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Benefits in the News

Older News | May 4, 2016

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Faulty Claims Underlie Federal Legislative Call for Public Employee Pension Reporting
Pensions & Investments
[Opinion]
5/4/2016
"In 2011, a flawed research paper was used as the basis for proposed federal legislation to mandate costly pension reporting requirements on state and local governments.... [T]here was no GAO conclusion that the funds should be expected to run out of money in the foreseeable future. Further, those states the research paper projected to be the first to become exhausted, namely Oklahoma and Louisiana in 2017, are predictably nowhere near insolvency. Yet the bill's sponsor is renewing claims of public fund insolvency, as well as efforts to pass what is again being called the Public Employee Pension Transparency Act."
Private Employer Costs for Pay and Benefits Rose from March 2015 to March 2016
U.S. Bureau of Labor Statistics [BLS]
5/4/2016
"Private employer costs for pay and benefits rose 1.8 percent from March 2015 to March 2016. That compares with a gain of 2.8 percent from March 2014 to March 2015. Wages and salaries increased 2.0 percent from March 2015 to March 2016."
IRS Rule Turns Away UPS Bid for Benefit Cut Changes
Bloomberg BNA
5/4/2016
"According to the rules, a multiemployer plan looking to reduce benefits would first have to cut them to the maximum extent permissible for retirees with employers that withdrew from the plan without paying the full withdrawal liability, or in Tier 1. Retirees with employers with make-whole agreements (Tier 3) could face cuts, but they would have to be equal to or less than decreases for all other plan participants (Tier 2).... The rules didn't mention UPS by name, but address its make-whole agreement after it left the Central States fund in 2007 ... UPS [had] argued in written comments and at a hearing that benefits in tiers 1 and 2 would have to be cut to the maximum extent possible before those benefits in Tier 3 could be cut."
Some Annuity Execs Say DOL Rule Prevents Independent Agent Sales
InsuranceNewsNet.com
5/4/2016
"An insurance company executive at one of the top fixed indexed annuity sellers cast doubt on an insurance company's ability to police and supervise independent agents selling financial products into retirement accounts.... Other companies have said they are backing away from selling FIAs in the qualified market through independent agents because of the liability without the ability to supervise independents.... The exchange underscores the uncertainty among some insurance executives about their respective insurance companies' duties and responsibilities with regard to supervising the sale of annuities and other financial products by independent agents."
Shifting Davis-Bacon Dollars into a Qualified Plan
Retirement Management Services
5/4/2016
"Plan Design Considerations: [1] Davis-Bacon dollars can be applied toward minimum requirements for some coverage and nondiscrimination tests required in the plan. [2] The ability to make healthier contributions on behalf of management because higher contributions are being made to the plan for the hourly workers. [3] Davis-Bacon dollars must be immediately 100% vested. [4] The Employer can offset the company's profit sharing contribution for each participant by the amount of the Davis-Bacon contribution deposited for each participant."
Q&As on the DOL Rule: Product Impact
fi360
5/4/2016
"Are group annuities (whether they are registered or unregistered) covered under 84-24 or would they need to comply with BICE? ... Any specific mention of liquid alternatives, specifically? Is increased scrutiny applied based on an asset class/type, or will strategy, track record, and risk management be considered in the best interest decision of ERISA and non-ERISA accounts? ... Will the new ruling cause agents who sell equity-indexed annuities to get the Series 65 (IAR) license?"
Have You Reviewed Your Employee Handbook for ACA Compliance?
Mintz Levin
5/4/2016
"While employers are undoubtedly already fatigued by ACA compliance, there are several reasons to take on this exercise. [1] The handbook can be used to help document an 'offer of coverage.' ... [2] The employer is not in compliance with the ACA, and the handbook reveals that.... [3] The employer IS in compliance with the ACA, but the handbook does not reflect that.... [4] If an employer is audited, the IRS or DOL will probably ask to see the handbook."
