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Benefits in the News

Older News | October 23, 2014

arrow icon Millennials Prioritizing Retirement and Health Saving Through Workplace Benefits
Merrill Lynch

"Health savings account (HSA) usage grew 33 percent during the first six months of the year, with more than 384,000 workers now utilizing these tax-advantaged vehicles to prepare for qualified near- and long-term medical expenses. While Baby Boomers (38 percent) and Gen Xers (39 percent) make up the majority of account holders, Millennials (23 percent) are also using HSAs early in their careers. Millennials are also taking positive retirement savings actions. Nearly 40,000 of these younger workers enrolled in their employer's 401(k) plan for the first time during the first half of the year -- a 55 percent increase from the same six-month period last year. Across all generations, the report found a 37 percent increase among first-time contributors."
arrow icon Checklist for Evaluating Private Exchanges
Findley Davies

"Important considerations include: What are my company's benefit plan objectives and does it make sense to move to a private exchange based on these objectives? Is moving to an exchange cost effective for my organization and my employees? What does moving to a private exchange entail? What are the options for both insured and self-funded arrangements? How will offering benefits through an exchange impact my company's health management strategy? What additional fees and commissions are built into the rates under a private exchange?"
arrow icon Text of IRS Information Release 2014-99: 2015 Pension Plan Limitations (PDF)
Internal Revenue Service [IRS]
10/23/2014 [Official Guidance]

"The elective deferral (contribution) limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government's Thrift Savings Plan is increased from $17,500 to $18,000. The catch-up contribution limit for employees aged 50 and over ... is increased from $5,500 to $6,000. The limit on annual contributions to an [IRA] remains unchanged at $5,500.... [T]he limitation on the annual benefit under a defined benefit plan under Section 415(b)(1)(A) remains unchanged at $ 210,000.... The limitation for defined contribution plans under Section 415(c)(1)(A) is increased in 2015 from $52,000 to $53,000."
arrow icon Shades of Green: Key Questions for Multiemployer Plans to Ask About Being in the Green Zone
Segal Consulting

"[B]ecause being in the green zone on a particular measurement date just means not being in the red zone (critical status) or the yellow zone (endangered status), it is not a measure of a plan's long-term financial well-being. In essence, there are many shades of green. The variance in hue only emerges as additional projections of the zone criteria are performed. Understanding shades of green is an important part of plan stewardship. An increasingly positive trend indicates a continuously stable, and perhaps improving, financial condition. A downward trend may signal a need for preemptive board action, particularly when a more modest present action mitigates the likelihood of more drastic future actions."
arrow icon As Virus Spreads, Insurers Exclude Ebola from New Policies
Reuters, via The Baltimore Sun

"As fear of Ebola infections spreads to developed economies, U.S. and British insurance companies have begun writing Ebola exclusions into standard policies to cover hospitals, event organizers and other businesses vulnerable to local disruptions. As a result, new policies and renewals will become costlier for companies opting to insure business travel to West Africa or to cover the risk of losses from quarantine shutdowns at home[.]"
arrow icon Pharma Pays $825 Million to Doctors and Hospitals, ACA's Sunshine Act Reveals
The Brookings Institution

"Teaching hospitals and physicians together received $669,561,563 in general payments from 949 different medical manufacturers. Interestingly, close to 70 percent ($460,369,403) of this amount was paid to individual physicians and the rest was paid to teaching hospitals. More than half of the total general payments were made by only 20 companies led by Genentech, which paid $130,065,012 in general grants to various hospitals and doctors and in particular, City of Hope National Medical Center."
arrow icon Open Enrollment: Insights from Medicare for Health Insurance Marketplaces
Henry J. Kaiser Family Foundation

"Health insurance plans often change from one year to the next, and some of these changes could have a real impact on costs and coverage, including changes in premiums, cost-sharing, benefits, formularies and choice of doctors and hospitals. Consumers are advised to review their options carefully before deciding whether to renew their current plan or enroll in a new one. But will they?"
arrow icon Edison International Case Highlights a Needed Reform: Share Class Restrictions in 401(k) Plans
Employee Fiduciary
10/23/2014 [Opinion]

"Fund companies use the different share classes to provide varying levels of compensation to intermediaries, such as financial advisors and recordkeepers. The underlying investment management is the same, the only difference between share classes is the amount of additional fees that are charged to shareholders. This 'revenue sharing' shifts costs to plan participants and creates a layer of complexity in plan fees that sponsors and participants find confusing. Because these fees are included in the fund expense ratio and deducted before calculating net returns, these fees can be easily overlooked when evaluating total fees."
arrow icon Treasury Inspector General Report: Additional Measures Needed to Provide Greater Assurance That Tax Information Provided to Health Exchanges Is Protected (PDF)
Treasury Inspector General for Tax Administration [TIGTA], U.S. Department of the Treasury

