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Benefits in the News

Older News | May 26, 2015

Search the News

arrow icon Four Words That Imperil Health Care Law Were All a Mistake, Writers Now Say
The New York Times; subscription may be required
5/26/2015

"How those words became the most contentious part of President Obama's signature domestic accomplishment has been a mystery.... The answer, from interviews with more than two dozen Democrats and Republicans involved in writing the law, is that the words were a product of shifting politics and a sloppy merging of different versions. Some described the words as 'inadvertent,' 'inartful' or 'a drafting error.' But none supported the contention of the plaintiffs, who are from Virginia."
arrow icon Chronic Care Management Programs Have Become Standard for Health Plans
RAND Corporation
5/26/2015

"[T]he study found that all plans, regardless of size, location, and ownership, offer programs to support members with chronic conditions. Plans typically identify those members based on claims and laboratory data, and then match them to appropriate interventions and resources based on need and risk. While internal evaluations suggest that these programs improve care and reduce cost, plans report difficulties in engaging members and providers, leading to the programs being underutilized."
arrow icon Derivatives, De-Risking and Disclosures
Pension Risk Matters
5/26/2015

"If true that lower interest rates may discourage some plan sponsors from fully transferring risk to a third party insurer via a buy-out but they nevertheless seek to more actively manage pension risks, one could logically expect a greater use of a strategy such as Liability-Driven Investing (LDI). To the extent that LDI frequently entails the use of derivatives, those plan sponsors in favor of LDI may want to take note of a recent move by the [SEC]....[C]ertain registered funds could soon be asked to publish a considerable bounty of data about how they price securities, characteristics of trading counterparties and the specific use of derivative instruments."
arrow icon San Bernardino Bankruptcy Exit Plan Cuts Some Pension Costs
Calpensions
5/26/2015

"A San Bernardino plan to exit bankruptcy follows the path of the Vallejo and Stockton exit plans, cutting bond debt and retiree health care but not pensions. Then it veers off in a new direction: contracting for fire, waste management and other services. The contract services are expected to reduce city pension costs. Other pension savings come from a sharp increase in employee payments toward pensions and from a payment of only 1 percent on a $50 million bond issued in 2005 to cover pensions costs."
arrow icon The Fiduciary Hierarchy
The Retirement Plan Blog
5/26/2015

"There is a hierarchy of service models available in the 401(k) marketplace. Each of which offers Plan Sponsors a different level of support with regard to investment selection and monitoring. Here is a brief description of each in the order of lowest to highest fiduciary protection: [1] Due Diligence Support.... [2] Fiduciary Certificate or Warranty.... [3] Directed Trustee... Section 3(21) Fiduciary ... [5] Section 3(38) Fiduciary... [6] Discretionary Trustee."
arrow icon IRS Provides Resources for Electronic Filing of Form 1094/95 Information Returns
Thomson Reuters / EBIA
5/26/2015

"With the mandatory filing deadline fast approaching and many reporting entities being required to file electronically, employers, coverage providers (such as insurers and multiemployer plans), and their advisors will need to follow developments carefully to ensure that they are prepared for compliance. While it is encouraging to see an emphasis here on correcting mistakes (since glitches are bound to arise in the first reporting period), many details still need to be worked out -- exemplified by the IRS's decision to waive the electronic signatures for this year's voluntary filings."
arrow icon IRS Provides Further Guidance on Reporting Employer Health Coverage Information on Forms 1094 and 1095
Thomson Reuters / EBIA
5/26/2015 [Guidance Overview]

"The forms are used by the IRS to enforce Code section 4980H employer penalties, as well as individual mandate and tax credit eligibility rules. The latest guidance consists of an updated Q&A document covering basic reporting requirements and a new Q&A document addressing more specific issues that may arise while completing Forms 1094 and 1095."
arrow icon Six Key Activities CFOs and CHROs Should Perform Together to Optimize Employee Benefit Programs
Grooms Benefit Solutions
5/26/2015

"Advanced Strategic Planning ... Collaborate to align HR and finance metrics with company objectives... Evaluate outsourced partnerships... Utilize technology to drive efficiencies... Measure... Educate and Value."
arrow icon IRS Continues to Expand, Encourage and Simplify Correction Program in 2015 Updates to EPCRS
Katten Muchin Rosenman LLP
5/26/2015

"Under the 2015 updates, the IRS is continuing to provide incentive for plan sponsors to correct errors promptly, rather than wait for a governmental auditor to discover the error and require correction along with a hefty sanction."
arrow icon GAO Report: Medicare Results from the First Two Years of the Pioneer Accountable Care Organization Model
U.S. Government Accountability Office [GAO]
5/26/2015

"GAO was asked to review the results of the Pioneer ACO Model and CMS's oversight of the ACOs. In this report GAO [1] describes the financial and quality results for the first two years of the model and [2] examines how CMS oversees and evaluates the model.... GAO analyzed ACOs' expenditures, spending benchmarks, the amount of shared savings and losses, and payment amounts for shared savings or losses. GAO also reviewed relevant laws, regulations, and documents describing CMS's oversight and evaluation role and interviewed CMS officials about the agency's oversight and evaluation activities."
arrow icon D.C. Court of Appeals Won't Rehear Challenge to Contraceptive Coverage Accommodation
Timothy Jost, in Health Affairs
5/26/2015