How to Use Social Security After the File-and-Suspend Rule Ends
U.S. News & World Report
5/4/2016
"[S]ome people are still eligible to use the restricted application, allowing them to choose between their own or a spousal benefit.... In one option, the spouse with the bigger benefit would start Social Security, and the other spouse would use a restricted application to get the spousal benefit. That would allow the second spouse's own benefit to grow larger until she starts to take it. Or the couple could do the opposite, using a restricted application to start a spousal benefit for the spouse with the larger benefit, allowing the regular benefit to grow even bigger."
Comments on Proposed Regs Regarding the Application of Federal Normal Retirement Age Regs to Governmental Plans (PDF)
National Association of State Retirement Administrators [NASRA], National Council on Teacher Retirement [NCTR], and National Conference on Public Employee Retirement Systems [NCPERS]
[Opinion]
5/4/2016
"[The proposed reg] provides that a good faith determination by the employer will be given deference... It would be helpful to also include a provision that a state or local law establishing a normal retirement age will also be given deference, assuming the law is reasonable under the facts and circumstances and is otherwise consistent with pre-ERISA vesting.... We believe it would be helpful if the preamble to the final regulations noted that these regulations do not affect the application of the 10% penalty rules contained in Code Section 72(t)."
SEC Probes Retirement Advice
Carlton Fields, via JDSupra
5/4/2016
"The SEC has been sending lengthy sweep examination letters to many registered investment advisers (RIAs) and broker-dealers, requesting a broad variety of information regarding retirement plan advice. A form of the letter made public by the SEC includes 75 questions requesting information on advisory client accounts, fees, conflicts of interest, and supervision and compliance controls.... 25 questions pertain to products or services that are 'qualified default investment alternatives' (QDIAs) under [DOL] rules[.]"
Text of IRS Final Regs: Additional Limitation on Suspension of Benefits Applicable to Certain Pension Plans Under MPRA
Internal Revenue Service [IRS]
[Official Guidance]
5/4/2016
19 pages. "One specific limitation governs the application of a suspension of benefits under any plan that includes benefits directly attributable to a participant's service with any employer that has withdrawn from the plan in a complete withdrawal, paid its full withdrawal liability, and, pursuant to a collective bargaining agreement, assumed liability for providing benefits to participants and beneficiaries equal to any benefits for such participants and beneficiaries reduced as a result of the financial status of the plan. This document contains final regulations that provide guidance relating to this specific limitation. These regulations affect active, retired, and deferred vested participants and beneficiaries under any such multiemployer plan in critical and declining status as well as employers contributing to, and sponsors and administrators of, those plans."
Treasury Finalizes Multiemployer Benefit Suspension Regulations (PDF)
Xerox HR Services
[Guidance Overview]
5/4/2016
"[T]he final rule: ...[C]larifies that individual-level contingencies (such as retirement) can be considered for those who had not started benefits before the effective date of the suspension.... [Adds] a floor of 2 percent of the periodic payment determined before the proposed reduction ... Details the steps that must be taken to locate participants whose notices are returned as undeliverable ... The final regulation also adds a new rule that, in appropriate circumstances ... allows a plan sponsor that has withdrawn an application to submit a revised application for suspension that will be subject to a different review process."
Retirement Spending: How Much Can You Afford?
Charles Schwab
5/4/2016
"The 4% rule is a simple rule of thumb, but needs adjustment to fit current market conditions and your situation. To determine retirement spending that you're comfortable with, consider your time horizon, asset allocation and confidence level -- then stay flexible."
Matching Payment Methods with Healthcare Benefit Designs to Support Delivery Reforms
Urban Institute
5/4/2016
"This report analyzes patient-centered medical homes, 'focused factories,' and accountable care organizations to determine which payment methods and benefit designs best align the incentives of providers and consumers to support delivery reform through these models."
What Small Businesses Are Doing to Provide Employees with Essential Retirement Benefits
Vanguard
5/4/2016
"Are participants saving enough now? ... Plan design features can help employees save more.... Auto-enrollment sees 50% higher participation.... 94% set their default option in 2014 to a target-date fund option."
