other concerns in state-run exchanges creates new reason for concern about the future of ACA's health care reforms even for those citizens of states whose eligibility for subsidies is not challenged by the King v. Burwell Supreme Court challenge. These and other budget overruns and operational challenges raise serious questions about the ability of the federal government or the states to fund the promises currently made by ACA in its present form. Congress and state governments almost certainly will be forced to deal with these broader challenges regardless of the outcome of King v. Burwell."
arrow icon Americans Aren't Saving Enough for Retirement; One Change Could Help
The New York Times; subscription may be required

"The standard prescription is that Americans should put more money aside in investments. The recommendation, however, glosses over a critical driver of unpreparedness: Wall Street is bleeding savers dry.... Actively managed mutual funds, in which many workers invest their retirement savings, are enormously costly. First, there is the expense ratio -- about 1.12 percent of assets for the average large capitalization blend fund. Then there are transaction costs and distribution costs. Active funds also pay a penalty for keeping a share of their assets in low-yielding cash. Altogether, costs add up to 2.27 percent per year ... By contrast, a passive index fund ... costs merely 0.06 percent a year in all."
arrow icon Tibble v. Edison: Why Investment Monitoring Is as Important as Investment Selection

"The duty to prudently select plan investments and the duty to prudently monitor plan investments are separate fiduciary responsibilities, but there is no difference in the standard of prudence required in each case ... Most plan fiduciaries are already performing [periodic] monitoring ... thus protecting themselves and existing participants, as well as newly appointed plan fiduciaries and new participants, from risks associated with prior imprudent decisions ... Such monitoring, if performed in this case, would have uncovered the imprudent selection of retail-class mutual fund shares in time to avoid or at least mitigate the loss to participants and/or risk of participant legal claims[.]"
arrow icon Senate, House Leaders Introduce Bill to Provide Certainty to Employers Offering Innovative Employee Wellness Programs
Committee on Education and the Workforce, U.S. House of Representatives

"The Preserving Employee Wellness Programs Act ... will reaffirm existing law, which allows for employee wellness programs tied to a financial reward. The legislation clarifies that an employee's spouse may participate in the program as well. It also provides employees up to 180 days to request and complete an alternative wellness program if it is medically inadvisable or unreasonably difficult for an employee to participate in the original employee wellness program. Finally, the legislation does not limit the EEOC's authority to investigate and litigate complaints of employment discrimination."
arrow icon ACA's Complexity Invites Attack, Even as It Fails to Cure Ailment
Physicians for a National Health Program [PNHP]
3/3/2015 [Opinion]

"[The] arguments before the Supreme Court in the case of King v. Burwell demonstrate once again how the [ACA's] administrative complexity and flaws -- largely reflecting its accommodation to the private health insurance industry and other corporate, profit-oriented interests in U.S. health care -- make it vulnerable to legal attacks by its opponents. The ACA clearly lacks the simplicity and legal robustness that a single-payer plan would have. Single payer would be simple: everyone in the U.S. would be covered for all medically necessary care in a single program financed by equitable taxes."
arrow icon Engaging the Next Generations in Retirement Savings

8 pages. "Plan sponsors who commit the time and resources to work with plan consultants who understand Gen X and Gen Y expectations and priorities can adopt strategies to communicate the importance of retirement savings in a way that is meaningful to Gen X and Gen Y and may be in a better position to help these generations of workers save for retirement. This whitepaper identifies some distinguishing characteristics of Gen X and Gen Y and suggests strategies that plan sponsors may want to adopt to engage younger workers in retirement savings today so they can achieve retirement readiness in the years to come."
arrow icon Change in Average 401(k) Account Balances from January 1, 2014 Through March 1, 2015 (PDF)
Employee Benefit Research Institute [EBRI]

This report shows change in average account balances grouped by age and tenure, from January 1, 2014 through March 1, 2015, for participants who had an account balance at the end of 2013.
arrow icon Funded Status of U.S. Corporate Pensions Rises Five Percent in February
BNY Mellon

"It was the best month for gains in the funded status of corporate plans since January 2011 ... For the typical U.S. corporate plan, assets in February rose 2.1 percent as U.S. stocks, international developed markets equities, and emerging markets equities all gained. Liabilities for the typical corporate plan in February fell 3.9 percent as the Aa corporate discount rate rose 28 basis points to 3.84 percent."
arrow icon Age Anchors and the Individual Retirement Age: An Experimental Study
Niels Vermeer, via SSRN