"The plaintiffs objected to [the HHS accommodation], as they believe it makes them complicit in the provision of contraceptive coverage ... The dissenters would have held that the government must accept this belief, and that its failure to do so substantially burdens the religious beliefs of these organizations. The concurring judges ... asserted that this is not a question of religious belief, but rather a legal question as to how the law operates." [Priests for Life v. HHS, No. 13-5368 (D.C. Cir. May 20, 2015)]
arrow icon 'Embedded' Out-of-Pocket Limits Might Be Required for 2016 Plan Years
Lockton
5/26/2015

"The interpretation appeared only in the preamble to the regulatory changes made by the Notice, and did not appear as an actual change to HHS' regulations. HHS stated in the preamble that the interpretation is a 'clarification' of existing rules. HHS later issued FAQs clarifying that the interpretation would apply to plan years starting in 2016. Aside from arguments about whether statements made in a preamble are binding on anyone, many would argue that HHS does not have authority to implement this provision with respect to employer plans."
arrow icon CareFirst Is Latest Insurer to Suffer Major Cyberattack
Thompson SmartHR Manager
5/26/2015

"Information on about 1.1 million individuals was affected by the breach, which CareFirst discovered during an information technology security review conducted in the wake of the attacks on Anthem and Premera. In June 2014, according to CareFirst, hackers gained access to a single database where CareFirst stores data that is entered by members and other individuals in order to access the company's websites and online services."
arrow icon ACA Information Returns (AIR) Working Group Meeting: Overview of Draft Publication 5164 (May 28, 2015) (PDF)
Internal Revenue Service [IRS]
5/26/2015 [Guidance Overview]

45 presentation slides. "This session will focus on the TCC application process and Publication 5154 overview.... If you file 250 or more of any of the following ACA Information Returns, you are required to file them electronically through the AIR System: [1] Form 1094-B, Transmittal of Health Coverage Information Returns; [2] Form 1095-B, Health Coverage; [3] Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns; [4] Form 1095-C, Employer-Provided Health Insurance Offer and Coverage. To file electronically, you must submit the ACA Application for Transmitter Control Code (TCC)."
arrow icon Employers: Are You Ready to Report Offers of Health Insurance?
Jackson Lewis P.C.
5/26/2015 [Guidance Overview]

"[A]pplicable large employers should be thinking about ... If the employer contributes to a multiemployer plan on behalf of some or all of its employees, has it coordinated reporting and information exchanges with the multiemployer plan administrator? ... How does an employer ensure compliance with COBRA when it is using the look back method to determine full-time employee status?... Does the employer have an administrative process in place to ensure that it promptly responds to exchange notices indicating that employees have claimed eligibility for exchange subsidies?... Employers sponsoring self-insured plans generally have to transmit to the IRS the Social Security numbers of spouses and dependents of employees covered under the plan. Is the employer able to comply with this requirement?"
arrow icon Are Top Hat Plans Entitled to a Discretionary Standard of Review?
Stinson Leonard Street
5/26/2015

"A recent First Circuit Court of Appeals decision held that the abuse of discretion standard would apply to a top hat plan that incorporated the standard into its plan documents.... The plan gave discretion to the company to decide the claim and the court upheld the company's decision that the executive had voluntarily retired and therefore was not entitled to severance benefits under the plan." [Niebauer v. Crane & Co., No. 14-2059 (1st Cir. Apr. 21, 2015)]
arrow icon DOL Benefit Plan Audit Quality Study Results Generate Concern, Displeasure from Officials
Bloomberg BNA
5/26/2015

"The declining quality of audits underlines the need for 'effective and efficient enforcement' methods to encourage auditors to 'do the right thing,' Borzi said. While the DOL and the AICPA have taken steps to train auditors, large numbers of auditors still haven't gotten the message, she said."
arrow icon Attention 401(k) Plan Sponsors: It Is More Important Than Ever to Regularly Review and Evaluate Your Plan's Investment Funds
Frost Brown Todd LLC
5/26/2015

"[The Supreme Court's decision in Tibble v. Edison International] provided the following specific guidelines for plan sponsors: [1] Plan sponsors or an investment fiduciary they retain have a duty to select prudent investment options, and have a separate, continuing duty to monitor the investment options to ensure that they continue to be prudent options. [2] The plan sponsor or investment fiduciary has a duty to remove investment options that become imprudent. [3] The sponsor or investment fiduciary's continuing duty to monitor investment options requires that they have a process in place to regularly review the investment options."
arrow icon A Golden Opportunity for Retirement Plan Advisers: The IRS Restatement Requirements
Investment News
5/26/2015

"The PPA restatement requirement may provide the perfect opportunity for advisers to connect with employers that have yet to amend and restate their plans, and review the effectiveness of their retirement plans. The review process and subsequent findings allow advisers to determine if retirement plans are meeting employers' goals and helping the employees prepare for retirement."
arrow icon Supreme Court Rules That Fiduciaries Have Ongoing Duty to Monitor Plan Investments (PDF)
Groom Law Group
5/26/2015

