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Benefits in the News

Older News | December 21, 2014


arrow icon Text of DOL, HHS and IRS Proposed Regs: Amendments to Excepted Benefits
Employee Benefits Security Administration [EBSA], U.S. Department of Labor; Internal Revenue Service [IRS]; and U.S. Department of Health and Human Services [HHS]
12/19/2014 [Official Guidance]

"After consideration of comments on the 2013 proposed regulations, the Departments are publishing these proposed regulations to address limited wraparound coverage and solicit comment before promulgation of final regulations on limited wraparound benefits.... These proposed regulations seek comment on two options for limited wraparound coverage to be considered an excepted benefit. The Departments intend that, after notice and comment, one or both options could be finalized. (That is, they are not necessarily alternatives and, therefore, could be implemented side by side). The regulations include a sunset date and, therefore, would operate as a pilot program. While some elements of this proposal are the same as those in the previous proposal, this new proposal contains changes in response to suggestions and adds new elements for reporting and data collection to gather information to inform future rulemaking.... These proposed regulations set forth five requirements under which limited benefits provided through a group health plan that wrap around either eligible individual insurance or coverage under a Multi-State Plan (limited wrap around coverage) constitute excepted benefit ... [1] Covers additional benefits ... [2] Limited in amount ... [3] Nondiscrimination ... [4] Plan eligibility requirement ... [5] Reporting."
arrow icon HMOs Offer Lower Price Increases in Health Care Marketplaces
The New York Times; subscription may be required
12/19/2014

"Plans featuring health maintenance organizations or restricted networks of providers typically had the lowest year-over-year premium increases, according to McKinsey, which sifted through information on the 223,000 plans offered in the marketplaces at the county level over the last two years. Plans featuring an H.M.O. had a median increase of only 2 percent. The more widely known P.P.O., or preferred provider organization, plans, which typically allow people to go outside their plan's network if they are willing to pay a greater share of the cost, had a median increase of 9 percent."
arrow icon How Responsive Are Millennial Employees to Your Wellness Efforts?
Wolters Kluwer Law & Business
12/19/2014

"Millennials are the least likely to participate in activities focused on prevention and maintaining or improving physical health compared to other generations. About half (54 percent) have had a physical in the last 12 months, compared to 60 percent of Generation X and 73 percent of Baby Boomers.... More than half (52 percent) say 'living or working in a healthy environment' is influential to their personal health, compared to 42 percent of Generation X and 35 percent of Baby Boomers. Millennials also are more open to having their direct manager play an active role in encouraging them to get and stay healthy (53 percent), compared to 47 percent of Generation X and 41 percent of Baby Boomers[.]"
arrow icon Text of CMS Draft 2016 Letter to Issuers in the Federally-facilitated Marketplaces and SHOPs (PDF)
Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS]
12/19/2014 [Official Guidance]

59 pages. "This Letter provides issuers seeking to offer qualified health plans (QHPs), including stand-alone dental plans (SADPs), in the Federally-facilitated Marketplaces (FFMs) or the Federally-facilitated Small Business Health Options Programs (FF-SHOPs) with operational and technical guidance to help them success fully participate in those Marketplaces in 2016. Unless otherwise specified, references to the FFMs include the FF-SHOPs. Throughout this Letter, CMS identifies the areas in which states performing plan management functions in the FFMs have flexibility to follow an approach different from that articulated in this guidance. CMS notes that the policies articulated in this Letter apply to the certification process for plan years beginning in 2016."
arrow icon The Year in Exchanges: Where Private Exchanges Go from Here
Employee Benefit Adviser
12/19/2014

"[T]he majority of employers are still waiting to see evidence of what value private exchanges provide, but more importantly, are waiting for someone else in their market to make the jump first, says Jean Moore, managing director of Towers Watson Active Exchange. According to Moore, 34% of employers are waiting for someone else to switch. Once that happens, she expects others will follow right away -- even before data about the move comes in."
arrow icon Text of 2014 Instructions for IRS Form 8965: Health Coverage Exemptions (and Instructions for Figuring Your Shared Responsibility Payment) (PDF)
Internal Revenue Service [IRS]
12/19/2014 [Official Guidance]

"Beginning in 2014, individuals must have health care coverage, have a health coverage exemption, or make a shared responsibility payment with their tax return. Use Form 8965 to report a coverage exemption granted by the Marketplace (also called the Exchange) or to claim a coverage exemption on your tax return. In addition, if for any month you or another member of your tax household had neither health care coverage nor a coverage exemption, these instructions provide the information you will need to calculate your shared responsibility payment."
arrow icon Active and Retired Public Employees' Health Insurance: Potential Data Sources
Journal of Health Economics; purchase required
12/19/2014

"Employer-provided health insurance for public sector workers is a significant public policy issue. Underfunding and the growing costs of benefits may hinder the fiscal solvency of state and local governments. Findings from the private sector may not be applicable because many public sector workers are covered by union contracts or salary schedules and often benefit modifications require changes in legislation. Research has been limited by the difficulty in obtaining sufficiently large and representative data on public sector employees. This article highlights data sources researchers might utilize to investigate topics concerning health insurance for active and retired public sector employees."
arrow icon Regence BlueShield Bets on 'Accountable Health' Group Plans
Healthcare Payer News
12/19/2014