"This audit was initiated to determine whether IRS Office of Safeguards has implemented sufficient policies and procedures to ensure that ACA Exchanges are adequately protecting [Federal Tax Information (FTI)] received from the IRS.... The current documentation on which the Office of Safeguards bases its approval decision for release of FTI does not provide sufficient evidence that required controls have been implemented. TIGTA also found deficiencies in procedures related to obtaining signed system security authorizations and ensuring that on-site reviews of agencies that have deployed new systems occur in a timely manner." [Report is dated Sept. 16, 2014; released Oct. 23, 2014.]
arrow icon The State of U.S. Employee Retirement Preparedness (PDF)
Financial Finesse

15 pages. "Twenty-eight percent of employees reporting $100,000 or more in household income are confident they are on track to achieve their income-replacement goals, up from 23% in 2012. All other income cohorts experienced little or no change in retirement confidence. Seventeen percent of women are confident they are on track to achieve their income-replacement goals, up from 13% in 2012. However, women are still trailing men in this area, as 26% of men reported being on track[.]"
arrow icon Longevity Insurance in DC Plans: Paving the Way for QLACs (PDF)
Aon Hewitt
10/23/2014 [Guidance Overview]

"Treasury's QLAC regulations are a step in the right direction toward helping individuals better manage longevity risk. Deferred income annuities like the QLAC offer an efficient way to target longevity exposure by guaranteeing income in the later years of an individual's life. Plan sponsors may want to consider QLACs as an option when they review available retirement income solutions. In the long term, these regulations likely will spur innovation and potentially may create a more diverse marketplace with broader solutions for plan sponsor consideration. In the short term, sponsors will need to carefully review alternatives and may have limited available choices."
arrow icon Borrowing Money to Reduce PBGC Premiums (PDF)

"Factors to consider when borrowing funds include: ... Method of borrowing: Two primary options are a direct loan from a financial institution or issuing bonds. Plan sponsors should consider whether accounting treatment may vary depending upon the method of borrowing.... [A]mortizing payments like a mortgage or issuing a bond with periodic interest payments and full principal repayment at maturity ... What is the interest rate on the debt? ... What is the plan sponsor's marginal tax rate?"
arrow icon Can Dependents Trigger an ACA Employer Penalty Under Section 4980H(a) or 4980H(b)?
Health Care Attorneys P.C.
10/23/2014 [Guidance Overview]

"The final regulations make it clear to utilize the 95 percent rule, a full-time employee's dependents must be offered coverage along with the full-time employee. Therefore, an employer not offering a full-time employee's dependents coverage would not have the protection of the 95 percent rule."
arrow icon ACA Issues in Mergers and Acquisitions: New Guidance from IRS
Saul Ewing LLP

"[In] a stock deal, Buyer will assume any unpaid ACA penalties owed by Target. Although this is generally true for any taxes or other liabilities assumed in a stock deal ... the ACA penalties are not due until the Service issues a notice and demand. Thus, for cash basis taxpayers, the ACA penalty will not be reflected on Target's financial statements ... Second, whether or not Target is acquired in a stock sale or asset sale, if Buyer hires Target's employees, any such acquired employees who are 'full-time' must be offered health insurance that provides minimum value and is affordable if Buyer wants to avoid potential ACA penalties."
arrow icon Retirement Savings Flows and Financial Advice: Should You Roll Over Your 401(k) Distribution? (PDF)
Benefits Quarterly, published by the International Society of Certified Employee Benefit Specialists [ISCEBS]

"Pension rollovers are an important source of revenue for money managers.... This article addresses the question of whether participants should roll over their 401(k) plans to IRAs. It also examines why rollovers have occurred.... [As] well as addressing an issue of personal finance and the quality of financial advice that individuals receive, this article addresses the issue of the limits of the effects of inertia.... It then considers a behavioral economics explanation for why rollovers have occurred. It considers advertising and advice on rollovers as part of that explanation and examines reasons why participants may not be considering fees in their decision."
arrow icon October's Volatile Markets Hit Pension Plan Funding
Russell Investments

"On October 1 alone, the representative plan funded status fell more than 1%. By October 10th, it was down to 81.1%. It dipped below 80% the following week before closing October 17th at 80.7%. Volatile funded status can, of course, be the result of volatile asset values or the result of volatile liability values. In this case, it's been the liability values that have been the bigger factor, something that may be a little surprising given the big movements in the equity market so far this month."
arrow icon ISS Seeks Comments on Proposed Changes to Proxy Voting Guidelines
Schiff Hardin

"Two of the proposed changes are applicable to U.S. companies -- one to revise the methodology used when evaluating shareholder proposals to require an independent board chair, and one to implement an 'Equity Plan Scorecard' for evaluating equity plans. The comment period is open until 6 p.m. EDT on October 29, 2014."
arrow icon Chief HR Officers Give Negative Reviews to ACA's Impact on Employee Health Care
Wolters Kluwer Law & Business