"Fiduciaries should be prepared for the plaintiffs' bar to assert -- and the courts to possibly recognize -- 'continuing violations' under a theory based upon a fiduciary's failure to monitor the appropriateness of plan investments, thereby allowing claims to reach back well beyond the 6-year statute of limitations period for an alleged fiduciary breach or violation. To mitigate risk associated with plan investment decisions, plan fiduciaries should establish procedures for periodic review of plan investment choices. These periodic reviews should document the empirical reasons why plan investment options have been retained or removed from a plan's fund lineup."
arrow icon Understanding Participation in SSI
University of Michigan Retirement Research Center
5/26/2015

"The Supplemental Security Income program (SSI) provides a guaranteed income for the elderly. As such it can serve to mitigate any deleterious effects of reductions in Social Security benefits that might result from any Social Security reform. However, participation in SSI among qualified individuals has proven to be low. [The authors] show that this low participation rate, just over 50%, observed at the program's inception has continued to today with little if any change."
arrow icon The Funded-Status Seesaw and DB Decision-Making
Vanguard
5/22/2015

"While it's not impossible, and it won't necessarily be painless, [there are] three ways that funded status can increase: [1] Contributions are made to the plan. [2] Interest rates rise. [3] Plan assets return more than the plan liability. The first route has little -- or no -- risk ... [S]ponsors have been waiting years, basically, for the rate to rebound and maintain a rate above, say, even 6%.... Whatever the choice to manage or transfer risk, the investment strategy to do so and its precise execution are critical to its success."
arrow icon Documentation Hardship for Hardships (and Participant Loans, Too)
Benefits Bryan Cave
5/22/2015 [Guidance Overview]

"[It] may be impossible for many recordkeepers to 'transfer' the hardship and loan documentation in electronic format to the plan sponsor. But every plan sponsor should probably request it from the recordkeeper and request that the electronic data be transmitted to the plan sponsor with each future hardship distribution and each participant loan. And, then, of course, there's the fiduciary obligation to review the information and make certain of compliance with the rules since the plan sponsor may not be able to rely on the recordkeeper to do that. And failing or refusing to do this, maybe the IRS's real objective will be met -- the plan will be amended to eliminate participant loans and hardship distributions in order to avoid leakage."
arrow icon Coalition Letter to Senators Supporting Small Group Expansion (S. 1099) Legislation (PDF)
Society for Human Resource Management, U.S. Chamber of Commerce, and 17 other trade associations
5/22/2015 [Opinion]

"[We] applaud your introduction of legislation (S. 1099) maintaining the current definition of a small group market as 1-50 employees, and giving states the flexibility to expand the group size if the market conditions in their state necessitate the change.... Repealing the ACA-mandated expansion and returning to the historical role of state determination would allow flexibility and ensure a broad array of coverage options and mitigate dramatic premium increases. Expanding the small group market to include groups up to 100 at this time would reduce choice for this segment of the market.... [E]xpanding the small group market to include all groups with up to 100 employees would have an immediate impact on premiums due to new rating rules, required Essential Health Benefits, and minimum actuarial value and cost sharing requirements."
arrow icon Three Considerations Before Allowing Your Employer to Make Your 401(k) Decisions
PennLive
5/22/2015

"[M]ore employers have ... [adopted] plans where employees must actively choose not to participate or 'opt-out'. If they ignore the paperwork and do nothing, they'll be automatically enrolled in their employer's 401(k) plan and begin accumulating retirement funds. It sounds like a good thing; a way to turn inertia into something positive. You don't have to do a thing and your retirement savings begin to accrue. But the question remains, should you just sit back and let your employer make your 401(k) decisions for you?"
arrow icon Medicare Physician Payment Rates: Better Data and Greater Transparency Could Improve Accuracy
U.S. Government Accountability Office [GAO]
5/22/2015

"The American Medical Association/Specialty Society Relative Value Scale Update Committee (RUC) has a process in place to regularly review Medicare physicians' services' work relative values (which reflect the time and intensity needed to perform a service). Its recommendations to [CMS] ... may not be accurate due to process and data-related weaknesses.... The Protecting Access to Medicare Act of 2014 included a provision for GAO to study the RUC's process for developing relative value recommendations for CMS.... CMS should better document its process for establishing relative values and develop a process to inform the public of potentially misvalued services identified by the RUC. CMS should also develop a plan for using funds appropriated for the collection and use of information on physicians' services in the determination of relative values."
arrow icon 'Cadillac Tax' a Major Roadblock to Consumer-Driven Health Plans (CDHPs) and Affordable Health Care (PDF)
Employers Council on Flexible Compensation [ECFC]
5/22/2015

A two-page flier describing the Cadillac Tax, how it is assessed, and its impact on consumer-driven health plans.
arrow icon The Titanic Redux (PDF)
Chelko Consulting Group
5/22/2015

"We've all heard the phrase, 'Doing that is like rearranging the deck chairs on the Titanic.' The point of the phrase is to call out the disproportionality of action taken in the face of a really big problem. And so it may be when we consider three heavily promoted health care cost management techniques: [1] Consumerism / High Deductible Health Plans, [2] the Defined Contribution Approach to determining the amount of employer health plan subsidies, and [3] Private Exchanges."
arrow icon Lessons for Advisers from Supreme Court's Decision on 401(k) Excessive Fees Lawsuit
Investment News
5/22/2015