"One Blue insurer will find out just how much employer appetite there is for health plans with limited but transparent networks branded as both accountable and affordable. Washington State's Regence BlueShield, one of the four Blues insurers in the Cambia Health Solutions family, is introducing ActiveCare, a new group health plan offering built on accountable care partnership with four providers that form network choices.... Members enrolled in the ActiveCare plans choose a primary care physician from the affiliated provider system, and those primary care doctors then are tasked with coordinating healthcare needs and overseeing referrals within the parent organization."
arrow icon Draft of the 2015 Instructions for IRS Form 5500-SUP: Annual Return of Employee Benefit Plan Supplemental Information (December 18, 2014) (PDF)
Internal Revenue Service [IRS]
12/19/2014 [Official Guidance]

"Form 5500-SUP is a paper-only form filed with the IRS that is used by the sponsors and administrators of retirement plans to satisfy the reporting requirements of section 6058. Form 5500-SUP should only be used if certain IRS compliance questions are not answered electronically on the Form 5500, Annual Return/Report of Employee Benefit Plan, or the Form 5500-SF, Short Form Annual Return/Report of Small Employee Benefit Plan."
arrow icon Creditor to Oppose San Bernardino Bankruptcy Plan Favoring CalPERS
Reuters
12/19/2014

"The creditor intends to pursue a new approach when hearings resume next year, in light of a deal the city reached with Calpers in November that will see the pension fund paid in full under a bankruptcy plan. The city has been ordered to produce a plan by May.... The move is significant because all the capital market creditors have so far supported the bankruptcy and it signals a change in course, speaking to the wider fight between Wall Street and pension funds over how they are treated in municipal bankruptcies."
arrow icon Examining the DOL 2014 Fall Regulatory Agenda
Drinker Biddle
12/19/2014 [Guidance Overview]

"The updated agenda provides the anticipated publication dates for the next steps in the regulatory process for nearly a dozen ERISA items. This bulletin discusses the agenda for the retirement plan projects that [the authors] believe are most important to plan sponsors and service providers[:] The 'Conflict of Interest Rule.' ... Brokerage Windows.... Projection of Lifetime Income.... 408(b)(2) Guide." [Editor's note: for each agenda item, the authors discuss the anticipated effect on plan sponsors and on service providers.]
arrow icon What Will 2015 Hold for the ACA and Employers?
Littler
12/19/2014 [Guidance Overview]

"Despite the detailed discussion of the lookback measurement and method in the final rule, a number of questions and ambiguities remain.... Although the use of the lookback approach is complicated and administratively burdensome, it does afford more flexibility and certainty than a strict monthly calculation. Looking ahead to 2015, the questions and challenges regarding determination of full-time employee status are likely to grow. Although additional guidance from the IRS may be forthcoming, employers will enter the new year with compliance challenges ahead."
arrow icon Final IRS Regs Clarify Some Questions on Individual FATCA Reporting of Foreign Pensions and Deferred Compensation on Form 8938 (PDF)
Groom Law Group
12/19/2014

"Beginning with the 2011 tax year, individuals have had to report specified 'foreign financial assets' valued at over certain threshold amounts on Form 8938 with their individual tax returns. Pensions and deferred compensation are generally included as one of the types of foreign assets that may have to be reported.... The final regulations do not mark a very different approach from the prior temporary regulations, and the preamble to the final regulations devotes most of the discussion to explaining changes requested by commentators that the IRS did not choose to make."
arrow icon Tax Implications for Employer-Paid Life Insurance Coverage (PDF)
McGraw Wentworth
12/19/2014

"[This article] explains the impact of Section 79 on employer-sponsored group term life plans, voluntary life plans, discriminatory life plans and the potential tax consequences for your employees... Each section details potential tax consequences for each situation ... [and explains] how to calculate tax liability."
arrow icon 2014 Review of Defined Benefit Plan Issues
October Three Consulting
12/19/2014

"In 2014 there were several major DB policy developments, including a significant extension of MAP-21 funding relief, new mortality tables and the finalization of the hybrid plan regulations on 'market rate of return.' In addition, the year-end federal spending deal included ERISA section 4062(e) legislation. [This article reviews] these developments, beginning with the legislation Congress just passed."
arrow icon Managing Funding Position and Risk: Five Steps for DB Plan Sponsors to Take in 2015
Mercer
12/19/2014

"[1] Re-evaluate the plan's glide path ... [2] Develop an interest rate strategy ... [3] Review the plan's risk-transfer policy ... [4] Review the plan contribution policy ... [5] Review the investment portfolio."
arrow icon U.S. Chamber of Commerce Comment Letter to IRS on Proposed Transitional Rules for Hybrid Retirement Plans (PDF)
U.S. Chamber of Commerce
12/19/2014 [Opinion]

"The proposed rule allows plan sponsors to fix only the piece of the interest credit that is not in compliance. However, changing just that single piece could change the overall impact or effect a plan sponsor may have been trying to reach.... Rather than requiring [Pension Equity Plans (PEPs)] to use administrative and financial resources to engage in a two-step process, we recommend that the transitional rules for PEPs not apply until further guidance specifically for these plans are issued.... The proposed rule is to take effect on the date that that a transition rule is published. Treasury and the IRS did not consider legally feasible alternative compliance schedules, such as 6, 12, 18 or 24 months after final rule publication."
arrow icon CBO's 2014 Long-Term Projections for Social Security: Additional Information (PDF)
Congressional Budget Office [CBO]
12/19/2014