"Fifty-two percent of the Chief Human Resource Officers (CHROs) responding to the survey reported that, as a direct result of the ACA, they have raised employee contributions toward health insurance. Eleven percent have cut back coverage eligibility, but few have moved employees to either private exchanges (1 percent) or public exchanges (.5 percent)."
arrow icon Social Security Benefits to Increase in 2015 (PDF)
Buck Consultants at Xerox

"The Social Security taxable wage base will increase in 2015 to $118,500, up from $117,000 in 2014. The Medicare payroll tax rate of 1.45% will continue to apply on all wages in 2015.... The average of total wages for 2013 (the most recent year) is $44,888.16.... For 2015, the primary Social Security monthly benefit formula will be 90% of the first $826 of [Average Indexed Monthly Earnings], plus 32% of the next $4,154, plus 15% of any excess over $4,980."
arrow icon Knowledge of Annuities Boosts Ownership
LIMRA Secure Retirement Institute

"Peace of mind, stable income and lessening the risk of running out of money in retirement were cited as the top three reasons to create a guaranteed lifetime income among households that owned annuities, as well as those that did not. Among annuity owners, 4 out of 5 said they are a 'good fit' for their financial needs and 70 percent are willing to recommend annuities to friends and family members."
arrow icon How to Maximize Value of Your DC Plan -- Consider These (Non-Decumulation) Strategies (Part IV)
Osler, Hoskin & Harcourt LLP

"Any strategy aimed at maximizing DC plan value should be sensitive to the particular needs and circumstances of plan stakeholders.... [W]here, as is most often the case, the majority of an employer's workforce are not sophisticated investors, pooled, administrator-managed DC investments may be seen as a considerable value-add, increasing DC benefit security. By contrast, this strategy may be viewed as overly 'paternalistic' to participants in an institutional investors' DC plan."
arrow icon More States Recognize Same-Sex Marriages But No Mandate Yet for Self-Funded ERISA Plans to Extend Coverage to Same-Sex Spouses

"Although states may have insurance, domestic relations, and nondiscrimination laws that require recognition of same-sex marriages, ERISA preemption appears to invalidate those requirements as they would apply to a self-funded ERISA plan. Plan sponsors choosing an insured plan might not have a choice, because of the way these laws impact insurers."
arrow icon Verizon Wins Challenge to Pension Transfer; Fifth Circuit Says Investment Guidelines Need Not Be Disclosed
Bloomberg BNA

"The court rejected claims that a Verizon spinoff ... violated [ERISA] by failing to turn over its pension plan's investment guidelines. Instead, the court found that these documents weren't binding on the plan and therefore didn't qualify as formal plan instruments subject to ERISA's mandatory disclosure requirement. The court's ruling specifically left open the possibility that binding investment guidelines could be subject to mandatory disclosure in another case." [Murphy v. Verizon Communications, Inc., No. 13-11117 (5th Cir. Oct. 15, 2014) (unpublished)]
arrow icon Your Roth IRA Calculator May Be Lying to You
Slott Report

"How many people, after running such a calculation and determining it was advisable to opt for the traditional IRA, actually put aside the amount of money they would have used to pay the tax on the conversion and invest it in a similar manner? Would/do you? Each and every year?"
arrow icon Updated GAO Report: Preliminary Information on IRA Balances Accumulated as of 2011
U.S. Government Accountability Office [GAO]

"In 2014, the federal government will forgo an estimated $17.5 billion in tax revenue from IRAs. Congress limited annual contributions to IRAs to prevent the tax-favored accumulation of unduly large balances, but concerns have been raised that tax benefits accrue primarily for higher income individuals. This statement provides preliminary observations based on ongoing work on information on IRA balances in terms of reported fair market value aggregated by taxpayers. GAO analyzed 2011 IRS statistical data." [Originally released Sept. 16, 2014; reissued Oct. 22, 2014.]
arrow icon Employers Looking at 'Skinny' Health Plans to Avoid ACA Penalties
The Wall Street Journal; subscription may be required

"[S]ome benefits administrators are pitching somewhat-less-skinny plans that they claim protect employers against the $3,000 penalty as well -- by meeting the law's standard of covering at least 60% of the cost of health care. Yet one such 'minimum value plan' that is being sold to employers still lacked coverage for inpatient hospital treatments, procedures at ambulatory surgery centers or most maternity care[.]"
arrow icon Proposed Bankruptcy Fairness and Employee Benefits Protection Act of 2014 Would Place Significant Restrictions on Employers in Bankruptcy
Thompson Coburn