"In the past, advisers were able to go about their business with retirement plans and only know about the investments that go into the menu. Nowadays, with the Labor Department releasing its fiduciary proposal and with plaintiffs' attorneys scoring wins for employees, 'advisers have to be mini ERISA lawyers,' [said Marcia Wagner, managing director of The Wagner Law Group]. 'They have to understand not just how you invest and what's prudent, but they have to understand the law, the terminology and the statute of limitations.' "
arrow icon High Court Affirms Ongoing Duty to Monitor Plan Investments, but Says Little on Scope of that Duty (PDF)
Buck Consultants at Xerox
5/22/2015

"The Court acknowledged the Ninth Circuit's point that 'characterizing the mere continued offering of a plan option, without more, as a subsequent breach would render the statute of limitations meaningless. ' Thus, according to the Court, there exists an as yet unspecified threshold lower than the Ninth Circuit's 'significant change in circumstances' for bringing a breach of fiduciary duty claim concerning investments selected prior to the six-year window.... ERISA's limitations period has stymied efforts to challenge the prudence of investments that have long been part of a plan's line up. This ruling may pry open the door for many such challenges." [Tibble v. Edison Int'l, No. 13-550 (U.S. May 18, 2015)]
arrow icon Text of Letter from Senators to President Obama Requesting Clarification on Application of ERISA to State-Based Retirement Savings Programs (PDF)
26 U.S. Senators
5/22/2015

"We respectfully request that you ask the [DOL] and the Department of the Treasury to ... clarify that: [1] California's and Illinois' Secure Choice Retirement Savings Programs, and similar IRA-based programs enacted in the future, are not preempted by ERISA; [2] the retirement savings vehicles created by those laws, and similar IRA-based vehicles created by the laws of other states in the future, are not 'plans' subject to ERISA; and [3] contributions to the savings vehicles created by those laws, and similar IRA-based vehicles created by the laws of other states in the future, are tax-preferred at the federal level. Furthermore, please provide specific guidance on what other types of state-based IRA vehicles are not to be subject to ERISA, including information on the program features that could be adopted without triggering ERISA."
arrow icon Analysis of the DOL Fiduciary Proposal's Impact on Independent Registered Investment Advisers
Drinker Biddle
5/22/2015 [Guidance Overview]

"A recommendation to a participant to take a distribution, and advice regarding the investment of assets to be rolled over to an IRA, are fiduciary investment advice under the proposed regulation. This is in contrast to existing guidance in DOL Advisory Opinion 2005-23A ... In other words, the proposal applies to a recommendation, regardless of whether the adviser already is a fiduciary to the plan and regardless of whether the adviser is otherwise providing services to the plan or participant.... For an RIA who is not already serving as a fiduciary to a plan, the proposal could be significant."
arrow icon The Actuarial Approach: Periodic Matching of a Retiree's Assets and Liabilities
Ken Steiner, FSA Retired
5/22/2015

"[A]ny spending approach that does not periodically match a retiree's assets with her liabilities runs a significant risk of failing to achieve the retiree's spending objectives.... This [article] illustrate[s], with an example, the matching of assets and liabilities achieved by the Actuarial Approach[.]"
arrow icon IRS Further Explains Large-Employer ACA Reporting
Thompson SmartHR Manager
5/22/2015 [Guidance Overview]

"Under the new guidance, if a large employer's workforce is comprised entirely of part-time employees who were not full-time in any month of the year, it does not have to submit a Form 1095-C. The guidance also indicates how to report on coverage to employees during their months of hire and termination, and provides more details on reporting COBRA coverage for three categories of COBRA qualified beneficiaries."
arrow icon Philadelphia Paid Sick Leave Law Takes Effect (PDF)
Buck Consultants at Xerox
5/22/2015 [Guidance Overview]

"The new law requires employers with at least 10 employees to provide paid sick leave and smaller employers to provide unpaid leave.... As Philadelphia's sick leave ordinance took effect, the state legislature was considering preempting local leave laws. The state Senate has already passed a bill (SB 333) that would apply retroactively to January 1, 2015 to prevent Pennsylvania municipalities from imposing their own sick leave requirements on businesses."
arrow icon FASB Eases Benefit Plan Measurement Date Rules
PricewaterhouseCoopers
5/22/2015

"For employers with a fiscal year-end that does not coincide with a month-end, the amendments will permit the entity to adopt an accounting policy to measure benefit plan assets and obligations as of the month-end closest to the fiscal year-end. If this policy is adopted, the practical expedient must be applied consistently to all of its plans. For any employer that must remeasure plan assets and obligations in an interim period due to a significant event, the amendments allow the entity, on an event by event basis, to remeasure the plan using the month-end closest to the date of the significant event."
arrow icon Americans Are Aging, But Not as Fast as People in Germany, Italy and Japan
Pew Research Center
5/22/2015