"The first part of this report examines Social Security's financial status from several vantage points. The fullest perspective is provided by projected streams of annual revenues and outlays. A more succinct analysis is given by measures that summarize the annual streams in a single number. The system's finances also are described by projecting the trust fund ratio, which is the amount in the trust funds at the beginning of a year in proportion to the outlays in that year."
arrow icon Like the Cheshire Cat, Defined Benefit Plans Are Slow in Vanishing
Russell Investments
12/19/2014

"The importance of pension plans is much greater in some industries and at some corporations than it is at others. That's why some plans are being more aggressive in reducing pension risk than others. The aggregate picture, though, is one which shows that DB plans will continue to be a major consideration for many CFOs for a long time to come."
arrow icon Vermont Abandons Single Payer, for Now
Healthcare Payer News
12/19/2014

"Three years after Vermont's legislature passed Act 48 creating a roadmap for a state-financed single payer system called Green Mountain Care, Governor Peter Shumlin has abandoned the idea ... A team within the Shumlin Administration had drafted a financing proposal to fund Green Mountain Care, a public healthcare plan envisioned to cover 94 percent of healthcare costs for all Vermonters except those enrolled in Medicaid or Tricare. The proposal called for an 11.5 percent payroll tax on all businesses, as well as a 9.5 percent assessment on individuals earning over 400 percent of the poverty level, with a lower, sliding scale tax for those earning under 400 percent FPL."
arrow icon Aetna Rate Hike Excessive, California Insurance Commissioner Says
Los Angeles Times
12/19/2014

"[California Insurance] Commissioner Dave Jones lashed out ... at the third-largest U.S. health insurer for raising premiums as much as 20% on some small businesses starting Jan. 1. The average increase of 10.7% will cost small employers and their workers $23.5 million in excessive premiums, according to the state. But Jones has no power to stop it. California voters last month soundly rejected Proposition 45, which would have enabled him to block rate hikes that his department deemed unreasonable."
arrow icon Baby Boomer Workers Revolutionize Retirement, But Are They and Their Employers Ready? (PDF)
Transamerica Center for Retirement Studies
12/19/2014

"Sixty-five percent of Baby Boomer workers plan to work past age 65 or do not plan to retire. More than half (52 percent) plan to continue working after they retire.... 62 percent of the Baby Boomer workers who plan to work in retirement and/or past age 65 indicate that their main reason is income or health benefits.... [The] majority of employers share positive perceptions of their older workers with 87 percent saying that they are 'a valuable resource for training and mentoring' and 86 percent identifying them as 'an important source of institutional knowledge.' Many employers do feel they have higher healthcare costs (57 percent), but only 28 percent cite higher disability costs."
arrow icon FMLA Leave for Headache Effectively Converts Full-Time Position into Part-Time Position; Employers' Shrieks Heard Across the Country
FMLA Insights
12/19/2014

"The court also addressed a larger issue that it acknowledged was a novel question: Could Sam use his annual FMLA allotment to effectively convert his full-time position into one that no longer required overtime? Or taken further, could an employee use FMLA leave also to convert a full-time position into a part-time version of the same? In short, the court said 'Yes,' and reminded us that the FMLA does what the ADA cannot. Specifically, the ADA does not require an employer to eliminate an essential function (such as overtime) or provide an accommodation that would cause an undue hardship. However, the same is not true for the FMLA." [Santiago v. Dep't of Transp., No. 3:12cv132 (D. Conn. Sept. 25, 2014)]
arrow icon Whoomp, There It Is! The New Prudent Fee Fiduciary Standard
The Prudent Investment Adviser Rules
12/19/2014

"[The] United States District Court for Southern District of New York provided the long-anticipated introduction, or more specifically the judicial verification, of Vanguard's funds' fees as a comparative basis for assessing excessive of fund fees was established. While the case is not binding on other courts, the rationale used by the court is persuasive and will undoubtedly be referenced by plaintiffs' attorneys in both 401(k) and other cases where breach of fiduciary issues involving fee issues are involved.... More importantly, the court's decision provides further support for the relevance of intrinsic costs and returns in analyzing both investment recommendations made by financial advisors and investment options offered by 401(k) plans and other retirement plans." [Leber v. The Citigroup 401(k) Plan Investment Committee, No. 07-CV-9329 (S.D.N.Y. Sept. 30, 2014)]
arrow icon Medicaid Rolls Surge Under ACA
The New York Times; subscription may be required
12/19/2014

"Even though state policy wasn't changing everywhere, all the talk about new health insurance options and the resources devoted to helping people sign up led to a surge among people who had always been eligible for the program. Altogether, enrollment in the nonexpansion group of states has increased by 6.8 percent, or about 1.5 million people. Of course, the increases in states that have expanded Medicaid are more extreme. In Kentucky, the state with the biggest increase, the Medicaid rolls have grown by 71 percent."
arrow icon 257,000 Doctors Will Get Medicare Pay Cut for Using Paper Records
Forbes
12/19/2014

"[CMS] is telling about 257,000 eligible medical care providers who are largely physicians that they will be paid 1 percent less in reimbursement next year from both the Medicare health insurance program for the elderly and the Medicaid insurance program for the poor because they failed to comply with so-called 'Meaningful Use' of electronic health records standards in 2013."
arrow icon How the High Cost of Medical Care Is Affecting Americans
The New York Times; subscription may be required
12/19/2014

"Nearly half of respondents described the affordability of basic medical care as a hardship for them and their family, up 10 points from a year ago. While the [ACA] has expanded insurance to millions of Americans, including those with existing conditions, it does not directly address cost. And cost is becoming increasingly problematic."
arrow icon DCIO Providers to Compete for Market Share
planadviser
12/19/2014

