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Older News | October 9, 2015

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D.C. Introduces Nation's Most Generous Paid Leave Law
Vorys, Sater, Seymour and Pease LLP

"As currently envisioned, the bill creates a system comparable to unemployment compensation in which D.C. employers would pay a percentage of employees' annual pay into a D.C.-administered fund. The fund then administers and pays out benefits for eligible paid leave claims that are submitted to it.... Because the benefits fund does not yet exist, claims for benefits would not be administered until one year after the law becomes effective or until D.C.'s chief financial officer certifies that the fund can begin paying out claims while remaining solvent."
The American Retirement System Needs a Plumber
10/9/2015 [Opinion]

"Everything is built so the pipes don't connect.... It took visits to three websites and two phone calls -- which were only answered during business hours -- before a letter and check were mailed from the 401(k) plan. Yes, that's a paper letter and check, sent through the U.S. Postal Service. Then, when the money finally arrived at the IRA provider, it took two more calls, totaling 23 minutes, before the firm was able to invest my money. The whole process took two full weeks, which happened to be an unlucky time to have my money out of the stock market. I missed a 6 percent rise in the Standard & Poor's 500 index and a 10 percent jump in emerging markets."
Protecting Your Information at
Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS]

"Today, we launched a simple way to give you more control over the information you choose to share with us -- a new privacy manager. We're also supporting the Do Not Track browser setting for our digital advertising.... [The privacy manager] makes it easy for you to opt-in or out of the different types of third-party tools used by -- Advertising, Analytics, or Social Media. If you choose to opt-out, you'll still have access to everything on the site, but we won't use information from your visit to analyze the site's technical performance or use digital advertising to remind you about helpful information like deadlines."
The FMLA Marriage Penalty: When Spouses Work for the Same Employer
FMLA Insights
10/9/2015 [Guidance Overview]

"Plenty of employers understand that the spouses split 12 weeks of FMLA for bonding time, but plenty more employers forget that the FMLA sharing also occurs when one or both of the spouses care for a parent.... Notably, the DOL has acknowledged that this provision does not apply to unmarried couples."
Corporate Pension Funded Status Declines by $28 Billion in September (PDF)

"Milliman 100 Pension Funding Index The funded status of the 100 largest corporate defined benefit pension plans worsened by $28 billion during September as measured by the Milliman 100 Pension Funding Index (PFI). The deficit rose to $312 billion due to both investment losses and interest rate decreases during September. As of September 30, the funded ratio dropped to 81.7%, down from 83.3% at the end of August."
Risk Assessment for Taft-Hartley Health and Welfare Plan Claim Payments
Belfint Lyons & Shuman, CPAs

"In considering the completeness and accuracy of the benefit payment expense in Taft-Hartley health and welfare plan financial statements, an auditor must consider what can go wrong.... Testing benefit payments can be challenging due to the highly specialized nature of the adjudication process."
The New Congressional Effort to Undermine the ACA
Health Affairs
10/9/2015 [Opinion]

"The key elements in the [reconciliation package], developed by three House Committees (Ways and Means, Energy and Commerce, Education and the Workforce) include: ... [1] Eliminating the ACA requirement that large employers must auto-enroll their workers into company health insurance plans, now scheduled to take effect in 2017; [2] Repealing the ACA's health insurance mandates on individuals and employers; [and] [3] Repealing the ACA's tax on high-cost health insurance plans called the 'Cadillac Tax'[.]"
Why 16-Week Paid Parental Leave Policies Are Revolutionary for U.S. Workers
The Washington Post; subscription may be required

"[E]ven with paid leave, there are still barriers to parents' taking more leave. Some employers might frown on parents taking as long as four months off, and employees might reasonably worry about the impact on their careers. So perhaps fathers might take just a week or two more than they do now, not the full 16 weeks. But even such a small increase would have an important impact."
HHS Finds Substantial Improvements to Mental Health and Substance Use Disorder Coverage in Response to the Mental Health Parity and Addiction Equity Act of 2008 (PDF)
Assistant Secretary for Planning and Evaluation [ASPE], U.S. Department of Health and Human Services [HHS]

"A recent study commissioned by the Office of the Assistant Secretary for Planning and Evaluation has found that large employer-based plans made substantial changes to their benefit designs in response to enactment of the Wellstone-Domenici Mental Health Parity and Addiction Equity Act (MHPAEA) of 2008 and issuance of the interim final rule (IFR) . Most plans removed most financial requirements that did not meet the requirements of the federal parity statute and its implementing the IFR.... However, there is room for improvement. A minority of large employer-based plans -- one in five -- still required higher copays for in-network outpatient MH/SUD services than for comparable medical/surgical benefits in 2011." [Detailed study results and additional information are available online.]
From EBSA: An Employee's Guide to Health Benefits Under COBRA
Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]
10/9/2015 [Guidance Overview]