"This study examines the sensitivity of the retirement age decision to standard retirement ages [age anchors] ... Individuals retire later when they are confronted with a higher age anchor. Specifically, their retirement age corresponds to the age of the anchor. The effect of the age anchor on the retirement age is strongest for women.... Financial literacy does not seem to play a role, while the role of advice from pension funds and the role of social interactions are limited. This suggests that age anchors may have a distinct effect on the retirement age."
arrow icon 10th Circuit Decides There Are No Vested Health or Life Insurance Benefits Where Plan and SPD Were Silent
Cary Kane ERISA Lawyer Blog

"A plaintiff cannot prove his employer promised vested benefits unless he identifies 'clear and express language' in the plan making such a promise. Further, a promise to provide vested benefits must be incorporated into the formal written ERISA plan. Summary plan descriptions (SPDs) are considered part of the ERISA plan documents. Continuing, the Court said that, having reviewed the SPDs at issue in this matter, the Court concludes Plaintiffs cannot show that any plan contains clear and express language promising vested benefits. The SPDs presented either contained a reservation of rights clause, under which the employer could change or discontinue the benefits at any time, and/or had no clear and express or affirmative promise under which benefits will vest." [Fulghum v. Embarq Corporation, No. 13-3230 (10th Cir. Feb. 24, 2015)]
arrow icon NYC Public Advocate Pushes Private Sector Plan
American Society of Pension Professionals & Actuaries [ASPPA]

"It's no longer just states that are looking at the notion of expanding private sector retirement plan coverage. New York City Public Advocate Letitia James on Feb. 26 introduced legislation creating a commission of experts to study the establishment of a pension fund for private sector workers in New York City. The 11-member advisory board would have a year to present a report to the mayor and other elected officials about the feasibility of a centrally pooled retirement fund, and to provide recommendations on how such a fund would be structured and managed."
arrow icon King v. Burwell: What to Expect from the March 4 Supreme Court Oral Arguments
Ogletree Deakins

"Whether the reality lives up to the predictions remains to be seen. However, it seems that the Supreme Court considers King more important than the typical case challenging the validity of an agency regulation. One hour and 15 minutes of argument time per side has been scheduled for Wednesday, rather than the typical 30 minutes per side scheduled in well over 95 percent of Supreme Court arguments. For those interested in following the argument, here is a guide to the basic issues and some of the topics that the Justices might raise in questions for the advocates."
arrow icon The Best Way Plan Sponsors Should Pay Fees for 401(k) Fiduciary Advice
Fiduciary News

"The rise of the machines may sound like another Arnold Schwarzenegger sci-fi action movie, but it may also be a harbinger of things to things to come for employees whose company's offer 401k plans. The 'Robo-Advisor' represents an automated delivery vehicle for investment advice. It has been touted as the answer to cheap, efficient, participant advice."
arrow icon The Great Cost Shift: Why Middle-Class Workers Don't Feel the Health Care Spending Slowdown
Center for American Progress

"In recent years, the growth in overall health care costs has slowed dramatically. But for millions of Americans with employer-sponsored insurance, or ESI, this slowdown is illusory.... The actual reason why employee and employer costs are increasing at different rates is because employers have, over time, shifted greater responsibility for health care expenses to their employees through higher deductibles, higher copayments, and higher coinsurance -- a practice that began long before the passage of the ACA."
arrow icon The Average Retirement Age: An Update
Alicia H. Munnell, via Center for Retirement Research at Boston College

"Labor force activity among older Americans began rising in the mid-1980s due to: changing Social Security incentives; the shift to 401(k) plans; and improving health, longevity, and education. Updated data, however, suggest that these factors may have played themselves out. As a result, the average retirement age has increased only slightly in the last 10 years: to 64 for men and 62 for women."
arrow icon Retirement Security 2015: A Roadmap for Policy Makers (PDF)
National Institute on Retirement Security [NIRS]

36 pages. "An overwhelming majority of Americans believe there is a retirement crisis.... Three in four Americans remain highly anxious about their retirement outlook, but the concern has dissipated slightly as the economy has recovered.... Even though Americans feel slightly less stressed about their retirement prospects, support for steady and reliable retirement income from a pension is high and growing.... Americans see retirement benefits as a job feature that is almost as important as salary.... Americans express strong support for pensions for public employees. Few Americans realize that 75 percent of public pension costs are paid for with employee contributions and investment returns.... Protecting Social Security benefits is increasingly important."
arrow icon IRS Publication 4334: SIMPLE IRA Plans for Small Businesses (PDF)
Internal Revenue Service [IRS]
3/3/2015 [Guidance Overview]