"Seventy-nine percent of [defined contribution investment-only (DCIO)] providers plan to increase staffing further in at least one distribution-related role. The leading positions where DCIO groups plan to increase head count are internals, where 50% of firms plan to increase staffing; and marketing, where 46% plan to increase staffing.... Only 36% of DCIO organizations plan to increase head count of external salespeople, and only 29% suggest they will be hiring in key account/strategic relationship roles."
arrow icon Amgen ESOP Fiduciaries Remain Subject to Suit for Failure to Drop Inflated Company Stock from Investment Menu
Wolters Kluwer Law & Business
12/19/2014

"ESOP participants will be allowed the opportunity to prove in court that plan fiduciaries acted imprudently in continuing to offer company stock as an investment option when they knew or should have known that the stock price was artificially inflated ... The participants will also be permitted to rely on documents incorporated by reference in plan summary plan descriptions to establish a breach by the plan fiduciaries of their duty to provide the participants with material information related to the investment in company stock.... The case is one of the first to be adjudicated in the wake of the invalidation by the U.S. Supreme Court of the presumption of prudence." [Harris v. Amgen, Inc., No. 10-56014 (9th Cir. Oct. 30, 2014)]
arrow icon Understanding the New One-Per-Year Limit on IRA Rollovers
SunGard Relius
12/19/2014

"This Technical Update is written for institutions which hold and administer IRA funds. It is written at the level of the IRA investor, and can be used to explain the new rollover rules to the investor."
arrow icon How to Settle an ERISA Breach of Fiduciary Duty Case and Sleep at Night: A Checklist for Plan Trustees
Proskauer Rose LLP
12/19/2014

"This [article] focuses on how Plan Trustees can appropriately settle ERISA breach of fiduciary duty claims in order to achieve 'complete peace.' The article provides a check list and discusses strategies for handling settlement of fiduciary breach claims including, barring future claims by non-settling parties, baring future claims by non-settling co-defendants, protecting against future claims with adequate insurance coverage, and moving on after settlement."
arrow icon 2015 Reporting and Disclosure Calendar for Single-Employer Benefit Plans (PDF)
Sibson Consulting
12/19/2014 [Guidance Overview]

27 pages. Detailed list of compliance requirements and dates; covers DOL, HHS and IRS requirements for welfare plans as well as retirement plans. Interactive version is also available.
arrow icon 2015 Reporting & Disclosure Calendar for Multiemployer Benefit Plans (PDF)
Segal Consulting
12/19/2014 [Guidance Overview]

27 pages. Detailed list of compliance requirements and dates; covers DOL, HHS and IRS requirements for welfare plans as well as retirement plans. Interactive version is also available.
arrow icon Noteworthy Developments of Interest to Sponsors of Multiemployer Retirement Plans (PDF)
Segal Consulting
12/19/2014 [Guidance Overview]

Articles covering: [1] As plan sponsors embrace the idea of diversification, there has been a dramatic uptick in interest in hedge funds in a liquid (mutual fund) format; [2] The Society of Actuaries has released updated mortality tables reflecting a rise in life expectancy that may result in higher benefit obligations; [3] The key provisions of the Multiemployer Pension Reform Act of 2014 generally become effective for plan years beginning on or after January, 2015; and [4] A multiemployer DB plan currently in the PPA '06 green zone may not be 'green' for long if its obligations exceed its assets plus future contributions.
arrow icon Bipartisan SAVE Act Looks to Help Small Business Retirement Plans
American Society of Pension Professionals & Actuaries [ASPPA]
12/19/2014

"The bill [1] adds a new SIMPLE 401(k) deferral-only safe harbor for small employers ... [2] permit[s] the operation of so-called 'open' multiple employer plans (MEPs), provided that each employer involved in the plan has less than 500 employees (with a five-year grace period)....[3] creates a new 'automatic deferral IRA' arrangement that allows employers to automatically enroll eligible employees (defined as any employee that makes at least $5,000 per year) into a payroll deduction IRA arrangement.... [4] allows a limited transfer of an unused balance contained in a flexible spending account to be rolled into a qualified retirement plan.... [5] creates an annuity selection safe harbor in qualified plans designed to encourage lifetime income options in retirement."
arrow icon ERIC Comment Letter to IRS on Transitional Amendments for Hybrid Retirement Plans (PDF)
The ERISA Industry Committee [ERIC]
12/19/2014 [Opinion]

12 pages. "[1] The 'silo' approach to transition in the proposed regulations is unnecessarily restrictive and fails to take account of the many variations in interest crediting rates among existing plans, resulting in arbitrary distinctions among plans. [2] The final regulations for the first time penalize plans that calculate lump sums using the 'whipsaw' method (even though the [IRS] previously required plans to use that method).... [3] The final regulations for the first time, and without statutory authority, establish a new definition of early retirement subsidy that differs markedly from the established definition embodied in the statute and regulations since the passage of [ERISA]."
arrow icon Ten Steps DC Plan Sponsors should take in 2015
Mercer
12/18/2014