"This [web page] explains your rights under COBRA to a temporary extension of employer-provided group health coverage, called COBRA continuation coverage. This [page] will: [1] Provide a general explanation of your COBRA rights and responsibilities; [2] Outline the COBRA rules that group health plans must follow; [3] Highlight your rights to benefits while you are receiving COBRA continuation coverage."
California Scheduled to Expand Small Group Definition Despite PACE Act
E is for ERISA
10/9/2015 [Guidance Overview]

"Although the PACE Act repeals the federally-mandated expansion of the 'small employer' definition, it leaves states the discretion to expand the definition on their own schedule.... California already enacted legislation in 2012, A.B. 1083, that expands the definition of small employer to employers with 1 to 100 employees, effective for plan or policy years beginning on or after January 1, 2016. And in S.B. 125, earlier this year, California also adopted the use of the ACA's full-time and full-time equivalent method of counting employees towards the small employer threshold."
Another Change to ACA: States Can Decide on Small Group Expansion
Frenkel Benefits
10/9/2015 [Guidance Overview]

"California, Colorado, Maryland, New York, Virginia, Vermont and the District of Columbia have enacted laws or issued regulatory guidance changing their small group definition to the 1-100 employee definition in 2016. Most states will be reverting back to 50 lives for community rating, however, these states will need to enact legislation prior to considering a change."
ACA Reporting Requirements for Multiemployer Plans
The Wagner Law Group
10/9/2015 [Guidance Overview]

"The 2014 version of the Instructions for Forms 1094-C and 1095-C required ALEs that contribute to a multiemployer plan on behalf of full-time employees to obtain information from the multiemployer plan about covered employees. In addition to creating a myriad of logistical problems for contributing employers, this created compliance concerns regarding the HIPAA privacy rules. As a solution, the IRS's 2015 draft Instructions directed contributing employers to use Code 1H (no offer of coverage) on Form 1095-C, Line 14 for any month in which the employer claimed the multiemployer plan transition relief made available in the preamble to the final Code Section 4980H regulations."
Text of PBGC Disaster Relief Relating to PBGC Deadlines in Response to Severe Storms and Flooding in South Carolina
Pension Benefit Guaranty Corporation [PBGC]
10/9/2015 [Official Guidance]

"[PBGC] is waiving certain penalties and extending certain deadlines in response to the severe storms and flooding that began on October 1, 2015, in South Carolina.... The disaster area consists of Berkeley, Charleston, Clarendon, Dorchester, Georgetown, Horry, Lexington, Orangeburg, Richland, Sumter and Williamsburg counties."
Vast Majority of Companies Provide Enhanced Severance Benefits Below the NEO Level in a Change in Control
Towers Watson

"The survey responses suggest that enhancing severance for terminations in conjunction with a CIC is widespread. The vast majority (93%) of respondents indicated they do so for some portion of employees below the NEO level, with two-thirds (67%) of those companies offering enhanced cash compensation (salary and/or bonus) and accelerated vesting of equity and about a quarter (26%) offering only accelerated vesting of equity."
SEC Adopts CEO Pay Ratio Disclosure Rules
Perkins Coie LLP
10/9/2015 [Guidance Overview]

Topics include: [1] Where and how to make pay ratio disclosures; [2] Identifying the median employee; [3] How often must companies identify the median employee? [4] Limited exceptions for non-U.S. employees; [5] Calculating annual total compensation; [6] Must disclose methodology, assumptions and estimates; and [7] Exempt companies and transition periods.
Proposed Retiree Benefit Cuts by the Central States Pension Fund Are a 'Pension Demolition Plan'
Pension Rights Center
10/9/2015 [Opinion]

"The Pension Rights Center has said from the beginning that the Fund could have taken other steps to truly rescue the Fund. But rather than do the work needed to find better solutions, the Fund took the easy way out: cutting the benefits of the most vulnerable -- the very people Congress intended to protect when it passed ... ERISA in 1974.... We are getting calls and letters from desperate retirees, who have been told that their benefits will be cut by between 50 to 70 percent. While many of them knew they would be getting letters about proposed pension cuts, they have been completely blindsided by how deep these cuts are."
Teamsters Applaud Introduction of Pension Accountability Act By Sen. Portman
10/9/2015 [Opinion]