ACT to Submit Determination Letter Recommendations at June Meeting
Internal Revenue Service [IRS]
5/4/2016
"The [IRS] Advisory Committee on Tax Exempt and Government Entities (ACT) will hold a public meeting on June 8, 2016, when the panel will submit its annual report and recommendations to the IRS.... At the public meeting, the ACT subcommittee members will present their report that includes ... analysis and recommendations regarding changes to the Determination Letter program."
FINRA Levies Its Largest VA-Related Fine Against MetLife Securities
InsuranceNewsNet.com
5/4/2016
"[FINRA] has fined MetLife Securities, Inc. (MSI) $20 million and ordered it to pay $5 million to customers for making negligent material misrepresentations and omissions on variable annuity (VA) replacement applications for tens of thousands of customers. Each misrepresentation and omission made the replacement appear more beneficial to the customer, even though the recommended VAs were typically more expensive than customers' existing VAs. MSI's VA replacement business constituted a substantial portion of its business, generating at least $152 million in gross dealer commission for the firm over a six-year period."
Healthcare Benefit Designs: How They Work
Urban Institute
5/4/2016
"All payment methods have strengths and weaknesses, and how they affect the behavior of health care providers depends on their operational design features and how they interact with benefit design.... This report analyzes the nuances of how seven different benefit designs work. These designs include narrow networks, tiered networks, reference pricing, high-deductible health plans, centers of excellence, value-based insurance design, and alternative sites of care."
DOL Glows and Invesco Glowers Over $10 Million Settlement of Alleged ERISA Infraction
RIABiz
5/4/2016
"The Labor Department contends that Invesco violated ERISA rules by hiding plan losses and continued to ensure the fund was trading at $1 even though the fund's net value had fallen below $1 due to the value of the fund's securities holdings. Invesco did not disclose the losses to investors or disclose the steps it took to hide the losses, according to the DOL.... Invesco spokeswoman Jeaneen Terrio insists her firm came to terms with DOL to avoid having the matter distract from broader business concerns."
A Typology of Healthcare Benefit Designs
Urban Institute
5/4/2016
"In this report, [the authors] develop a new typology of benefit designs under two categories -- cost sharing and contingent coverage -- and focus only on designs that have the potential to change consumer behavior and its alignment with payment reform."
HealthCare.gov to Feature Simplified Plans and Pilot Star Ratings
Bloomberg BNA
5/4/2016
"Simple Choice Plans are standardized health plans with uniform deductibles, out-of-pocket limits and standard copayments that are options for insurers to offer.... Health insurers opposed them, arguing that they may inhibit their ability to promote more economical plans, such as those that have narrow provider networks.... And congressional Republicans wrote Andy Slavitt, acting administrator of [CMS], saying they are concerned the policy 'will continue a pattern of allowing Washington bureaucrats to pick winners and losers by propping up plans that meet arbitrary requirements, instead of preserving choice and encouraging consumers to select plans that best meet their unique needs.' "
Can You Amend Your Stock Plan to Allow Tax Withholding Up to the Maximum Statutory Rate?
Winston & Strawn LLP
[Guidance Overview]
5/4/2016
"[A] company could not apply an amendment to allow tax withholding up to the maximum statutory rate unless it applies the change to future accounting for tax deductions attributable to current equity awards and other ASU 2016-09 changes. Companies should double-check with their auditors as to when these amendments should be adopted and applied."
Worse Than It Looks: The True Burden and Risks of Federal Employee Pension Plans in Canada (PDF)
C.D. Howe Institute
5/4/2016
16 pages. "Federal government employees enjoy pure defined-benefit pensions that promise relatively generous benefits to a large current and former workforce.... [M]isleading accounting understates the true burden and risks these plans create for Canadian taxpayers ... To relieve taxpayers of their current sole responsibility for risks in the federal plan, Ottawa would need to switch to a shared-risk, target-benefit model already common in much of the provincial public sector, which calculates benefits with reference not only to salary and years of service but also to the plans' funded status."
April 2016 Pension Finance Update
October Three Consulting
5/4/2016
"Pension sponsors suffered another down month in April on the back of relentlessly lower interest rates. Both model pension plans we track lost ground last month: Plan A slipped 2% in April, and is now down more than 7% this year, while Plan B lost less than 1% last month and is now down more than 3% during 2016[.]"