"[In] the United States, the share of people aged 65 or older will rise dramatically by 2050. However, the U.S. isn't experiencing the same gray wave that many other developed nations in Europe and Japan are. At least one-in-five people in Japan, Germany and Italy are already 65 or older, and most other European countries are close behind. In the U.S., 13% of the population is 65 or older, ranking the country 42nd on this measure out of about 200 other places in 2010[.]"
arrow icon President Obama Taps Thomas Reeder as PBGC Director
Pensions & Investments
5/22/2015

"Mr. Reeder, whose nomination was announced Wednesday, has served as health-care counsel at the Internal Revenue Service since March 2013. He was senior benefits counsel on the Senate Finance Committee staff from 2009 to 2013, and held numerous tax policy positions with the Department of Treasury. He has also worked in private law practice."
arrow icon ACA FAQs Address Coverage of Preventive Services
The Wagner Law Group
5/22/2015 [Guidance Overview]

"FAQ XXVI clarifies that if a provider recommends a particular type [of contraception] as medically necessary for an individual, the group health plan must defer to the professional's determination. Medical necessity considerations include the severity of side effects, differences in permanence and reversibility of contraceptives, and an individual's ability to appropriately use the item or service."
arrow icon Where There's Smoke There's Questions: Designing Compliant Wellness Programs That Target Tobacco Use
Verrill Dana LLP
5/22/2015 [Guidance Overview]

"[1] Is it acceptable to design a program where employees who use tobacco may avoid a higher insurance premium (or surcharge) only by quitting tobacco use? No.... [2] Are there any limits to the 'reasonable alternative standard' an employer can require for tobacco users to obtain the reward? Yes.... [3] Is it acceptable to design a program that restricts participation in certain health benefit options to employees who are tobacco-free (i.e., maintain a tobacco-free 'threshold' requirement for participation in certain health plans)? Generally, no.... [4] Does it matter whether an employer characterizes the different treatment of employees who use tobacco (and refuse to complete an alternative standard) and tobacco-free employees as a penalty or a reward? No."
arrow icon The Impact of Same-Sex Marriages on Benefit Plan Administration
Bloomberg BNA
5/22/2015

"If the Court concludes that same-sex couples have a fundamental right to marriage or that states must recognize same-sex marriages lawfully performed out-of-state, then health plans that define a spouse as a member of the opposite sex will need to be amended to cover lawfully married same-sex spouses. In addition, employers would no longer be able to cherry pick the types of spousal benefits they provide and would have to make available the same benefits to same-sex married couples that they currently offer opposite-sex married couples."
arrow icon Eliminating the Company Stock Fund from Your Public Company's 401(k) Plan: Navigating the Securities and ERISA Fiduciary Issues (PDF)
Jenner and Block LLP, for American Benefits Council
5/22/2015

33 presentation slides. Topics include: [1] Types of sunsetting; [2] Why it can be problematic; [3] Process; [4] SOX Blackout? [5] Company stock via brokerage window? [6] Impact of Dudenhoeffer and Tatum; [7] Fiduciary override; [8] Settlor action by the company; [9] Securities disclosure -- materiality; [10] Potential dangers of non-disclosure; [11] Best Practices.
arrow icon In-Plan Income Guarantees Available to More Retirement Plan Participants in 2014
LIMRA
5/22/2015

"3 million participants have access to an in-plan income guarantee through their employee-sponsored retirement plan in 2014, a 32 percent increase from 2013.... [T]here was a 24 percent increase in the number of participants electing an in-plan guarantee to reach 71,300 in 2014. In 2014, the number of retirement plans offering in-plan guarantees grew 41 percent totaling 33,500 and over 132 billion in assets are in plans that offer a in-plan guarantee, up 27 percent compared with 2013."
arrow icon Two-Headed Nightmare: The Robos and the DOL
Kerry Pechter, of Retirement Income Journal, via LinkedIn
5/22/2015 [Opinion]

"The robo-advice threat and the DOL conflict-of-interest threat are two parts of the same threat to traditional distribution. Both aim to make the distribution of financial products and services less expensive, more objective and more transparent -- i.e., more consumer-friendly. Of the two, you should be more worried about the digital threat. Consider the DOL its messenger."
arrow icon Testimony to House Oversight Subcommittee Hearing on the Use of Administrative Actions in the Implementation of the ACA (PDF)
Elizabeth P. Papez, Esq., of Winston & Strawn LLP
5/22/2015

11 pages. "[T]his Subcommittee recently questioned whether the administration's employer coverage and cost sharing regulations exceed constitutional limits and intrude upon Congress's legislative and appropriations authority. Parallel challenges to agency implementation of the Act's cost-sharing and premium tax credit provisions have also made their way into two pending lawsuits. Regardless of their outcome, these suits and the ongoing disagreement between the political branches regarding ACA's implementation highlight the constitutional obligations and risks that attend administration of complex legislation, and underscore the need for continuing legislative oversight." [Ms. Papez is Former Deputy Assistant Attorney General, Office of Legal Counsel, U.S. Department of Justice.]
arrow icon Republican Proposals for King v. Burwell Ruling
Health Care Lawsuits, a project of the Independent Women's Forum
5/22/2015