"The Pension Accountability Act seeks to fix changes to multiemployer pension law that were attached to the omnibus spending bill passed in December. The Multi-employer Pension Reform Act (MPRA) allows the Treasury Department to overrule any vote taken by pension participants on proposed cuts in large plans. Portman's bill would change that part of the law by making any vote by participants binding and not subject to overrule by the Treasury Department. The legislation would also change the law so that only those ballots returned in any vote are counted."
Fund Managers Unprepared for SEC Money Market Rules
Employee Benefit News

"[In a recent poll] of 100 investment managers ... 85% said they had limited or no understanding of the [SEC's] final ruling 2a-7 and 75% said their organizations are not completely prepared for the rules to go into effect.... When doing their due diligence on their plan's investment lineup, fiduciaries must look at all relevant issues, including 'where the particular fund fits within the plan's investment strategy, the net yield received and how well the fund performs compared to relevant benchmarks, the stability of the investment team, liquidity of the fund, including issues such as redemption fees and restrictions, and the cost of the fund and compensation paid to its investment manager,' [said Bruce Ashton of Drinker Biddle & Reath LLP]."
The Dreaded Census Questionnaire, Part One: Employee Information (PDF)
Ekon Benefits

"The census questionnaire concerns both current and terminated employees, participating or not, who received a Form W-2 for the year. Typical requests include an entire database of information ... How can information about employees that aren't even participating in your Plan and people that are no longer employed by your firm be necessary to Plan compliance?"
QLAC Searches by Advisors Double in Third Quarter

"To get quotes and product information about QLACs, advisors made 18,800 hits to the Cannex database during that three-month period ... Activity was up 138 percent from 7,900 hits on QLACs in second quarter. The database records the number of searches that annuity advisors do on a variety of single premium income annuities. It began reporting on QLAC activity just this year, in the second quarter."
Is Company Stock a Liability to Your Retirement Plan?

"A common source of company stock in retirement plans has been the company match. Employers that want to continue this practice and reduce allocations might consider shortening the vesting period for company stock, says Holly Verdeyen, director, defined contribution investments at Russell. This way, 'participants have more opportunity, sooner, to be able diversify themselves.' ... For plan sponsors that decide to eliminate the plan's holdings entirely, it should be planned out carefully."
Connecticut's Pension Ranks Number 48
Young Research and Publishing, Inc.

"Connecticut's funding of its pension obligations ranks #48 in the country only to be outdone by Kentucky and Illinois. Connecticut, with a pathetic 51.9% of assets to pay future obligations isn't even close to dealing with its unfunded pension obligations.... Connecticut assumes that its pension assets will earn a future rate of return of 8%. But ... that basically means that it will need a 12% average annual return from the stock market. Any prudent fiduciary would not advise such a rosy future for the stock market."
Independent RIAs Struggle with Schwab Investment Menu Limitations

"The good news, RIAs say, is that Schwab is proposing to give them better control of how their clients' assets are managed and that the fees, reflecting the index-based approach, fall into the reasonable range. Yet some RIAs suspect that Schwab's presence will still be far too intrusive. 401(k) participants will get ETFs, they say, in managed account form with Schwab as the only manager."
Society of Actuaries Updates Mortality Improvement Scale
Society of Actuaries

"The updated scale -- MP-2015 -- reflects a trend toward somewhat smaller improvements in longevity.... The SOA's preliminary estimates suggest that updating to the MP-2015 scale released [on Oct. 8, 2015] might reduce a plan's liabilities by between zero and two percent, depending on each plan's specific characteristics."
Updated Mortality Improvement Scale Issued by Society of Actuaries
Towers Watson

"[M]ost plan sponsors that used their own mortality experience to select assumptions and that made adjustments to the 2014 tables will find this new information further supports the adjustments they made. While the new information should still be considered in those instances ... in many situations, it will not cause a plan sponsor to change its current mortality assumptions.... [P]lan sponsors that adopted the SOA's 2014 mortality tables without change will likely want to reconsider their assumptions by studying their own mortality experience and either adopting MP-2015 ... or adopting an altogether different improvement scale."
PBGC Final Regs Will Affect Default Risk for Borrowers with Pension Plans
Pillsbury Winthrop Shaw Pittman LLP
10/9/2015 [Guidance Overview]