"[1] Evaluate the impact of competing financial priorities on employees' ability to prepare for retirement.... [2] Examine options designed to respond to participants' retirement security needs.... [3] Conduct an in-depth analysis of your current, or future, managed account provider.... [4] Design a structure that is based on the investment behaviors of your participants rather than general market assumptions.... [5] Monitor participants' progress against their retirement goals.... [6] Reconfirm the capital preservation option in your DC plan remains the most appropriate for participants.... [7] Consider the impact disability could have on employees' ability to accumulate funds for retirement ... [8] Customize the plan's auto-features to improve participant outcomes.... [9] Consider the appropriateness of liquid alternatives within the plan.... 10. Complete an annual four-point tune-up of design, fees, operation, and compliance."
arrow icon Congress Extends Transit Benefit Tax Parity but Limited to 2014 (PDF)
Buck Consultants at Xerox
12/18/2014 [Guidance Overview]

"Some employers may have allowed employees to make after-tax elections in 2014 that exceeded the prior $130 limit. It is possible that the IRS will require that employers refund any excess FICA taxes that were withheld for 2014 and adjust the 2014 Form W-2 to reflect the correct income amount for federal income tax purposes. The IRS required similar adjustments when the transit limit was increased retroactively for 2012. Employees cannot retroactively increase their transit elections, however, so employers that did not allow after-tax transit benefit elections in 2014 would not have withholding and reporting adjustment obligations."
arrow icon Text of CMS Quality Rating System (QRS) Frequently Asked Questions (FAQs) (PDF)
Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS]
12/18/2014 [Official Guidance]

FAQs include: "[1] If a [Qualified Health Plan (QHP)] issuer offers multiple products (e.g., EPO, HMO, POS, PPO) in the Marketplace, can products be combined for the Quality Rating System (QRS) and the QHP Enrollee Experience Survey (QHP Enrollee Survey) reporting? [2] Do the [QRS] and the QHP Enrollee Experience Survey requirements only apply to QHP issuers participating in State-based Marketplaces (SBMs)? [3] What are the deadlines for QHP issuers to contract with data validators and survey vendors in preparation for [QRS]) and the QHP Enrollee Experience Survey data submission? Are these deadlines flexible? [4] Will CMS accept state-mandated quality measure data to meet [QRS] requirements?" [Dated November 16, 2014; published online December 17, 2014.]
arrow icon Text of Amicus Brief by AARP to Supreme Court in Tibble v. Edison (PDF)
Joint Committee on Employee Benefits [JCEB], American Bar Association
12/18/2014

"Alarmist arguments that decry an outcome for the petitioners as a death knell for employee retirement plans are cast more heat than light. The ERISA duty of prudence requires fiduciaries of employer sponsored defined contribution plans to regularly monitor and re-evaluate long standing plan investment options. Industry standard of practice has borne out this requirement to include regular re-evaluation of investment share class and fees, a recommendation resoundingly echoed by responsible employers and retirement management consulting groups.... A formalized legal requirement to evaluate existing investment options for imprudent fees will not weaken the 401(k) system. Rather, it merely embraces the procedures that plan sponsors and their fiduciaries should already be following.... Requiring periodic fiduciary consideration of mutual fund fees as part of a prudent investment evaluation merely recognizes a fiduciary duty that is already embraced as standard practice." [Tibble v. Edison International, No. 13-550 (9th Cir. Aug. 1, 2013; cert. pet. granted Oct. 2, 2014)]
arrow icon Text of Federal District Court Opinion Awarding Attorney's Fees to Providers Who Were Not Provided with ERISA Appeal Process by Health Insurer (PDF)
U.S. District Court for the Northern District of Illinois
12/18/2014

"The first factor requires a court to consider 'the degree of the offending parties' culpability.' ... Although [Independent Blue Cross (IBC)] may not have acted in bad faith, its failure to follow ERISA's notice and appeal requirements to the detriment of healthcare providers suggests some level of culpability.... As to the second factor, IBC does not dispute that it is able to pay an award of attorney's fees. The third factor also tilts in favor of a fee award, as it will deter other insurers from denying benefits without providing ERISA-compliant notice and appeal procedures. This is particularly important given the fact that cases like this one do not always result in a monetary damage award, at least not a significant award; as a result, insurers have less of a monetary incentive to provide ERISA-compliant procedures until after a suit is initiated. Finally, members of the plan who contract with IBC have benefited from [the Pennsylvania Chiropractic Association's] efforts to ensure that IBC provides adequate notice and appeal procedures. Thus, an award of attorney's fees is appropriate." [Pennsylvania Chiropractic Association v. Blue Cross Blue Shield Association, No. 09 C 5619 (N.D. Ill. Dec. 17, 2014)]
arrow icon IRS Retirement News for Employers, December 18, 2014 (PDF)
Internal Revenue Service [IRS]
12/18/2014 [Guidance Overview]

Topics include: Plan sponsors: [1] Set up a plan by December 31; [2] Retirement plan records; [3] Form 5500-SUP; [4] Plan check-ups -- a retirement plan needs regular care; and [5] Correcting common Roth contribution mistakes. Plan participants: [1] Types of retirement plan contributions; [2] Limit your elective deferrals to the annual amount; [3] Saver's credit; [4] IRA year-end reminders; [5] Required minimum distributions; [6] Changes to the IRA one-rollover-per-year rule. Updated: [1] Mark your calendar -- deadlines for retirement plans; [2] Updates from Department of Labor; [3] Publication 1-EP, Understanding the Employee Plans Examination Process (10-2014); [4] Publication 1020, Appeal Procedures Employee Plans Examinations (11-2014); [5] Publication 4810, Specifications for Electronic Filing of Form 8955-SSA, Annual Registration Statement Identifying Separated Participants With Deferred Vested Benefits.
arrow icon Text of Federal District Court Opinion: ERISA Did Not Preempt State Law Claims by Former Executive Arising from Agreement to Terminate Benefits Under Section 457(f) Plan in Exchange for Cash Payment (PDF)
United States District Court for the Northern District of Texas
12/18/2014