"Top Republican legislators are pondering how to respond should the Supreme Court rule that the federal ObamaCare subsidies are illegal in 37 states (the states that didn't establish their own health insurance exchanges).... [T]hese subsidies trigger the individual and employer mandates in those states, meaning this ruling could significantly impact the way ObamaCare works. Here are a few Republican proposals for how to respond in this scenario[.]"
arrow icon Health Insurers Seek Hefty Rate Boosts
The Wall Street Journal; subscription may be required
5/22/2015

"In New Mexico, market leader Health Care Service Corp. is asking for an average jump of 51.6% in premiums for 2016. The biggest insurer in Tennessee, BlueCross BlueShield of Tennessee, has requested an average 36.3% increase. In Maryland, market leader CareFirst BlueCross BlueShield wants to raise rates 30.4% across its products. Moda Health, the largest insurer on the Oregon health exchange, seeks an average boost of around 25%. All of them cite high medical costs incurred by people newly enrolled under the Affordable Care Act."
arrow icon Financial Literacy and Decisionmaking Among College-Educated Hispanics (PDF)
TIAA-CREF Institute
5/21/2015

"This report examines the financial practices, experience, literacy and condition of college-educated Hispanics, i.e., those with high school degrees who report at least 'some college' as their highest level of educational attainment, to shed light on their overall financial capability. This group is seldom the singular focus of analysis. To our knowledge there are no other reports that comprehensively examine the personal finances of Hispanics with this level of education. This report can thus serve as a baseline for future research on the personal finances of college-educated Hispanics."
arrow icon The #1 Reason Multiemployer Plans Fail a DOL Audit
International Foundation of Employee Benefit Plans [IFEBP]
5/21/2015

"Multiemployer plan trustees have a fiduciary duty under ERISA to make sure the fund is receiving all employer contributions that are due, based on participants' hours worked. This means they must follow up when employers neglect to send their contributions on time (in other words, when they're delinquent). This also means trustees need to make sure that the correct amounts are received. If trustees neglect this fiduciary responsibility, they can be personally liable. They help fulfill this duty by having a payroll audit performed by a knowledgeable and experienced auditor."
arrow icon EEOC Proposes Wellness Program Rule
Hodgson Russ LLP
5/21/2015 [Guidance Overview]

"While the standard in the Proposed EEOC Rule for determining whether a program is reasonably designed to promote health is similar to the standard articulated in the FAQ guidance, the HIPAA Wellness Rule standard applies only to health-contingent programs while the standard in the Proposed EEOC Rule applies to all wellness programs, including participatory programs.... The Proposed EEOC Rule provides that offering a reasonable alternative standard and giving notice to the employee of that alternative as part of a health-contingent program under the HIPAA Wellness Rule would likely fulfill an employer's obligation to provide a reasonable accommodation under the ADA. The EEOC goes on to note, however, that the ADA requires employers to provide reasonable accommodations for participatory programs even though the HIPAA Wellness Rule does not require participatory programs to provide reasonable alternative standards."
arrow icon Exchange-Only Health Plans Average Higher Premiums Than Competitors That Sell Plans Both On and Off-Exchange
HealthPocket
5/21/2015

"[H]ealth plans that are only sold through exchanges averaged higher premiums than health plans that were sold both on-exchange and off-exchange. The biggest difference in average premiums was for bronze plans, where premiums were approximately 15% more expensive on average for exchange-only plans. Exchange-only silver plans were nearly 7% more expensive than their on/off-exchange competitors and gold plans were approximately 5% more expensive."
arrow icon Missouri Rep. Ann Wagner Wages 'War' Against DOL Fiduciary
Investment News
5/21/2015

"A leading opponent of a Department of Labor proposal to raise investment-advice standards for brokers working with retirement accounts is pursuing an aggressive strategy -- that includes denying the agency funds to implement it -- to stop the rule.... Ms. Wagner argues that the rule would significantly raise regulatory and liability costs for brokers and price them out of serving the middle-income market of retirement savers."
arrow icon Latest Twist on the Annuity Hits the Market: The Retirement Spending Account
Investment News
5/21/2015

"An investment account is more flexible than an annuity: If there's an emergency, you can sell it. If you die young, your heirs get the proceeds. But there's no guarantee it will last if you live longer than you expect.... Another downside to the Natixis product is its annual fee of about 1% of assets per year. Because it is sold only through financial advisers, that's on top of any fees they charge for advice."
arrow icon Text of SEC Proposed Rule: Investment Company Reporting Modernization (PDF)
U.S. Securities and Exchange Commission [SEC]
5/21/2015 [Official Guidance]

506 pages. "The [SEC] is proposing new rules and forms as well as amendments to its rules and forms to modernize the reporting and disclosure of information by registered investment companies.... We have historically acted to modernize our forms and the manner in which information is filed with the Commission and disclosed to the public in order to keep up with changes in the industry and technology.... Our proposed reforms seek to [1] increase the transparency of fund portfolios and investment practices both to the Commission and to investors, [2] take advantage of technological advances both in terms of the manner in which information is reported to the Commission and how it is provided to investors and other potential users, and [3] where appropriate, reduce duplicative or otherwise unnecessary reporting burdens on the industry."
arrow icon SEC Proposes Rules to Modernize and Enhance Information Reported by Investment Companies and Investment Advisers
U.S. Securities and Exchange Commission [SEC]
5/21/2015 [Guidance Overview]