"The [PBGC] has adopted final regulations relieving certain sponsors of defined benefit pension plans from the obligation to report certain events that signal an increase in the plan's financial risk. The final regulations also revise many existing reportable event waivers. In recognition of the significant effect that pension liabilities can have on creditworthiness, many credit agreements refer to unwaived reportable events when defining the events of default."
Year-End Compliance Deadlines and Other Reminders for Multiemployer Retirement Plans (PDF)
Segal Consulting
10/9/2015 [Guidance Overview]

"DB plans might need to make certain amendments as a result of MPRA... Reminders about year-end compliance matters cover new rules for DB annual funding notices, required minimum distributions, documentation for plan loans and hardship distributions, and annual notices for Section 401(k) plans."
D.C. Council Introduces Legislation That Would Give D.C. Employees Up to 16 Weeks of Paid Family and Medical Leave
Mintz Levin
10/8/2015 [Guidance Overview]

"If the proposed Act becomes law, all companies with at least one 'covered employee' will be required to contribute to a Family and Medical Leave Fund established by the D.C. government. A covered employee is any individual who was employed by a company for some or all of the 52 weeks immediately before a qualifying medical or family leave event and either: (a) spends greater than 50% of work time for the employer in D.C. or (b) works for a company that is a registered business holder in D.C. This means local, regional, and national employers must figure out which, if any, of their employees would qualify for paid leave benefits."
Website Now Online: Central States Pension Fund Rescue Plan
Central States Pension Fund

"This site is an easy-to-navigate clearinghouse of comprehensive, important and up-to-date information regarding the status of Central States Pension Fund's proposed pension rescue plan, submitted under the Multiemployer Reform Act of 2014 (MPRA).... A detailed description of each of [the] proposed pension rescue plan components is available ... [1] Timing; [2] Re-employment phase-out; [3] Future accruals for active participants; [4] Early retirement; [5] Terminated status participants; [6] Orphans; [7] UPS transfer group; [8] All other participants; [9] Age protections; [10] Disability protections; [11] Spousal/survivor benefits."
Finances and Benefits Continue to Bewilder American Workers

"Four in 10 Americans admit knowing little or nothing about their employee benefits ... Millennials, Gen Xers, parents and low-income Americans find it difficult to manage finances, and many say issues with personal finance distract them while they're at work....[E]mployees indicate they are struggling to know whether they are on track to retire comfortably or how much money they should be spending on their employer-provided benefits." [Survey findings available online as 22 presentation slides from MassMutual.]
Six Economic Facts About Health Care and Health Insurance Markets After the ACA
The Brookings Institution

"Spending on health-care resources varies widely across the country: spending for the average Medicare enrollee in Miami is nearly 70 percent greater than in Minneapolis.... Millions of households with health insurance do not have enough cash on hand to pay out-of-pocket medical expenses in the event of a major health shock.... Over the past three decades the percent of American workers enrolled in conventional health insurance plans has declined from 73 percent to less than 1 percent.... Over the past two decades, there has been a nearly 50 percent increase in the share of private sector workers who are offered a choice of health insurance plans."
President Signs PACE Act Changing Small Group Market Definition (PDF)
Cherry Bekaert Benefits Consulting, LLC
10/8/2015 [Guidance Overview]

"On October 7, 2015 President Obama signed the Protecting Affordable Coverage for Employees (PACE) Act that amends the [ACA] definition of a 'small employer' for the purpose of purchasing health insurance coverage.... The PACE Act repeals the mandatory expansion of the small group market to employers with up to 100 employees and reverts to the prior definition of up to 50 employees although the states maintain flexibility to define the small market as up to 100 employees.... Numerous questions surround the passage of this amendment to the ACA given the fact that the change has happened so late in 2015."
Can the Cadillac Tax Be Made Less Regressive by Replacing It with an Exclusion Cap?
RAND Corporation

"One alternative to the Cadillac tax is an 'exclusion cap,' under which individuals enrolled in employer-sponsored plans would be able to exclude premiums from their taxable income only up to a dollar limit (i.e., the cap). This analysis uses RAND's COMPARE microsimulation model to [1] define an exclusion cap scenario that would produce the same amount of federal tax revenues as the Cadillac tax in 2020 and [2] compare the effects of the exclusion cap and the Cadillac tax on families in different income ranges. The analysis shows that there is very little difference in progressivity between the Cadillac tax and a revenue-equivalent exclusion cap."
Central States Pension Fund Submits Plan for Reducing Benefits
McGuireWoods LLP