"Kirkindoll could not have brought his state-law claims regarding the March 2011 Agreement under Section 502(a)(1)(B) of ERISA....In his state-law claims regarding the March 2011 Agreement, Kirkindoll does not seek to recover benefits due to him under the terms of an ERISA plan, to enforce his rights under the terms of an ERISA plan, or to clarify his rights to future benefits under the terms of an ERISA plan. Instead, he complains that, by signing the March 2011 Agreement, he was entitled to receive $234,068.18 within 30 days, and that he was never paid as promised.... Kirkindoll does not contend that he is owed the sum of $234,068.18 under the terms of the Plan, nor could he." [Kirkindoll v. National Credit Union Administrative Board, as Conservator of Texans Credit Union, No. 3:11-CV-1921-D (N.D. Tex. Dec. 17, 2014)]
arrow icon Without Direct Employer Action, Alternate Health Care Delivery Models and Payment Reform May Stall at Current Levels
Aon Hewitt
12/18/2014

"[W]hile employers find alternative provider delivery models and payment reform attractive, most admit they do not understand them or the value they provide. As a result, they may miss a significant opportunity to lead and improve results (health and financial) for their workforce and business.... Despite their lack of understanding of the models, the survey showed 60 percent of companies are providing or are considering providing a financial incentive for employees and dependents to use these new models through plan design changes, narrow network options, HRA/HSA contributions or cash."
arrow icon Probationary Periods: ACA and California Law are Back in Sync (SB 1034)
Fox Rothschild LLP
12/18/2014 [Guidance Overview]

"Senate Bill 1034 becomes effective January 1, 2015 and repeals the 60-day waiting period limit previously imposed on certain health insurance plans in California. Now employers can go back to the 90-day probationary period with benefits as a reward to employees who 'pass' probation. This comes just in time for the year-end employee handbook updates."
arrow icon What Do Plan Participants Consider When Choosing a Financial Advisor?
Spectrem Group
12/18/2014

"[F]or nearly nine-in-ten (89 percent) of retirement plan participants, honesty and trustworthiness are the most important criteria in choosing a financial advisor. Eighty-five percent of retirement plan participants surveyed ... place the highest premium on a financial advisor's transparency and being kept in the look on what they are doing in regard to their investments. For eight-in-ten, a financial advisor's investment track record and fees or commissions charged are the most important factors in choosing an advisor. Other factors retirement plan participants consider important when choosing an advisor include having access to products from a variety of different companies (73 percent), website and online services offered (63 percent) and the renown of the financial advisor's brand or company (61 percent)."
arrow icon Federal Spending Bill Brings Multiemployer Pension Changes in Through the Back Door
Benefits and Compensation with John Lowell
12/18/2014

"[F]or employers participating in reasonably well funded plans (green zone), there should not be much that is needed. For the remainder (red zone or yellow zone) of plans, however, employers may need to weigh their options. They might consider doing some or all of the following: [1] Review all of their collective bargaining agreements that cause them to be participating sponsors of multiemployer plans.... [2] If withdrawal from the plan is an option, request a withdrawal liability calculation to see how painful that strategy might be. [3] Consider the pros and cons of remaining in the plan as part of the company's overall risk management strategy. [4] Consider engaging an independent actuary (not affiliated with the plan's actuary) to assist with any strategy decisions."
arrow icon Public Easily Swayed on Attitudes About Health Law
Kaiser Health News
12/18/2014

"Six in 10 respondents to the monthly tracking poll from the Kaiser Family Foundation ... said they generally favor the requirement that firms with more than 100 workers pay a fine if they do not offer workers coverage. But minimal follow-up information can have a major effect on their viewpoint, the poll found. For example, when people who support the 'employer mandate' were told that employers might respond to the requirement by moving workers from full-time to part time, support dropped from 60 percent to 27 percent. And when people who disapprove of the policy were told that most large employers will not be affected because they already provide insurance, support surged to 76 percent."
arrow icon 401(k) Plan Asset Allocation, Account Balances, and Loan Activity in 2013
Employee Benefit Research Institute [EBRI]
12/18/2014

"On average, at year-end 2013, 66 percent of 401(k) participants' assets were invested in equity securities through equity funds, the equity portion of balanced funds, and company stock.... More 401(k) plan participants held equities at year-end 2013 than before the financial market crisis (year-end 2007), and most had the majority of their accounts invested in equities.... Seventy-one percent of 401(k) plans included target-date funds in their investment lineup at year-end 2013."
arrow icon ACO Quality Results: Good But Not Great
Health Affairs
12/18/2014

"Opportunity for continued quality improvement aside, a troublesome snag for the program could be a very low correlation between improved quality and earned savings: [the authors'] analysis shows that, in performance year one, improved quality and earned savings only correlate at 8.6 percent, so low that it is statistically insignificant. In practice, this means that better quality is not associated with better financial results."
arrow icon The Future of Technology and Services for Retirement Plans
PLANSPONSOR
12/18/2014

"Gary Josephs, managing principal at Retirement Benefits Group ... says participants have already benefitted strongly from digital innovation at retirement plan providers, and that it's not hard to picture what the client service portal of the future could look like. He believes providers will eventually create a digital plan experience for participants similar to that of today's iPhone or iPad user."
arrow icon Pension Plans and Derivatives in the New Regulatory Environment: Capital and Margin Concerns and Possible Solutions (PDF)
Cleary Gottlieb, via American Benefits Council
12/18/2014