"The investment company proposals would enhance data reporting for mutual funds, ETFs and other registered investment companies. The proposals would require a new monthly portfolio reporting form (Form N-PORT) and a new annual reporting form (Form N-CEN) that would require census-type information. The information would be reported in a structured data format, which would allow the Commission and the public to better analyze the information. The proposals would also require enhanced and standardized disclosures in financial statements, and would permit mutual funds and other investment companies to provide shareholder reports by making them accessible on a website."
arrow icon Mandatory E-Filing Under PBGC Proposed Rule Applies Only to Notices to PBGC
Pension Benefit Guaranty Corporation [PBGC]
5/21/2015 [Guidance Overview]

"PBGC has received inquiries whether its proposed rule on mandatory e-filing for certain multiemployer notices would affect notices to participants. The proposed rule only affects notices to PBGC.... [T]he proposed rule would require the following notices to be filed electronically with PBGC: notices of termination under part 4041A, notices of insolvency and of insolvency benefit level under parts 4245 and 4281, and applications for financial assistance under part 4281 ... Further, the proposed rule does not involve the Multiemployer Pension Reform Act of 2014 (MPRA). Comments on the proposed rule are due June 2, 2015." [Announcement is dated May 20, 2015.]
arrow icon Supreme Court Recognizes ERISA Fiduciary Duty to Monitor Plan Investments
Skadden, Arps, Slate, Meagher & Flom LLP
5/20/2015

"[T]he Supreme Court implicitly rejected 'continuing breach' theories of recovery that would treat the decision to acquire an investment and the decision to retain the investment as a single, continuous act and allow recovery of all investment losses incurred from the date of selection ... Instead, under the rationale of [Tibble v. Edison], as to investment options first made available to Plan participants outside the limitations period, any recovery would be limited to losses incurred as a result of a fiduciary's failure to properly monitor and remove imprudent investments within the six-year period preceding the filing of the claim."
arrow icon Incentive Plan Practices: Aligning Executive Pay with Performance
Steven Hall & Partners
5/20/2015

"CEO compensation is overwhelmingly incentive-based. Target compensation is 85% variable and only 15% fixed.... Median annual incentive targets for CEOs equaled approximately 100% of base salary. Typical leverage provides the ability to earn half of the bonus at threshold performance levels and 200% for maximum achievement. 87% of the companies studied used at least one metric related to earnings."
arrow icon Reporting Unrelated Business Taxable Income on IRS Form 5500-SUP
SunGard Relius
5/20/2015 [Guidance Overview]

"The inclusion of the question regarding UBTI on the draft 2015 Form 5500-SUP suggests that the IRS is concerned that Plan Administrators may be failing to properly report and remit unrelated business income tax. By placing the question on the 5500-SUP, the IRS is placing the onus on Plan Administrators -- under penalty of perjury -- to identify and disclose the existence and amount of UBTI with each plan year. It is reasonable to expect that a 'yes' answer to this question on the 5500-SUP will cause the IRS to look for the related Form 990-T submission and payment of the calculated tax liability."
arrow icon Applicability of the Embedded Maximum Out-of-Pocket Limit to Large Group and Self-Funded Plans (PDF)
Groom Law Group
5/20/2015 [Guidance Overview]

"Despite the lack of clarity on this issue, it appears that the Departments do intend to require large group and self-funded plans to comply with the 'embedded MOOP' requirements implemented in the [2016 Notice of Benefit and Payment Parameters]. The Departments are primarily relying on the cross-reference in section 2707(b) of the Public Health Service Act to extend the embedded MOOP requirement to large group and self-funded plans."
arrow icon Ten Tips to Comply with California's Upcoming Sick Pay Mandate
Ogletree Deakins
5/20/2015

"[1] PTO plans might -- or might not -- satisfy the obligation ... [2] Most employers and employees are covered ... [3] Notify employees of their new rights ... [4] Think about offering a lump sum benefit ... [5] Impose caps ... [6] Recognize very broad use rights ... [7] Consider variable pay ... [8] Plan to inform employees of available sick pay each pay period ... [9] Avoid retaliation ... [10] Stay informed."
arrow icon Pay for Performance Table and Best Practices for Proxy Disclosure
Orrick
5/20/2015

"[This article] focuses on the new 'pay for performance' table ... and best practices to address the additional requirement of a description of [1] the relationship between executive compensation actually paid versus the company's TSR and [2] the relationship between the company's TSR versus the TSR of its peer group. The proposed rules give flexibility to describe these relationships in either narrative or graph form (or both).... [T]he use of charts will tell a better story and be easier for shareholders to visualize and understand and thus, should be used to help illustrate the narrative description. [The authors] have provided sample charts[.]"
arrow icon New Fiduciary Regs Proposal, Part 3: People Are Talking (PDF)
Ferenczy Benefits Law Center LLP
5/20/2015 [Opinion]

"When all is said and done, the average person must judge his or her personal and retirement plan investments using tools that they can handle. The rules and disclosures of the Proposal are just too complex to do participants or plan fiduciaries any good. Of course, we all know that there are bad actors out there, and yes, we need to get them out of the business, but there has to be an easier, more effective way."
arrow icon Proposed Best Interest Contract Exemption Could Require Dramatic Changes for Financial Institutions
Faegre Baker Daniels LLP
5/20/2015 [Guidance Overview]