"Within 30 days of receiving an application to suspend benefits, Treasury will publish the Rescue Plan and request comments from contributing employers, unions, participants and other parties.... Treasury must approve or deny Central States' application within 225 days of the submission.... Within 30 days of an application's approval, the IRS must administer a vote for participants and beneficiaries to approve or reject the proposed benefit suspensions.... If a majority of participants and beneficiaries vote to reject the suspension, the plan sponsor may again apply for benefit suspensions.... [B]ased on the filing date for the Rescue Plan, if it is approved, it would be implemented on or around July 1, 2016."
Buyer Beware: Seventh Circuit Lowers Hurdle to Make Claim for Withdrawal Liability Under the Successorship Doctrine
Dechert LLP via Lexology

"Prior court decisions going back over 40 years have established that the successorship doctrine is applicable to employment-related liabilities. However, as [this case] demonstrates, in the context of multiemployer plan liabilities, courts may be more willing to find successor liability in order to further the MPPAA's policies of protecting remaining contributors to a multiemployer plan." [Tsareff v. ManWeb Services, Inc., No. 14-1618 (7th Cir. July 27, 2015)]
Do Financial Advisers Influence Savings Behavior?
RAND Corporation

"In this report, the authors review evidence from the research literature about whether working with an adviser improves savings behavior, in general, as well as saving for long-term goals, particularly retirement. While much of the literature provides evidence that individuals who receive professional financial advice are more financially healthy than those who do not, few papers attempt to address the endogeneity concerns of reverse causation, limiting insights into whether advisers are causing improvements in their clients' savings behavior."
IRS Issues Transition Guidance for Cooperative and Small Employer Charity Plans
Wolters Kluwer Law & Business
10/8/2015 [Guidance Overview]

"The CSEC Act, which was enacted on April 7, 2014, specifies minimum funding requirements and related rules that apply with respect to certain defined benefit plans maintained by groups of cooperatives and related entities and groups of charities. The IRS discusses plans that qualify as CSEC plans, elections to cease to be an eligible charity plan beginning in 2014, extended amortization elections, and reporting requirements."
Sixth Circuit: Claimant Could Be Entitled to LTD Benefits, Despite Late Filing of Claim
Cary Kane ERISA Lawyer Blog

"[The Court found that, while the plaintiff] did not comply with the notification deadlines outlined in the Plan, in that she did not file her claim for LTD benefits prior to termination, that failure is not surprising given that she was suffering from severe mental illness and was unable to comply due to the very disability for which she sought coverage. Provisions in the Plan contemplate the awarding of LTD benefits to employees who become disabled as long as they are working for Ford at the time of onset, which occurred here." [Waskiewicz v. UniCare Life and Health Ins. Co., No. 14-1479 (6th Cir. Oct. 2, 2015)]
Open Enrollment Tips

"What type of information can help employees make better decisions during Open Enrollment? ... [How should plan sponsors] ensure employees complete their enrollment selections within the open enrollment period? ... [How should they] adapt communication best practices for new hire enrollment?"
Testing Pay for Performance
Meridian Compensation Partners, LLC

"There is no silver bullet analysis that will definitively determine whether pay and performance are aligned at every company. However, there are a number of ways companies can test the pay and performance alignment relative to peers or historical results.... By understanding the key drivers of incentive plan outcomes, the compensation committee can discuss an action plan for improvement."
EEOC Proposes Rule on Application of ADA to Employer Wellness Programs
Morgan Lewis
10/8/2015 [Guidance Overview]

"The [proposed regulation] requires employers to provide employees with a written notice that clearly explains [1] what medical information will be obtained, [2] how the medical information will be used, [3] who will receive the medical information, [4] restrictions on the medical information's disclosure, and [5] the methods used to prevent improper disclosure of the medical information."
Why the Cost of Generic Drugs Is Increasing: Regulatory and Legal Reasons
National Center for Policy Analysis [NCPA]

"Oddly, during the past few years many generic drugs that have been on the market for decades have suddenly become expensive. In 2014, the price of more than one-fourth of generic drugs rose 10 percent to 100 percent or more. In other cases, old generic drugs have becomes scarce and hard to procure. [This article describes] some of the regulatory and legal reasons drug prices are rising."
ACA's Transitional Reinsurance Fee Submissions
Segal Consulting
10/8/2015 [Guidance Overview]