"Various changes to the Bankruptcy Code would place greater restrictions on corporations going through a bankruptcy by limiting reductions in the compensation and benefits of employees and retirees, requiring funding of retiree health benefits in excess of that approved by the bankruptcy court, increasing the amount of unpaid wages that receive priority treatment, limiting payments and bonuses to insiders, and forcing employers to continue funding pension plans after filing for bankruptcy protection."
arrow icon District Court Determines that Employer's FMLA Notice Sent by Email is Not Reliable
FMLA Insights

"[T]he court noted that the FMLA regulations only require that the employer provide the employee oral notice of the need to provide recertification. The court apparently found this method to be the most desirable, since it guarantees person-to-person communication. (Of course, the court glosses over the fact that this method sets up a he-said/she-said situation virtually every time.) As to FMLA notice sent by email, the court framed it up this way: ... 'The transmitting of an email, in the absence of any proof that the email had been opened and actually received, can only amount to proof of constructive notice.' And with that quick stroke, the court refused to dismiss [the employee's] FMLA claims." [Gardner v. Detroit Entertainment, LLC dba MotorCity Casino, No. 12-14870 (E.D. Mich. Oct. 15, 2014)]
arrow icon Text of Social Security Announcement of COLA and Taxable Wage Base Amounts for 2015
U.S. Social Security Administration [SSA]
10/22/2014 [Official Guidance]

"The 1.7 percent cost-of-living adjustment (COLA) will begin with benefits that more than 58 million Social Security beneficiaries receive in January 2015.... [T]he maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $118,500 from $117,000. Of the estimated 168 million workers who will pay Social Security taxes in 2015, about 10 million will pay higher taxes because of the increase in the taxable maximum."
arrow icon Ebola and the FMLA
Benefits Bryan Cave

"[W]hat about the employee who is exposed or potentially exposed to Ebola, and, as a result, is requested or required -- or even just volunteers, based on potential exposure -- to be in quarantine? And what about employees who have not been exposed but who are fearful of contracting Ebola in the workplace and refuse to come to work?"
arrow icon What's an Employer to Do with Marketplace Notices?
Mintz Levin
10/22/2014 [Guidance Overview]

"Some employers may get hundreds, even thousands, of Section 1411 Certifications, many of which may relate to variable hour employees who have not yet reached (and may not ever reach) full-time status.... While the reporting rules are designed to recognize these employees for purposes of the assessable payment calculations, the process may not work perfectly. Thankfully, an employer may wait until the IRS contacts them to inform them of their potential liability to explain why a tax is not owed with respect to one or more employees. Thus, an employer may -- but is not obligated to -- appeal each and every Section 1411 Certification as it is received. Or, to put it another way, the employer is not prejudiced for failing to engage in the initial appeals process under Code Section 36B."
arrow icon Saving for Retirement Is Not Happening for a Third of Middle Class
Wells Fargo

"While a majority of middle-class Americans say that they are not sacrificing a lot to save for retirement, 72% of all middle-class Americans say they should have started saving earlier for retirement, up from 65% in 2013.... 56% say they would give up treating themselves to indulgences like spa treatments, jewelry, or impulse purchases; 55% say they'd cut eating out at restaurants 'as often'; and 51% say they would give up a major purchase like a car, a computer or a home renovation. Notably, fewer people (38%) report that they would forgo a vacation to save for retirement."
arrow icon The Misleading Arguments of Those Who Fight Against Public Sector Pension Reform
10/22/2014 [Opinion]

"Those who fight against pension reform ... continue to claim public sector pension benefits average only around $25,000 per year, ignoring the fact that pension benefits for people who spent 30 years or more earning a pension ... average well over $60,000 per year. Public safety unions still spread the falsehood that their retirees die prematurely, when, for example, CalPERS own actuarial data proves that even firefighters retire today with a life-expectancy virtually identical to the general population. Propagandists who oppose urgently needed reform should recognize that pension reform is bipartisan, it is a financial imperative, and it is a moral imperative."
arrow icon 71% of Obamacare Signups Traced to Expansion of Medicaid
Melissa Quinn, in The Daily Signal

"In the states that adopted and implemented Medicaid expansion under Obamacare, enrollment skyrocketed as an additional 5.7 million Americans signed up for coverage. In 21 states opting out of Medicaid expansion, however, enrollment was strikingly lower.... 355,674 Americans signed up for Medicaid in those states. In all, Medicaid enrollment increased by 6 million individuals for the first half of 2014."
arrow icon Financial Independence in Lieu of Retirement, and Other Phrases That Should Be Banished from Retirement Planning
Michael Kitces in Nerd's Eye View
10/22/2014 [Opinion]

"[T]he focus of generating retirement spending from retirement 'income' creates ... unnatural distortions, as retirees potentially stretch for income (especially in low-yield environments!), introducing new risks, and possibly confusing appealing-sounding retirement 'income' products that are actually just returning principal ... If we talk about retirement 'cash flows' instead, and move away from an income-centric conversation, it opens the door to looking more holistically at the retirement portfolio and how it can support retirement spending. But perhaps the most crucial change in our language of retirement planning is simply to rename 'retirement' itself."
arrow icon Five Things to Tell 401(k) Participants About Volatile Markets
Lawton Retirement Plan Consultants

"Plan Sponsors and their investment advisors should help participants remain calm during these periods of intense market fluctuations by sharing the following: Don't stop contributing.... Don't make significant changes in your account.... There is always help.... Stick with your plan.... Volatile markets do not last forever."
arrow icon Are Out-of-Plan Annuitization Options Overlooked?