"Public disclosure is to be provided through a website, and client disclosure is to be provided as a point-of-sale disclosure, an annual disclosure and a potential limited-range-of-investment-options disclosure.... The website, freely accessible to the public, must provide three items: [1] Direct and indirect material compensation provided in connection with each Asset that is available and has, in fact, been purchased, held or sold within the last 365 days through the Adviser or Financial Institution; [2] The source of the compensation; and [3] How the compensation varies within and among Assets ... The website chart must also be machine readable[.]"
arrow icon 31 Million People Were Underinsured in 2014; Many Skipped Needed Health Care and Depleted Savings to Pay Medical Bills
The Commonwealth Fund
5/20/2015

"While people buying coverage on their own are still more likely to be underinsured than those with employer coverage (37% vs. 20%), the share of people with employer insurance who are underinsured has doubled since 2003, when it was 10 percent.... 11 percent of people with employer plans and 24 percent with individual market plans had high deductibles in 2014, up from 2 percent and 7 percent respectively in 2003. People in small firms with insurance through their jobs were more likely to have a high deductible than those in larger firms (20% vs. 8%)."
arrow icon Galen Institute Testimony to House Oversight Subcommittee Hearing Examining the Use of Administrative Actions in the Implementation of the ACA
Galen Institute
5/20/2015 [Opinion]

"The Galen Institute has been chronicling changes made to the Affordable Care Act since it was enacted in 2010, and we count at least 50 changes -- 31 of them made by the administration. In addition, there have been 17 changes passed by Congress and signed into law by President Obama, and two changes made by the Supreme Court.... [This testimony] will discuss [1] examples of actions by the administration that are clearly contrary to the statute; [2] failed and successful congressional actions to provide legal authority to changing the law; and [3] additional changes only now being uncovered."
arrow icon Senator Cassidy Introduces King v. Burwell Alternative
National Center for Policy Analysis Health Policy Blog
5/20/2015

"Senator Bill Cassidy (R-LA) has introduced the Patient Freedom Act, in anticipation of the Supreme Court deciding for the plaintiffs in King v. Burwell ... If a state wants to restore the Obamacare tax credits, it would be free to do so by establishing a state-based exchange.... It would be an obvious choice to take Dr. Cassidy's other option: Receive the federal dollars and use them in a way that empowers patients, rather than the federal government. Having made that choice, the state can then take one of two paths. It can either choose individual tax credits deposited in patients' Health Savings Accounts (HSAs) or per capita block grants."
arrow icon Fiduciaries of Large Pension Funds Fire Back at Share-Buyback Policies
Pensions & Investments
5/20/2015

"The chief financial officers of two large states and two large cities on Wednesday issued an open letter in their role as pension fiduciaries criticizing the practice of share-buybacks by corporations and questioning whether companies 'are adequately reinvesting for sustainable returns over the long term.' The four financial officers -- from New York state, New York City, Chicago and California -- are fiduciaries to pension funds with $860 billion in assets, covering 4.3 million participants[.]"
arrow icon How 12(b)-1 Fees and Revenue Sharing May Be the Real Victims of 'Narrow' Supreme Court Ruling
RIABiz
5/20/2015

"Amid all the talk of creating a more transparent, client-first financial world, there are two sacred cows: 401(k) kickbacks, known as revenue sharing, and 12(b)-1 fees, known as a way to avoid upfront commissions by stowing the fees out of sight. Even the [DOL] and SEC walk on eggshells around these institutions that pay so much industry freight. The Supreme Court may not have gotten the memo to tread lightly.... [It] seems clear that fiduciary advisors will have a harder time stuffing client portfolios with mutual funds that are overstuffed with fees so that the 'sharing' can begin in a back room." [Tibble v. Edison Int'l, No. 13-550 (U.S. May 18, 2015)]
arrow icon Annuities With Guaranteed Living Benefits May Pose Risks to Financial System
InsuranceNewsNet.com
5/20/2015

"Annuities sold with guaranteed living benefits (GLBs) pose 'meaningful financial risks' to the U.S. financial system, the Financial Stability Oversight Council (FSOC) said in its annual report.... [T]he FSOC appeared to voice particular concern with fixed index annuities ... As to the emerging issue of pension risk transfers, the FSOC report said that consequences include the growth in the number of counterparties as well as changes in the type and amount of financial counterparty risk arising from the risk shifting transactions.... 'Accordingly, the backstop for pension plans switches from the [PBGC] to the state insurance guaranty funds,' the report said."
arrow icon U.S. Chamber of Commerce Comment Letter to EBSA on Proposed Information Collection Requests and Burden Estimates Associated with the DOL Conflict of Interest Proposed Rule and PTE Notices (PDF)
U.S. Chamber of Commerce
5/20/2015 [Opinion]

10 pages. "The potential magnitude of these burdens raises serious concern that the costs of the proposed regulation's information collection strategy may outweigh the benefits that the proposed regulation is likely to achieve. Rather than proceeding down a too-costly regulatory path, the government should consider more carefully whether there may exist prudent alternatives to achieve the desired protections and benefits."

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