"The fees are determined based on the plan's enrollment count during the first nine calendar months of the year, regardless of the plan's actual plan year. Enrollment counts for the first nine months of 2015 will be filed in November 2015 with payment made in 2016.... Plans that are self-insured and self-administered are not required to pay the fees in 2015 or 2016. To be regarded as self-administered, self-insured plans must retain responsibility for claims processing, claims adjudication (including internal appeals) and enrollment."
Risk Selection Threatens Quality of Care for Certain Patients: Lessons from Europe's Health Insurance Exchanges
Health Affairs

"Experience in European health insurance exchanges indicates that even with the best risk-adjustment formulas, insurers have substantial incentives to engage in risk selection.... Recommended improvements to the risk-adjustment process in the United States include considering the adoption of risk adjusters used in Europe, investing in the collection of data, using a permanent form of risk sharing, and replacing the current premium 'band' restrictions with more flexible restrictions."
The Leave vs. Compensation Debate (PDF)
Fox Rothschild LLP
10/8/2015 [Guidance Overview]

15 pages. "This outline is designed to provide a general overview of the following laws pertaining to employee leaves of absence: the federal Family and Medical Leave Act of 1993, the New Jersey Family Leave Act, the New Jersey Workers' Compensation Act, the New Jersey Family Leave Insurance Law and the New Jersey Temporary Disability Benefits Law. This outline will also discuss in broad terms the interplay of these laws with each other and with employer leave of absence policies."
Government Workers Are Retiring in Waves
American City & County

"A [recent study] found that four of 10 responding organizations indicated that they could lose 20 percent or more of their employees to retirement within the next five years. Other studies have confirmed that retirements, if unanticipated, threaten all public sector employers to a greater degree than the private sector. The local government workforce is especially vulnerable, with the percentage of workers at least 50 years of age (37 percent) significantly greater than the private sector (28 percent) ... Despite the apparent need for preparation, only 27 percent of survey respondents ... had succession plans in place[.]"
Latest Round of Cadillac Tax Comments Yields More Criticism
Bloomberg BNA

"In its comment letter, the OPM said that as the tax currently stands, administering it would likely lead to a reduction or elimination of benefits for employees in the Federal Employees Health Benefits Program.... The question over who should be considered 'the person that administers the plan benefits' was a prominent issue in the comment letters."
ACA Excise Tax on Expensive Health Plans Is an Unambiguous Pay Cut
Economic Policy Institute
10/8/2015 [Opinion]

"[E]ven if wages rise in response to cutbacks in employer premium contributions, the level of pre-tax pay (where pay includes both wages as well as other employer-provided benefits) won't increase at all -- instead its composition will simply shift, with employer premium payments falling and wages rising. Further, because wages are taxed and employer premium payments are not, this means that the total tax bill on the worker's overall compensation will have unambiguously increased. So, post-tax compensation is lower with the excise tax, period. It is a take-home-pay cut."
Why You Can't Overlook Worksite Wellness

"An increasing number of U.S. employers (over 60%) find value in offering worksite wellness. In response to current business challenges, some employers have cut their wellness programs to save money. But eliminating wellness from an organization's overall health plan strategy ignores the harmful effects unhealthy employees can have on the bottom line -- they can be less productive at work and have higher health care costs."
S&P 500 Pension Plans See $102 Billion Increase in Funded Deficit in the Third Quarter
Aon Hewitt

"[T]he funded status deficit of U.S. pension plans increased by $102 billion in the third quarter of 2015, a shift from the previous quarter that saw the deficit decline by $81 billion. Year-to-date, the funded status deficit has increased by $40 billion.... [T]he aggregate funded ratio decreased from 83.5 percent to 78.7 percent. The change was largely driven by asset reductions of $79 billion along with liability increases of $23 billion year-to-date."
Loan Is Not a Four-Letter Word

"When a plan offers loans, it seems to have the beneficial effect of raising contribution rates above what they would otherwise be.... When a plan sponsor permits multiple loans, the propensity to borrow nearly doubles ... [P]articipants may view the opportunity to take multiple loans as an implicit endorsement of borrowing by their employer."
Pension Fund May Cut Benefits for 273,000 Workers and Retirees

"The proposal, which still needs approval from the Treasury Department, will spare retirees age 80 or older from any cuts as well as anyone receiving disability protections. And reductions would be less severe for those older than 75 or widows and widowers receiving spousal benefits. While they vary, cuts will average about 23% and could happen as soon as July."
Teamsters' Pension Fund Warns 400,000 of Cuts
The New York Times; subscription may be required