Traditional and Roth IRAs: A Primer (PDF)
Congressional Research Service [CRS]
[Guidance Overview]
5/4/2016
21 pages. "This report explains the eligibility requirements, contribution limits, tax deductibility of contributions, rules for withdrawing funds from the accounts, and provides data on the account holdings. It also describes the Saver's Credit and provisions enacted after the Gulf of Mexico hurricanes in 2005 and the Midwestern storms in 2008 to exempt distributions to those affected by the disasters from the 10% early withdrawal penalty." [Report No. RL34397, dated Apr. 27, 2016.]
Eligibility and Coverage Trends in Employer-Sponsored Health Insurance
Henry J. Kaiser Family Foundation
5/4/2016
"Between 2000 and 2015, the share of workers covered by health benefits offered by their employers dropped from 63 percent to 56 percent, with some firms not offering coverage and some employees not enrolling when coverage is offered. The biggest decrease occurred among employees working for small firms (3-199 workers)."
Rx Drugs and Telemedicine Maximize Self-Funded Plan Value
Corporate Synergies
5/4/2016
"Virtually all brand name pharmaceutical manufacturers provide rebates to PBMs.... Negotiating with the PBM to pass on these rebates (in whole or in part) to the employer can have a significant impact on lowering prescription spend.... Many insurance carriers who offer self-funded services have recently introduced telemedicine as an option.... The value proposition of telemedicine is that it improves productivity by giving employees immediate 24/7 access to board-certified physicians who can diagnose and write prescriptions for common conditions."
FASB Updates Accounting Standards for Stock-Based Awards
Wilson Sonsini Goodrich & Rosati
[Guidance Overview]
5/4/2016
"Among other changes, the updated standards permit employers to withhold stock for tax purposes upon settlement of stock-based awards -- such as stock options and RSUs -- at up to the maximum individual statutory tax rate without triggering adverse accounting consequences."
More Design Flexibility in Maximizing Benefits for Highly Compensated Employees When the Employer Sponsors Both a DB and a DC Plan
Orrick
[Guidance Overview]
5/4/2016
"[With] an age- or service-based profit sharing formula in [the] defined contribution plan, the combined 'general test' gateway minimums will be more accommodating ... [M]atching contributions of up to 3% of pay will be taken into account for the first time for purposes of the gateway minimums, allowing more of a mix of match and profit sharing in the defined contribution plan while maximizing contributions/benefits to highly compensated participants."
ACA Implementation Round-Up: Insurer Quality Ratings and More
Health Affairs
[Guidance Overview]
5/4/2016
"For 2017, star ratings will only be available in the FFM in five states: Michigan, Ohio, Pennsylvania, Virginia, and Wisconsin.... CMS hopes that the further pilot testing will give it additional time to better ascertain how consumers will use quality reporting, to develop technical assistance and educational tools to facilitate the use of quality ratings, and to allow insurers to measure and improve the quality of their QHP offerings."
Let's Expect Transparency from All, Including the Policymakers
Michael Barry, in PLANSPONSOR
[Opinion]
5/3/2016
"If we can insist on transparency from providers and the mutual fund industry, why can't we insist on transparency -- and integrity -- from policymakers? ... That is, if you're going to pass a fiscally irresponsible highway-spending bill because politicians need it to get re-elected, then admit you're being irresponsible, instead of punishing the (in this case at least) totally innocent DB retirement system with uncalled for and double-counted PBGC premiums. While you're at it, make some obvious and simple reforms to make clear where federal tax money for retirement savings is actually being spent. And finally, craft legislation the financial consequences of which can be clearly measured. In other words: be transparent."