"Offering an annuity in-plan sounds like such an elegant idea because it would be an easy way for DC participants to transition almost seamlessly into a predictable lifetime income stream. In reality, however, there are several obstacles to providing in-plan annuity options that make plan sponsors hesitant to include them, such as fiduciary oversight, the long-term nature of guarantees, and low participant usage."
arrow icon Understanding the Qualified Health Plan Federal Exchange Participation Agreement
Health Affairs
10/22/2014 [Guidance Overview]

"The agreement expressly recognizes that QHP insurers have developed their products based on the assumption that advance premium tax credits and cost-sharing reduction payments will be available through the marketplace and that QHP insurers could have cause to terminate the agreement if this assumption ceases to be valid. This could be interpreted as a reference to the Halbig/King litigation which currently threatens the availability of tax credits and cost-sharing reduction payments through the FFE, but could also have been included in recognition of the likely Republican takeover of the Senate and the possibility that the Republicans may accomplish through budget reconciliation or otherwise their longstanding goal of repealing the ACA."
arrow icon Few Self-Insured Plans Will Avoid Paying ACA Reinsurance Fee
Thompson SmartHR Manager

"[S]elf-insured plans will lose the exemption if the plan uses a TPA for even one of four core claim-paying and adjudication functions. These include: [1] repricing claims; [2] sending out explanations of benefits; [3] cutting checks for providers; and [4] negotiating provider discounts. Nov. 15 is the deadline for submitting information and scheduling payments for the fee. The payments are not due on Nov. 15, but employers must upload their information by that date."
arrow icon IRS Issues Favorable Guidance on After-Tax Rollovers
Towers Watson
10/22/2014 [Guidance Overview]

"Starting in 2015, participants can avoid current taxes on retirement plan distributions that include after-tax amounts. The rules apply to defined benefit, defined contribution, 403(b) and governmental 457(b) plans. Until now, participants had to allocate pro rata portions of pre-tax and after-tax contributions to each direct rollover."
arrow icon Higher Education Institutions Implement Changes to Improve Retirement Readiness of Employees
Transamerica Retirement Solutions

"Higher Education institutions are responding to the shifting retirement landscape by adopting practices more commonly seen in the corporate sector, such as working with plan advisors, monitoring the retirement readiness of employees, implementing automatic enrollment features and streamlining retirement plans[.]"
arrow icon New California Paid Sick Leave Law May Cause Headaches for Employers
Ford & Harrison LLP
10/22/2014 [Guidance Overview]

"The new law requires any employer -- however large or small -- to provide most of their employees with at least three paid sick days. The law provides any employee who works at least 30 days in California within his or her first year of employment with paid sick leave, regardless of whether the employer is located in California or where the employee resides. While there are exceptions to the new law, the exceptions are very narrow."
arrow icon To Have an Expert or Not: The Fiduciary's Quandary
Fox Rothschild LLP

"[A] fiduciary is not required to substitute their own knowledge for that of another if the fiduciary has a certain skill.... [T]he process of selecting and relying on an expert requires a fiduciary to go deeper than simply selecting someone who claims to know more than the fiduciary.... The due diligence of investigating and selecting someone who does in fact have an expertise defines whether a fiduciary can rely on the advice. Simply put, you can't rely on an expert if you have not first determined them to be an expert and that is only done through investigating their qualifications."
arrow icon PBGC Topics for Single-Employer Pension Plans (PDF)
Morgan Lewis

39 presentation slides. Topics include: [1] PBGC and legislative initiatives regarding 4062(e) and plant shutdown liability; [2] PBGC's early warning program and involvement in corporate transactions, including financings and capital restructurings; and [3] Plan termination issues in voluntary bankruptcies.
arrow icon Mortality Assumptions in Benefit Obligations: Effects of Anticipated New Mortality Tables (PDF)

"For companies with significant defined benefit pension and OPEB obligations, longer life expectancies could significantly increase the reported value of those obligations. And, for companies that immediately recognize the impact of changes in actuarial assumptions at the measurement date, that improved mortality experience could have a significant impact on fourth quarter results of operations."
arrow icon How the Supreme Court Could Still Wreak Havoc on Obamacare
The Washington Post; subscription may be required