13 presentation slides. "New margin and capital requirements may significantly increase costs and collateral requirements for public and private pension plans and impose significant capacity constraints on banks in connection with listed and over-the-counter derivatives. This is due to uncertainty regarding the treatment of creditors' rights to close out, net and apply collateral in a pension plan insolvency proceeding. [This presentation discusses] several solutions -- all of which will require industry participation -- to these issues."
arrow icon The Dark Side to Uncontrolled Drug Benefits
International Foundation of Employee Benefit Plans [IFEBP]
12/18/2014

"Obviously, plan sponsors have financial reasons for steering people toward a generic drug instead of a more expensive (and possibly heavily marketed) brand-name drug. Or for limiting how much of a costly drug people can get at one time. However, putting controls on access to prescription drugs can be healthier for plan participants, benefiting them far more than it might hurt them[.]"
arrow icon FSI to Fight Rollout of State-Sponsored Auto IRAs
InvestmentNews
12/18/2014

"Having states involved in retirement savings squeezes out financial advisers, said David Bellaire, executive vice president and general counsel at the [Financial Services Institute (FSI)]. 'We see this as unnecessary, unwise competition against small [financial advisers] that are working hard to address these needs,' Mr. Bellaire said. 'There's significant research that shows that investors, particularly those that are planning for retirement, have better outcomes when they work with financial advisers.' "
arrow icon Critics Challenge Corporate Wellness Program ROI
Society for Human Resource Management [SHRM]
12/18/2014

"Even with the modest rise in health care costs over the past several years, sources familiar with the issue believe businesses have reached a tipping point and that the expense of providing medical benefits to workers has become unsustainable. Cost-containment efforts therefore are putting more pressure on wellness programs to deliver on the promise of reducing health care expenses. However, as ... recent studies have shown, wellness plans may not be producing the return on investment (ROI) that employers expect and need."
arrow icon Obama's myRAs Meant as Complement to Employer-Sponsored Plans, Treasury Official Says
Bloomberg BNA
12/18/2014

"President Barack Obama's proposal for 'starter' retirement accounts is meant solely to jump-start savings by workers not currently with access to employer-sponsored retirement plans, a senior Treasury Department official said during a Senate subcommittee hearing. 'Employees who are eligible for employer plans will not be the target audience for the myRAs. They will have many good reasons to continue participating in those plans instead of myRAs, which will complement and not compete with 401(k) or other employer plans,' [according to J. Mark Iwry, Senior Adviser to the Secretary and Deputy Assistant Secretary (Retirement and Health Policy)]."
arrow icon Explaining the ACA Look-Back Measurement Method to Employees
Mintz Levin via Lexology
12/18/2014 [Guidance Overview]

"At bottom, the look-back measurement method for determining an employee's full-time status affects whether and when an employee must be offered group health plan coverage. It is, therefore, something that must be communicated to employees.... For group health plans that are subject to ERISA ... this is the job of [an SPD].... Where an employer wants to get out ahead of the formal ERISA disclosure rules, or where an understanding of ERISA's disclosure requirements is in short supply, some employers have sought to explain the look-back measurement method in a separate memorandum or other informal communication to employees.... Nothing prevents an employer from supplementing the formal ERISA disclosure requirements, and better and more complete communication benefits both the employer and the employee."
arrow icon 'Cromnibus' Spending Bill Makes Significant Changes to Law Governing Multiemployer Pension Plans
Littler
12/18/2014 [Guidance Overview]

"The new law makes clear that neither surcharges nor contribution increases required by funding improvement or rehabilitation plans are to be considered (i) to determine a withdrawing employer's allocable share of unfunded vested benefits or (ii) in calculating a withdrawing employer's payment amount. This provision does not apply to increases in contributions other than those required by a funding improvement or rehabilitation plan (for example, contribution increases to provide increased benefits). These changes go into effect for contribution rate increases required during plan years beginning after December 31, 2014."
arrow icon Important Updates and Upcoming Deadlines Concerning Employee Benefits in Puerto Rico
Littler
12/18/2014 [Guidance Overview]

"On December 15, 2014, the PR Treasury published Tax Policy Circular Letter 14-05, announcing the limits applicable to Puerto Rico for 2015, including the limits that are incorporated into the Puerto Rico Internal Revenue Code from the U.S. Internal Revenue Code.... Senate Bill P.S. 1189 seeks to extend window period to pre-pay at a reduced rate the tax amounts accumulated under a retirement plan... [The authors] have confirmed with the PR Treasury that an amendment to reflect the outcome of the Windsor decision and the IRS guidance is considered a 'qualification amendment' and, therefore, must be submitted for qualification with the PR Treasury."
arrow icon Reference-Based Pricing and the ACA's Rules on Out-of-Pocket Limits
Segal Consulting
12/18/2014 [Guidance Overview]

"Plan sponsors of non-grandfathered plans that have or are considering a reference-based pricing program must review the program to ensure that it complies with several factors related to quality and access. The Departments will consider all the facts and circumstances when evaluating whether a plan is using a reasonable method to ensure adequate access to quality providers at the reference price, including the following: Type of Service ... Reasonable Access ... Quality Standards ... Exception Process ... Disclosure ... It is likely that existing programs will not fully comply with these new rules, particularly some of the participant disclosure and exception process rules, and will need to be revised."
arrow icon Accounting for Pensions and Other Postretirement Benefits, 2014: Reporting Under U.S. GAAP Among Fortune 1000 Companies
Towers Watson
12/18/2014