"A SIMPLE IRA plan provides you and your employees with a simplified way to contribute toward retirement. It reduces taxes and, at the same time, attracts and retains quality employees. And compared to other types of retirement plans, SIMPLE IRA plans offer lower start-up and annual costs... they are just simpler to operate." [Dated Oct. 2014; published online Feb. 27, 2015.]
arrow icon IRS Publication 3998: Choosing a Retirement Solution for Your Small Business (PDF)
Internal Revenue Service [IRS]
3/3/2015 [Guidance Overview]

8 pages. "In addition to helping your business, your employees, and yourself, it's easy to establish a retirement plan, and there are additional reasons for doing so: [1] High contribution limits so you and your employees can set aside large amounts for retirement; [2] 'Catch-up' rules that allow employees age 50 and over to set aside additional contributions.... [3] A tax credit for small employers that enables them to claim a credit for part of the ordinary and necessary costs of starting a SEP, SIMPLE, or certain other types of retirement plans[.]" [Dated Dec. 2014; published online Feb. 27, 2015.]
arrow icon IRS Publication 4587: Payroll Deduction IRAs for Small Businesses (PDF)
Internal Revenue Service [IRS]
3/3/2015 [Guidance Overview]

8 pages. "A payroll deduction individual retirement account (IRA) is an easy way for businesses to give employees an opportunity to save for retirement. The employer sets up the payroll deduction IRA program with a bank, insurance company or other financial institution, and then the employees choose whether to participate and if so, how much they want deducted from their paychecks and deposited into the IRA. Employees may also have a choice of investments depending on the IRA provider.... A payroll deduction IRA program is easy to set up and operate." [Dated Oct. 2014; published online Feb. 27, 2015.]
arrow icon NHeLP Comment Letter to EBSA on Proposed Regs for Summary of Benefits and Coverage and the Uniform Glossary (PDF)
National Health Law Program [NHeLP]
3/2/2015 [Opinion]

"At a minimum, enrollees and applicants should be able to obtain synthesized, comparable information about coverage of essential health benefits. The plan administrator should be required to ensure that any separate SBCs are delivered as a package rather than as separately mailed or emailed documents."
arrow icon The Anthem Breach: Stanza Two Isn't Pretty
Clearwater Compliance

"So far, ten state attorneys general have complained that Anthem isn't moving fast enough in its notification efforts.... Meanwhile, questions abound about whether the breach was truly 'sophisticated' or not. The hackers had the skills to penetrate several Anthem security layers, but they were able to then access the vast database using a stolen password. Numerous reports suggest that Anthem had not encrypted the Social Security numbers found in that database."
arrow icon Brokerage Windows in Retirement Plans: Can Further Guidance Broker Peace?
Andrew L. Oringer, Andrew H. Braid and Aaron S. Cha, in Law Journal Newsletters
3/2/2015 [Guidance Overview]

"[A] key reason that the DOL has expressed concern with brokerage windows appears to be its perception that, by offering a brokerage window, a plan fiduciary can effectively abrogate its responsibility to contour and otherwise choose an investment menu, by making available to plan participants an extremely wide range of unspecified investments. Arguably, the DOL's concerns with the potential appropriateness of brokerage windows generally led to a disclosure-related approach that could have had the effect of making windows costly and difficult to administer and otherwise implement, or even completely unworkable in a number of cases."
arrow icon Treasury/IRS Take First Step in Implementing 40% High-Cost 'Cadillac' Excise Tax with Notice 2015-16 (PDF)
Groom Law Group
3/2/2015 [Guidance Overview]

6 pages. "[T]he projected schedule means that taxpayers will have several opportunities to weigh in on the rules that will eventually apply to the 40% Excise Tax. But a protracted timeline also may mean that Treasury/IRS believe they will need to develop complex rules for implementation and administration of the Tax. This could mean that by the time final rules are published, employers, insurers, plan administrators and others impacted by the Tax may have very little time in which to implement necessary administrative processes to meet reporting obligations and little ability to plan for the economic impact of the Tax on their businesses. Affected parties may want to begin planning now based on [Notice 2015-16], since it gives the first clear indication of the views of Treasury/IRS on a number of significant issues."
arrow icon Don't Overlook the Tax Credit for Small Employer Start-Up Plans
Legacy Retirement Solutions

"Many employers are unaware that, in certain circumstances, they may be eligible for a valuable tax credit in connection with their establishment of a retirement plan.... The credit is equal to up to 50 percent of the 'qualified plan start-up costs' incurred for a period of up to three years.... An employer may elect to initially apply the credit to the year the permissible plan is established or to the year before establishment."
arrow icon Longer Life Expectancies May Increase Benefit Obligations
Moss Adams LLP