"If you have Obamacare without the subsidies, it would essentially wreak major havoc on the individual insurance market ... Premiums would be 43.3 percent higher on average in the individual market in 2015, while enrollment -- on and off the exchanges -- would drop by 68 percent ... In all, 11.3 million fewer Americans would have health insurance[.]"
arrow icon Venue Selection Clause in Retirement Plan is Enforceable in the Sixth Circuit
Practical Law Company

"Although a majority of the courts that have considered the issue have found venue selection clauses in an ERISA-governed plan to be enforceable, the Sixth Circuit is the first circuit court to consider the issue. Plan administrators should keep this in mind as they consider whether to add a venue selection clause to a plan. A venue selection clause may enable the plan to have a single body of law applied to the plan, creating legal consistency and administrative ease for the plan administrator." [Smith v. Aegon Companies Pension Plan, No. 13-5492 (6th Cir., Oct. 14, 2014)]
arrow icon Frequently Asked Questions About the 401(k) Plan System
Investment Company Institute [ICI]

"How large are 401(k)s? ... How many Americans have 401(k)s? ... How did 401(k) participants fare through the financial crisis and economic recession? ... What role do mutual funds play in 401(k) plan investing? ... What role do retirement account investments play in the mutual fund industry? ... What is the average 401(k) plan account balance? ... How have 401(k) participants allocated their investments? ... Does age affect a 401(k) participant's asset allocation? ... How many participants borrow against their 401(k)s? ... What is the average outstanding loan balance through 401(k) plans?"
arrow icon An Actuarial Perspective on the 2014 Social Security Trustees Report (PDF)
American Academy of Actuaries

"The total change in the projected tenth-year trust fund ratio was a decline of 18 percentage points. The majority of the expected decline is caused by moving the Short-Range Estimate period one year forward. Changes to the OASI trust fund ratios ... : [1] Moving the Short-Range Estimate period forward one year (reduced ratio by 15 percentage points); [2] Changes in economic data and assumptions (reduced ratio by 2 percentage points); and [3] Methodology changes (reduced ratio by 1 percentage point)."
arrow icon Text of CMS Proposed Federal Funding Methodology for Basic Health Program, for Program Year 2016
Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services
10/22/2014 [Official Guidance]

"This document provides the methodology and data sources necessary to determine federal payment amounts made in program year 2016 to states that elect to establish a Basic Health Program [BHP] under the [ACA] to offer health benefits coverage to low-income individuals otherwise eligible to purchase coverage through Affordable Insurance Exchanges.... We propose that the total federal BHP payment amount would be based on multiple 'rate cells' in each state. Each 'rate cell' would represent a unique combination of age range, geographic area, coverage category ... household size, and income range as a percentage of [federal poverty level].... [We] would develop BHP payment rates that would be consistent with those states' rules on age rating. Thus, in the case of a state that does not use age as a rating factor on the Exchange, the BHP payment rates would not vary by age."
arrow icon Ten Mistakes That May Trigger a 401(k) Plan Audit
Employee Benefit News

"[1] Missteps with the plan's eligibility requirements.... [2] Misinterpretation of the vesting period.... [3] Violation of break-in-service rules.... [4] Errors in calculating employee contributions.... [5] Miscalculations for profit-sharing contributions.... [6] Mismanagement of employee requests.... [7] Late or inconsistent payment of employee deferrals.... [8] Increasing forfeiture accounts.... [9] Improper tax withholdings when employees take distributions.... [10] Confusion over service provider contracts."
arrow icon 2015 Marketplace Forecast for North American Insurance Buyers

"In the Employee Benefits space, Willis predicts rate increases holding at 5-6% for organizations with self-insured plans and 9.5-10.5% for insured plans. Possible cost savings from marketplace options such as public and private exchanges are balanced for the moment by the steadily rising cost of treating widespread chronic disease conditions, increased costs and prevalence of specialty drugs and expenses associated with health care reform."
arrow icon PBGC Issues Guidance on HATFA's Effect on 4010 Reporting
Practical Law Company

"In some cases, a filer may no longer be required to submit the actuarial valuation report or the 4010 filing for the next information year because of the retroactive application of HATFA. These filers are not required to submit the actuarial valuation report or an explanation of why the 4010 filing is not required."
arrow icon New York State Department of Health Releases Long-Awaited Proposed Regs Authorizing Formation of ACOs (PDF)
Epstein Becker Green
10/21/2014 [Guidance Overview]

"The Commissioner of the New York State Department of Health will issue Certificates of Authority (COA) to entities that satisfy the regulatory criteria for ACOs. Among the ACO criteria are the existence of stated mechanisms for governance, accountability, and the distribution of funds. An ACO must have a plan for coordination of care to assure that all medically necessary health care services are available to and used by the patient, including evidence-based treatment initiatives and strategies for patient engagement. The regulations specify standards for the ACO's quality management improvement program, including a process for peer review."
arrow icon IRS Permits Puerto Rico-Qualified Plans in U.S. Group Trusts, Extends Deadline for Certain Puerto Rico Spin-Offs
McDermott Will & Emery
10/21/2014 [Guidance Overview]