"Any reorganization of the decades-old Central States Pension Fund would take months and would probably be a brutal battle as workers, retirees, union leaders and employers all seek to protect competing interests.... [The] plan has caused consternation for many years, because if it failed, it could wipe out a federal insurance program that now pays the benefits of a million retirees. If the reorganization ultimately proves successful, however, it could serve as a model for other retirement plans with similar, seemingly intractable financial problems."
401(k) Document Retention Rules Made Simple
Employee Fiduciary

"In general, 401k plan records must be kept for a period of not less than six years after the filing date of the IRS Form 5500 created from those records. However, records necessary to a participant's claim for plan benefits must be kept ... 'as long as a possibility exists that they might be relevant to a determination of the benefit entitlements of a participant or beneficiary.' This can mean indefinitely. Some of the most common plan records a 401k sponsor must retain are itemized [in this article]."
Health Care Costs for Couples in Retirement Rise to an Estimated $245,000

"[A] couple, both aged 65 and retiring this year, can now expect to spend an estimated $245,000 on health care throughout retirement, up from $220,000 last year. The figure has increased 29 percent since 2005 when it was $190,000. Factors boosting this year's estimate include longer life expectancies and anticipated annual increases for medical and prescription expenses. The estimate assumes enrollment in Medicare health coverage but does not include the added expenses of nursing home or long-term care."
OCR Releases Platform to Solicit Comments from Software Developers on HIPAA Requirements
Gray Plant Mooty

"The Office for Civil Rights (OCR), the sub-agency within [HHS] charged with enforcement of HIPAA, recently launched a new tool that is intended to help developers of health care technology understand more about this important law. The idea with this new platform is that developers can post questions and comments about HIPAA privacy and security concerns. This will allow OCR to better understand the barriers that developers face and provide helpful feedback and guidance."
Excluding Certain Classes of Employees from Your Health Plan May Increase Risk of Penalty
Warner Norcross & Judd LLP
10/7/2015 [Guidance Overview]

"Whether you use the month-to-month method or the look-back measurement method to determine who is a full-time employee, categorical exclusions of entire classes of employees from your medical plan increase the risk that you will miss your targets, especially beginning in 2016, when you'll have much less margin for error ... [C]ategorical exclusions also increase the risk of incurring the Section 4980H(b) penalty, which applies when your organization avoids the [4980H(a)] penalty but any of your full-time workers end up purchasing health insurance on the Exchange and qualifying for the tax subsidy."
Upcoming Amendments to Federal Rules of Civil Procedure Will Impact ERISA Litigation
Begos Brown & Green LLP

"On December 1, 2015, barring action by Congress, amendments to the Federal Rules of Civil Procedure will take effect. A number of these amendments are intended to fine-tune the discovery process, and they may have an impact on ERISA-related discovery. Of particular note are the increased emphasis on proportionality in discovery; additional requirements in objecting to discovery requests; and a significant limitation on sanctions for loss of electronically stored information."
Tax Relief for Victims of Severe Storms and Flooding in South Carolina
Internal Revenue Service [IRS]
10/7/2015 [Official Guidance]

"The President has declared Berkeley, Charleston, Clarendon, Dorchester, Georgetown, Horry, Lexington, Orangeburg, Richland, Sumter and Williamsburg counties a federal disaster area. Individuals who reside or have a business in these counties may qualify for tax relief. The declaration permits the IRS to postpone certain deadlines for taxpayers who reside or have a business in the disaster area. For instance, certain deadlines falling on or after Oct. 1, and on or before February 16, 2016 have been postponed to February 16, 2016."
2015 Defined Contribution Plan and Fee Survey: What a Difference a Decade Makes (PDF)

"Fixed-dollar arrangements now account for 47% of plans in [this] Survey. While previously popular among larger plans, that is, those with $1 billion or more in assets, fixed-dollar arrangements are now increasingly prevalent among mid-size plans with $100 million to $500 million in assets ... [T]he recordkeeping fees for half of all retirement investment accounts are still calculated using pricing models based on assets within the plan. In addition, recordkeeping fees include some element of revenue sharing for most plans."
IRS Cracks Down On Lump Sum Pension Buyouts
Michael Kitces in Nerd's Eye View

"[F]or those in poor health or who fear their underfunded defined benefit plan may default (and don't want to rely on PBGC backing), the new rules have taken a potential buyout offer off the table. And ironically, while the purpose of the new rules was to shore up protections for pensioners, the elimination of yet another means by which plan sponsors can 'de-risk' their pension exposures may only serve to further accelerate the slow-motion demise of the defined benefit plan altogether."
Almost Half of Obamacare Plans on Federal Marketplace Lack Out-Of-Network Coverage