"You aren't required to use the new mortality tables when preparing the year-end benefit obligation accrual; other available information may represent a better estimate of mortality for the population of participants in your plan. However, you are required under generally accepted accounting principles (GAAP) to use your best estimate when measuring the benefit obligation, and in making that estimate, to consider all available information through the issuance date. Your auditors will want you to provide them with documentation that the selected mortality assumptions result in the best estimate of expected mortality for plan participants based on conditions existing as of the measurement date."
arrow icon IRS Offers Rules of the Road for Cadillac Plan Tax
Sutherland Asbill & Brennan LLP
3/2/2015 [Guidance Overview]

"[E]mployers that have already conducted a preliminary excise tax analysis based on their pre-Notice interpretation of Code section 4980I should consider whether their current assumptions would need to be adjusted if the IRS issues guidance consistent with the approaches outlined in [Notice 2015-16]. This is particularly true for employers that did not anticipate that employee pre-tax HSA contributions would be treated as applicable employer-sponsored coverage or those who may benefit from certain rules regarding permissive disaggregation of similarly situated employees based on job-related criteria."
arrow icon Big Changes Expected from Obama Push on Fiduciary Standard
Pensions & Investments

"Administration officials say the new proposal will look very different from a 2010 attempt that got sent back to the drawing board after a storm of criticism. This time, it will include economic analysis and several exemptions to prohibited transaction rules that would allow service providers to maintain their compensation practices, such as commissions and revenue sharing, as long as clients' interest come first and potential conflicts of interest are disclosed."
arrow icon The Implications of King v. Burwell
Urban Institute

"This one page summary highlights finding from three recent analyses of the implications of a Supreme Court finding for the plaintiffs in King v. Burwell. The Supreme Court will hear arguments in the case on March 4, 2015."
arrow icon Republican Senators' Proposal for Health Subsidies Lacks Substance
Center on Budget and Policy Priorities
3/2/2015 [Opinion]

"The senators write that the plan would 'provide financial assistance to help Americans keep the coverage they picked for a transitional period,' but they don't furnish the most basic information about this assistance. Would people receive the same amount of help they do now, both for premiums and for deductibles and cost-sharing? How long would this transitional assistance be available? What, if any, financial assistance would be available when it expires -- and if it were available, who would be eligible and for how much? The senators don't say."
arrow icon EEOC Charges Employer with ADA Violation by Terminating Employment at End of FMLA Leave
Solutions Law Press

"Employers assume at their own peril that their responsibility to an employee ends when an employee is unable to or fails to return to work following a FMLA or other medical leave. Instead, the employer should evaluate whether the affected employee qualifies as disabled under the ADA and if so, whether the employer has any responsibility to offer the employee an extended leave or other accommodations before terminating the employee." [EEOC v. ValleyLife, Civil Action No. 2:15-cv-00340-GMS (D. Ariz.)]
arrow icon Stockton Bankruptcy's Unsettled Pension Legacy

"Larger questions remain, however, from the judge's first-of-its-kind ruling that CalPERS pensions can be cut in a municipal bankruptcy, even though in this case Stockton chose not to do so. Will CalPERS appeal the pension ruling or let it stand unchallenged, possibly clouding the sense of security of state and local government employees, encouraging future bankruptcies and giving management leverage in labor negotiations? And does Stockton's decision not to cut pensions in bankruptcy risk future insolvency, as Moody's credit rating service warned a year ago, possibly putting the city on a path to future budget deficits, which Vallejo has faced since its bankruptcy?"
arrow icon In Four-Word Phrase, Challenger Spied ACA's Vulnerability
The New York Times; subscription may be required

"[In December 2010,] Thomas M. Christina, an employment benefits lawyer from Greenville, S.C., ... found a new vulnerability in the sprawling law. 'I noticed something peculiar about the tax credit,' he told a gathering of strategists at the American Enterprise Institute. With a rudimentary PowerPoint presentation, Mr. Christina ... pointed to four previously unnoticed words in the health care law, enacted nine months earlier. They seemed to say that its tax-credit subsidies were limited to people living where an insurance marketplace, known as an exchange, had been 'established by the state.' "
arrow icon Ninth Circuit: Spousal Consent Not Required Under Top-Hat Plans
Proskauer's ERISA Practice Center

"[T]he Court found that: (a) the participant's first wife, who was designated as the primary beneficiary, had waived her rights to benefits as part of the couple's divorce; and (b) the participant's second wife had no rights to the benefits, since she was not a named beneficiary and top-hat plans are exempt from ERISA's spousal consent requirements." [E & J Gallo Winery v. Rogers, No. 13-55327 (9th Cir. Feb. 23, 2015; unpublished)]

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