"Revenue Ruling 2014-24 now makes it clear that Puerto Rico-only plans may continue to pool assets with U.S.-qualified plans in group trusts now and in the future. The ruling provides certainty for Puerto Rico plan sponsors who may continue to invest plan assets in group trusts and seek out new group trust investment options. The rule also provides certainty for institutional investors and trustees, who may now continue to permit Puerto Rico-only plans to participate in U.S. group trusts and not face potential disqualification of the participating U.S. plans and trusts. The ruling will make it easier for plan sponsors to continue to maintain or establish Puerto Rico-only plans and avoid the administrative and tax complications that can result from having a dual-qualified plan."
arrow icon Can Public Sector Defined Benefit Plans Survive?
Money Management Intelligence

"Despite many politicos' vow to introduce extensive reforms that will address the needs of state and local pension plans, the switch from defined benefit to defined contribution might now be irreversible based on one key figure: The average funded ratio of public pension systems has dropped from 90% in 2004 to 71% in 2013.... According to Census Bureau data, in 2012 there were about 4,000 state and local government public employee retirement systems, with approximately 19.6 million active and inactive members. But retirees were 9 million. At that rate, with almost one-third of the public worker population inactive or receiving benefits and with Baby Boomers ready to retire as well, public pension systems will come under tremendous pressure."
arrow icon M&A Snapshot: Retention Awards at Acquired Companies (PDF)
Towers Watson

"[The authors] looked at U.S.-based public companies involved in 181 acquisitions with a transaction value greater than $1 billion between the beginning of 2010 and the end of March 2014.... [The] review identified 69 companies (39% of all acquired companies during this period) that offered some form of retention award to employees and/or executives prior to the close of the deal.... While primarily made in cash, award designs vary from broad-based programs to single awards made to one or more executives heavily involved in the transaction or key to the success of the business. Many companies used a maximum bonus pool from which to make grants, while other awards were determined on an individual basis."
arrow icon House Approves Health Care Bills Before November Elections
Towers Watson

"During a brief September legislative session, the House of Representatives approved a bill defining a full-time employee under the Patient Protection and Affordable Care Act (PPACA) using a 40-hour-per-week standard. Another House bill would allow insurers to sell certain health plans that fail to meet PPACA requirements. Although Senate action is not expected, these provisions could reappear on the legislative agenda in 2015."
arrow icon Health Reform Reduces the Deficit, Contrary to Senate GOP Analysis
Center on Budget and Policy Priorities

"The decline in projected Medicare spending means that health reform provisions that cut Medicare costs directly will save less than previously thought. (A provision that reduces Medicare costs by a certain percentage will save fewer dollars if that percentage cut is applied to a smaller base of costs.) But the Senate Republican analysis lowers CBO's estimate of health reform's Medicare savings to reflect that effect alone, as though not one dollar of the savings from the slowdown in health costs were due to health reform's focus on reducing cost growth in the U.S. health care system."
arrow icon November 1 Deadline for Many Health Plans to Get Health Plan ID from CMS
Solutions Law Press
10/21/2014 [Guidance Overview]

"A self-insured health plan must answer two questions to determine whether it must obtain a HPID. [1] Does it meet the definition of health plan under 45 CFR 160.103? A health plan is an individual or group plan that provides or pays the cost of medical care ... [2] If it meets the definition of a health plan, is it a controlling health plan (CHP)? A CHP is a health plan that controls its own business activities, actions, or policies, or is controlled by an entity that is not a health plan. A health plan is also a CHP if it has one or more sub health plans that it controls by directing the SHP's business activities, actions, or policies."
arrow icon Plaintiffs' Attorney Jerry Schlichter Describes How 401(k) Plan Sponsors Can Avoid a Fiduciary Breach
Fiduciary News

"The sponsor first and foremost must always act with the strict guide that what it does must be based on the standard of one familiar with industry practices, investment management, and financial matters, while acting solely in the interests of plan participants. Following that principle answers many questions that arise. Clearly, sponsors must carefully monitor the performance of advisers and independently determine whether their advice is sound and based on prudent standards. They should never get so locked into a particular adviser, or into a broader business relationship with that adviser and its organization, that they don't question his or her advice."
arrow icon How to Lower 401(k) Costs in a Buyer's Market

"With the growth of online investment education resources -- and the explosion in the use of target-date funds -- the traditional service model is less effective and more expensive than the new alternatives. Savvy plan sponsors are choosing specialized advisory services to meet specific plan objectives as needed, saving money on underused services, and providing a better benefit to employees.... For most small business plans, the simplest solution is to hire an ERISA Section 3(38) professional financial adviser."
arrow icon Overview of 2015 QRS Requirements for QHP Issuers (PDF)
Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS]
10/21/2014 [Guidance Overview]