CIGNA Can't Avoid Providers' Claims in Database Lawsuit
Bloomberg BNA
5/3/2016
"Out-of-network health-care providers have ERISA standing to continue with their lawsuit accusing Connecticut General Life Insurance Co. of using a manipulated database to determine their services fees, the U.S. Court of Appeals for the Third Circuit ruled.... [T]he providers argued that their assignments of benefits from participants included the right to sue under ERISA to recover those benefits. CIGNA argued that the assignments were insufficient to confer derivative standing to the providers.... In rejecting CIGNA's argument, the court noted that 'an assignment of the right to payment logically entails the right to sue for non-payment.' " [Franco v. Connecticut General Life Ins. Co. et al., Nos. 14-3395 and 14-3396 (3d Cir. May 2, 2016)]
34% of Employees at Midsize Firms Elect High Deductible Health Plans When Given the Choice
Benefitfocus
5/3/2016
"[T]raditional health plans -- primarily PPOs -- dominate the mix for midsize employers (87 percent), but when given the choice, over one-third (34 percent) of employees selected an HDHP, with millennials over age 26 the most likely to opt in (40 percent). Forward thinking employers -- 13 percent -- now offer at least one high-deductible health plan (HDHP).... [R]egardless of health plan, employees are facing higher out-of-pocket costs, and with copays and coinsurance across both PPOs and HDHPs, the average family could spend nearly 40 percent more on health care in 2016 than food[.]"
TIGTA Report: IRS Verification of ACA Premium Tax Credit Claims During the 2015 Filing Season (PDF)
Treasury Inspector General for Tax Administration [TIGTA}
5/3/2016
"TIGTA's analysis of more than 2.6 million tax returns with a [premium tax credit (PTC)] claim that were filed between January 20, 2015, and May 28, 2015 ... found that the IRS accurately determined the allowable PTC on more than 2.4 million (93 percent) returns. TIGTA is continuing to work with the IRS to determine the cause for calculation differences in 150,385 of the remaining 182,884 tax returns. Computer programming errors resulted in an incorrect computation of the allowable PTC for 27,827 tax returns."
Avoiding the Tragedy of the Commons in Health Care: Policy Options for Covering High-Cost Cures
RAND Corporation
5/3/2016
"[The authors] discuss the risk that strategic behavior by health insurers could unravel the market for curative therapies for chronic diseases. Because the cost of these cures is front-loaded but the benefits accrue over time, insurers might attempt to delay treatment or avoid patients who require it, in the hope that they might change insurers. The authors discuss policy options to remedy this potential free-rider problem through alignment of incentives at the patient level, coordination among payers, and government intervention. They present a framework to analyze policy options and real-world case studies."
Final DOL Fiduciary Rule: Q&As for Employers and Plan Sponsors on Investment Education
Proskauer Rose LLP
5/3/2016
"What is investment advice? ... What are the categories of investment education? ... Does investment education constitute investment advice? ... Does investment education apply past retirement? ... Do employees of a plan sponsor provide investment advice? ... Can a plan sponsor become an investment advice fiduciary by engaging a service provider to provide investment advice? ... How certain can an employer be that educational communications do not constitute investment advice? ... When is the final rule applicable? ... As a plan sponsor, is there anything I should be doing now?"
Businesses Are Opting for Freelancers to Dodge Health Care Fees
Entrepreneur
5/3/2016
"According to a [recent] study ... [the ACA] is leading companies to hire more freelance workers rather than bring on more in-house staff.... Since 2016, health care fees including the tax penalty for having uninsured employees increased because of the act, causing 74 percent of companies to opt for freelance hires instead, the study says. In fact, 60 percent said they planned to hire more freelancers in place of full timers.... And though most companies agreed benefits were the key to attracting desirable employees, nearly one third of them are eliminating their benefit plans because of fees associated with the new health care policies."
PBGC Improvements to Online Premium Filing (MyPAA)
Pension Benefit Guaranty Corporation [PBGC]
[Official Guidance]
5/3/2016
"You may move plans in your account so that your more frequently-used plans show first as Active Plans versus Archived Plans (e.g., on your All Plans Page). All e-filing team members for a plan may retrieve an in-process screen-prepared or imported filing if the person holding the filing is not available to route the filing. The check voucher printed for a screen-prepared or imported premium filing (while you are in My PAA) will typically show the amount due that is on the e-filing."