"For fiscal-year-end 2013, the average discount rate used to calculate the present value of pension obligations was 4.77% -- an increase from 3.94% in 2012. The average return for plan sponsors was 11.46%. At the end of 2013, 76% of companies had projected benefit obligation (PBO) funded status of greater than 80% -- a substantial improvement from 2012, when just 29% had a funded status greater than 80%."
arrow icon 2014 Plan Sponsor ACA and Year-End Checklist (PDF)
Alston & Bird LLP
12/18/2014 [Guidance Overview]

12 pages. "2014 has been another busy year of regulations and guidance affecting health and welfare benefit plans.... Many of the rules and regulations went into effect in 2014, while others were issued in 2014 but will not be effective until 2015 or later.... To help you ensure that nothing slips through the cracks, [this article provides] the highlights for 2014."
arrow icon 2014 Form 5500 Released to the Public
Bond Beebe Accountants & Advisors
12/18/2014

"In addition to the changes to the form, there were also two changes made to the instructions worth noting: [1] The instructions now include a warning to check the filing status after e-filing. An error message saying the filing status is 'Processing Stopped' or 'Unprocessable' may indicate a problem with the electronic signature that could cause the form not be acknowledged as being filed. [2] The instructions to line 1c(13) of Schedule H have been changed to elaborate on the definition of interest in registered investment companies."
arrow icon Latest HIPAA Settlement: Compliance is an Ongoing Process
Davis Wright Tremaine LLP
12/18/2014

"[OCR Director Jocelyn] Samuels' statements underscore the importance of monitoring information systems and conducting compliance audits. Samuels calls for entities to 'review[] systems for unpatched vulnerabilities and unsupported software that can leave patient information susceptible to malware and other risks.' ... [T]he newly released Experian Data Breach Industry Forecast for 2015 predicts the health care industry will be 'plagued' with data breaches in the coming year, stating that '[t]he potential cost of breaches for the healthcare industry could be as much as $5.6 billion annually.' "
arrow icon Multiemployer Pension Plan Reform: So Now What?
Fox Rothschild LLP
12/18/2014 [Guidance Overview]

"The idea behind the 'Multiemployer Pension Reform Act of 2014' is that by making certain changes to multiemployer pension plans, and specifically to underfunded pension plans, PBGC finances will improve. Of course the first part of this repair is that the annual PBGC insurance premiums for multiemployer plans will double to $26 per participant in 2015, and increase over time."
arrow icon ERISA Issues for Solicitor's Fees
FredReish.com
12/18/2014

"[T]he person making the referral is receiving 'indirect' compensation (that is, the solicitor's payment by the investment manager), which makes that person a 'covered service provider' or 'CSP.' ... The DOL takes the position that a referral to a discretionary manager is the same as the recommendation of an investment. If it is individualized, based on the particular needs of the plan (or a participant), the DOL says it's a fiduciary act.... 'The fiduciary nature of such advice does not change merely because the advice is being given to a plan participant or beneficiary.' That conclusion means that the CSP should engage in a prudent process and its compensation must be 'level'[.]"
arrow icon State-Based Marketplaces Using 'Clearinghouse' Plan Management Models Are Associated with Lower Premiums
Health Affairs
12/18/2014

"State-based Marketplaces using 'clearinghouse' plan management models had significantly lower adjusted average premiums for all plans within each metal level compared to state-based Marketplaces using 'active purchaser' models and the federally facilitated and partnership Marketplaces. Clearinghouse management models are those in which all health plans that meet published criteria are accepted. Active purchaser models are those in which states negotiate premiums, provider networks, number of plans, and benefits."
arrow icon PBGC Final Regs Clarify Treatment of Benefits Rolled Over from DC Plan If DB Plan Is Terminated and Trusteed by PBGC
Wolters Kluwer Law & Business
12/18/2014 [Guidance Overview]

"[A] benefit resulting from rollover amounts generally will be in the second highest priority category of the asset allocation among various classes of benefits and will not be subject to the PBGC's maximum guarantee or phase-in limitations.... The PBGC's goal in issuing the final regulations is to promote lifetime income options for employees by removing the fear that the amounts that 401(k) or other DC plan participants rolled over to DB plans would be restricted under guarantee limits should the PBGC step in and pay benefits."
arrow icon Healthcare Executives Are Vastly Underestimating Changes in Healthcare Utilization
Jeff Hoffman, for HFMA
12/18/2014

"For the utilization of inpatient services, on average, executives expect a 3 percent decrease. Per [Milliman Health Care Guidelines (HCG)] benchmarks, a well managed population should expect to see a 30 percent decrease, relative to a loosely managed population. Fifty-three percent of executives expect growth in the utilization of emergency services. HCG benchmarks suggest a 35 percent reduction of visits per person between loosely and well managed populations."
arrow icon Class Action Suits Mounting for ERISA Plan Clawbacks
Healthcare Payer News
12/18/2014

"A fractious and potentially costly family of provider-led class action lawsuits [is] moving through courts, pitting accusations of illegal clawbacks against the likes of Aetna and UnitedHealth Group. In New Jersey, a federal judge has certified a class of providers suing UnitedHealth Group for allegedly illegal payment recoupments under ERISA... Similar to complaints against other insurers, the providers suing UnitedHealth allege that the insurer conducted post-payment audits, concluded that it made erroneous overpayments, and then demanded to be repaid[.]"

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