"QHP issuers offering family and/or adult-only health insurance coverage of any category through the Marketplaces ... must comply with QRS requirements, if they offered coverage during the previous benefit year and meet minimum enrollment criteria.... QHP issuers are required to collect and submit third-party validated QRS measure data that will be used by CMS to calculate QHP scores and ratings."
arrow icon Text of 2015 Quality Rating System and Qualified Health Plan Enrollee Experience Survey Technical Guidance (PDF)
Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS]
10/21/2014 [Official Guidance]

51 pages. "This document provides technical guidance regarding the 2015 beta tests of the Quality Rating System (QRS) and Qualified Health Plan Enrollee Experience Survey (QHP Enrollee Survey). It specifies QRS and QHP Enrollee Survey requirements for Qualified Health Plan (QHP) issuers offering coverage through the Health Insurance Marketplaces ... This document includes the following information: [1] Implementation schedule for the 2015 beta test of the QRS and QHP Enrollee Survey ... [2] Entities that must comply with QRS and QHP Enrollee Survey requirements ... [3] QRS and QHP Enrollee Survey requirements ... [4] QRS scoring specifications and rating methodology ... [5] QRS and QHP Enrollee Survey data preview process ... [6] QHP quality rating information display and marketing use[.]"
arrow icon Text of Health Insurance Marketplace Quality Rating System Measure Technical Specifications (PDF)
Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS]
10/21/2014 [Official Guidance]

181 pages. "This document includes the measure specifications and guidelines for data collection for the 2015 Quality Rating System (QRS) measure set. Qualified Health Plan (QHP) issuers will need to reference this document in order to collect and submit QRS measure data to [CMS] in accordance with the QRS 2015 beta test requirements. The document specifically details the following: [1] QRS measure set.... [2] QRS clinical measure technical specifications .... [3] QRS survey measure technical specifications."
arrow icon 2015 IRS Form 5498 (Draft): IRA Contribution Information (PDF)
Internal Revenue Service [IRS]
10/20/2014 [Official Guidance]

"The information on Form 5498 is submitted to the Internal Revenue Service by the trustee or issuer of your individual retirement arrangement (IRA) to report contributions, including any catch-up contributions, required minimum distributions (RMDs), and the fair market value (FMV) of the account. For information about IRAs, see Pubs. 590 and 560."
arrow icon D.C. City Council Removes Final Obstacle to Enforcement of Sick and Safe Leave Amendments
Jackson Lewis P.C.

"Changes to the Sick and Safe Leave Act (SSLA) include removing a requirement that employees work for one year prior to accruing SSLA leave. Instead, the Act provides that leave starts to accrue on the date of hire and can be used after 90 days. Employees now are eligible to accrue and use leave whether or not they have worked 1,000 hours in the prior 12 months. The amendments also extend the law to cover tipped restaurant employees -- a sea change for the hospitality industry."
arrow icon A New Trend in Reducing Public Pension Obligations Under the Federal Bankruptcy Code?
Pepper Hamilton LLP

"When the [Stockton Chapter 9 bankruptcy] plan confirmation trial continues ... the court likely will consider the following questions, among others: Is the city permitted to continue paying pension benefits in full? Can the city prefer its employees and retirees over other creditors by offering a higher rate of recovery? In other words, does Stockton's plan meet the Bankruptcy Code's confirmation requirements, including that the plan [1] is proposed in good faith and in the best interest of creditors, and [2] properly groups together similar claims and does not unfairly discriminate against certain creditors?"
arrow icon ISS's New Approach to Equity is Better and Worse

"[W]hat was once a beautifully simple and critically flawed up or down vote is now a beautifully complex and differently flawed scorecard ... Overall, the better aspect is that the approach is less didactic than it has recently been. This means a bit more wiggle room to shape your company's approach to suit your objectives. Frustratingly, the things that make this better also make it worse."
arrow icon Are Your Benefit Plans Ready for Ebola?
William Gallagher Associates

"Will Ebola treatment costs be covered by commercial carriers? Maybe.... [M]ost plans include an exclusion of coverage for employees who are traveling abroad on short-term assignment.... Critical illness policies need to have an infectious disease rider included (not standard), and currently, no policies specifically cover Ebola."
arrow icon Absent Initial Showing That It Is a Fiduciary, Employer Is Immune from Breach of Fiduciary Liability Claim Under ERISA
Wilson Elser

"[T]he Fourth Circuit rejected fiduciary breach and equitable estoppel claims, determining that an employer's failure to alert an employee that he was no longer covered under a life insurance plan and the continued acceptance of premium payments constituted administrative, not fiduciary, functions[.]" [Moon v. BWX Technologies, Inc., No. 13-1888 (4th Cir. July 2, 2014)]

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