Online SHOP Enrollment Transition Relief Extended, States Should Plan for 2019
Wolters Kluwer Law & Business
5/3/2016
"State-based Small Business Health Options Programs (SHOP) that have not yet provided online enrollment capabilities are permitted to use direct enrollment for plan years beginning in 2017 and 2018. CMS and the Center for Consumer Information & Insurance Oversight (CCIIO) is providing this extension as a transitional measure, available only to SHOPs that currently use direct enrollment."
The Five Killer Concepts that Most Confuse Retirement Savers
Fiduciary News
5/3/2016
"While professionals can confidently breeze through the retirement landscape, to the casual retirement saver, these five concepts have led to the greatest confusion: How to Save ... How Much to Save ... Inflation ... Investments ... Who do you trust?"
Fee Reductions That Could Be Yours for the Taking, If You Only Ask!
Cammack Retirement Group
5/3/2016
"[A]sking only the plan's recordkeeper is not enough ... Plan sponsors should also ask the fund families directly.... Plan sponsors should confirm with their recordkeeper that any selected proprietary funds are offered with the lowest possible fee structure available to the plan.... Some fund families offer the lower-cost 'recordkeeping share class' fund to former recordkeeping clients, and others offer it to clients that have used the fund for several years.... If the fund company knows that the fund may be removed from the array because a less expensive version is offered, they may be willing to work with you[.]"
Before Teamsters Negotiate Benefit Cuts, They Should Investigate Reason for Pension Plan Failures
Edward Siedle, in Forbes
[Opinion]
5/3/2016
"We, as a nation, have the resources to forensically investigate the reasons pensions fail to provide retirement benefits promised workers. To date, despite the widespread failures, no one seems to care. Forensic investigations of failed plans will both improve the management of existing pensions, as well as signal to Wall Street and other wrongdoers that those who contribute to the demise of a pension will be held accountable."
The Fiduciary Rule Odyssey: Phyllis Borzi at the Helm
InvestmentNews
5/3/2016
"Standing at the center of that narrative is a woman with a hard-shell concept of right and wrong and who was beat back by those who didn't see the black-and-white nature of her ideal. After patching up the battle scars from an early defeat, she regrouped with a powerful duo and conceded to the reality of gray, in one last drive to change the financial advice business forever."
A Framework for Multinational Defined Contribution Plan Governance
State Street Global Advisors, for American Benefits Council
5/3/2016
12 presentation slides. "Build efficient governance structures ... Weigh pros and cons of centralization in investment and other functions ... Define goals and align benefits ... Improve plans' effectiveness for participants."
Another Exciting Day in Washington: Legislators Take Aim at Healthcare
Frenkel Benefits
[Opinion]
5/3/2016
"Republicans are preparing to issue five position papers to spell out their legislative agenda and priorities. One of these concerns healthcare. Speaker Ryan is pushing to finally create a Republican plan to deal with the ACA. We were told the plan would promote health savings accounts, encourage innovation, and protect the doctor-patient relationship. It will also embrace technology and electronic health records. Now the bad news: in place of the Cadillac Tax, this plan will likely contain a cap on the employer exclusion."
Class Actions Will Test DOL's New Fiduciary Rule
LegalNewsLine.com
5/3/2016
"Chris Thorsen [of Bradley Arant Boult Cummings] said the DOL's final rule, while well-intentioned, will more than likely end up hurting investors and attracting plaintiffs attorneys looking for new business.... 'It used to be, when you went and signed up with an investment advisor, you had to sign an arbitration clause,' he explained. 'But now, under this rule, your contract can't have that provision in it. So all of these plaintiffs lawyers who have never been able to aggregate these claims will be able to with the implementation of this rule and that means huge, huge business for them.' "
Empowering Illinois' Pension Reform (PDF)
Diana Furchtgott-Roth, Manhattan Institute for Policy Research
5/3/2016
38 pages. "A minor change to federal bankruptcy law ... would give state legislatures and governors the option to remedy fiscal crises attributable to pension obligations, notwithstanding local laws that prohibit changes to such obligations.... [S]tate legislatures and governors would be authorized to enact pension benefit changes only after determining that funding obligations impair the performance of essential state services; and would publish the basis for their determination, conduct public hearings, and file a proceeding in a bankruptcy court identifying the changes."