"Overall, 52.6 percent of Obamacare plans on had out-of-network coverage, leaving nearly half of plans without easily accessible out-of-network coverage.... The percentage of Obamacare marketplace plans offering out-of-network coverage in each state ranged from 0 percent in South Dakota to 100 percent in Alaska, Alabama, Louisiana, Tennessee, and West Virginia.... In 13 states, less than half of plans offered out-of-network coverage."
Why D.C.'s Proposal for Universal Paid Leave Is Such a Big Deal
The Atlantic

"D.C.'s plan isn't the first to take on leave at a local level.... But D.C.'s is different in that it provides more wage coverage for an extended period, and gives workers who live or work within the District the possibility of receiving the benefit, even if their employer isn't eligible to participate, a point that's especially important in a city where a large number of people are employed by the federal government or commute to states such as Maryland or Virginia where the city can't impose payroll taxes."
IRS Health Care Tax Tip 2015-62: Reporting Requirements for Applicable Large Employers
Internal Revenue Service [IRS]
10/7/2015 [Guidance Overview]

"If you're an ALE, you report information about health coverage you offered to each full-time employee, or to show that you didn't offer coverage to the full-time employee. This information will help the IRS determine whether an employer shared responsibility payment applies to your organization and is also used in determining the eligibility of employees for the premium tax credit. Here are some key points about the information reporting requirements under the health care law[.]"
Comment Letter to PBGC on Annual Financial and Actuarial Information Reporting; Changes to Waivers (PDF)
U.S. Chamber of Commerce, American Benefits Council, and Financial Services Roundtable
10/7/2015 [Opinion]

"[If] a plan has at least 500 participants, it should be permitted to use non-stabilized rates to determine it meets the dollar threshold. While this may create additional expense for the plan, it will generally be less expensive and onerous than complying with the reporting requirements. In addition, the PBGC should consider increasing both the dollar threshold and the participant count."
DOL Urged to Heed Constructive Ideas to Fix Fiduciary Proposal
Roll Call
10/7/2015 [Opinion]

"The [DOL] should restart the process by being clear about the proposed regulation's substantial, adverse impact on savers and account for the extensive laws and processes that already punish people and firms for failing to act in their customer's interest. Financial professionals will not be in business very long if their customers' needs aren't met."
Three Former SEC Chairmen Call for Agency to Adopt Fiduciary Rule
Pensions & Investments

" 'It doesn't matter what you are called; it matters what you do,' said Harvey Pitt, who led the agency from 2001 to 2003. 'If people are giving advice, they should be held to the same standards. What we really need is just an overarching standard.' ... The officials noted that while the [DOL] is developing its own updated fiduciary standard, a similar SEC effort first discussed in 2008 'is harder than perhaps it ought to be,' said Christopher Cox, whose tenure ran from 2005 to 2009. 'There are enormous interests at stake here.' "
Sidestep a Tax Hit by Reconstructing IRA Basis
On Wall Street

"Although Morles did not properly report his nondeductible IRA contribution, the court said he could prove that he had basis (after-tax funds) through other means. Furthermore, it indicated that there is nothing in the tax code that explicitly prevents an IRA owner from claiming basis that was not initially reported correctly. The court noted that Morles did not take a deduction for his IRA contribution at the time it was made. Accordingly, his $1,000 contribution for 2008 was a nondeductible IRA contribution that created basis." [Morles v. Comm., No. 2015-13, (T.C. Summary Opinion Feb. 23, 2015)]
Retirement Plan Communications Failed to Adequately Disclose Implications of Wear-Away Period to Retirement Plan Participants
Practical Law Company

"The court found that ... [the] human resources employees who helped draft these communications deliberately concealed the negative impact that wear-away would have on participants' benefits. Although Foot Locker asserted that it relied on the advice of counsel when drafting the communications, the court found that inside and outside counsel did not have all of the facts necessary to provide a clear understanding of the number of participants affected by wear-away." [Osberg v. Foot Locker, Inc., No. 07-cv-1358 (S.D.N.Y. Sept. 29, 2015)]
Central States Pension Fund Announces Proposed Pension Cuts
Pension Rights Center

"Retirees have questions about these proposed cuts and what the letter means.... [H]ere is what we can tell you right now. [1] Check the calculation.... [2] If you are a Central States' retiree, participate in the plan's town hall meeting.... [3] Ask your members of Congress to support the Keep Our Pension Promises Act.... [4] Contact local media.... [5] Spread the word ... [6] Add your voice to our story bank.... [7] Timeline."

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