Medicare Pays Bonuses to 231 Hospitals with Lower Quality Because of Cheaper Costs
Kaiser Health News
5/3/2016
"[For] the federal fiscal year that ended in September 2015 spending counted for 20 percent of a hospital's score in determining whether a hospital would get a bonus, penalty or regular payment. Under this formula, hospitals with Medicare spending below the median hospital were able to qualify for bonuses even though their quality measures were below the median.... CMS said it would consider revising the program for future years so that hospitals scoring below the national median for quality would not receive a bonus."
Text of CMS Guidance on Policy-Based Payments: Reversal of January 2016-April 2016 Adjustments in the May and June Payment Cycles (PDF)
Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS]
[Official Guidance]
5/3/2016
Unnumbered document, dated May 2, 2016. "Consistent with the March 22, 2016 guidance, all issuers were transitioned to policy-based payments for the April, 2016 payment cycle, and CMS is ending adjustments to the calculated policy-based payment amount to the manual workbook submitted payment amount (except in cases of extreme (>25%) variation) in the May 2016 payment cycle. This guidance sets forth the approach CMS will take to smooth the cash-flow implications of this transition for issuers whose total adjustments for January through April were net-positive."
PBGC Proposes to Reduce Late Premium Penalties (PDF)
Groom Law Group
[Guidance Overview]
5/3/2016
"Under the Proposed Regulation, if a sponsor self-corrects the missed payment, the penalty would be 0.5% per month with a maximum of 25% of the unpaid premium. If PBGC issues a written notice for the premium delinquency, the proposed penalty is 2.5% with a maximum of 50% of the unpaid premium. The Proposed Regulation also provides that penalties could be further reduced for sponsors with a history of timely paying their premiums."
IRS Announces 2017 HSA/HDHP Limits (PDF)
Xerox HR Services
[Guidance Overview]
5/3/2016
"The IRS has released the health savings account and high-deductible health plan limits for 2017. The HSA annual contribution limit for self-only coverage increased over the 2016 limit, but the limits are otherwise unchanged."
Scary Retirement Statistics and Easy Ways Employers Can Help
Lawton Retirement Plan Consultants
5/3/2016
"What employers can do to help: [1] Change the way you educate ... [2] Eliminate leakage ... [3] Automate savings ... [4] Provide investment advice."
Differing Impacts of Market Concentration on ACA Marketplace Premiums
The Commonwealth Fund
5/3/2016
"In New York, premium rates grew faster in areas with greater insurer concentration (i.e., less competition). In California, areas with less insurer competition had slower premium growth, which may be related to the state marketplace's use of selective contracting with a limited number of plans and direct negotiations with plans on premium rates.... In both California and New York, there was higher premium growth in markets with greater hospital concentration."
Can You Amend Your Stock Plan to Allow Tax Withholding Up to the Maximum Statutory Rate?
Winston & Strawn LLP
5/2/2016
"[B]oth the NYSE and NASDAQ require shareholder approval of a material amendment of a plan that provides for stock awards to directors or executives.... From the perspective of the NYSE and NASDAQ, if the Stock Plan allows the recycling of shares surrendered or withheld to pay tax withholding (that is, puts those shares back in the authorized share pool and allows those shares to be re-used for future awards), then an amendment of that Plan that allows for tax withholding at the maximum rate instead of the minimum rate would be material because it will increase the number of shares available for issuance under the Plan!"
DOL Issues Guidance on Interaction Between ACA and Fringe Benefit Requirements Under Service Contract, Davis Bacon and Related Acts
Proskauer Rose LLP
[Guidance Overview]
5/2/2016
"DOL emphasizes that the [ACA] and the SCA and DBRA are independent laws, and government contractors are expected to comply with each of them. In other words, no provision of either set of laws exempts contractors from the obligations of the other. The DOL then goes on to answer a variety of common questions that have been raised."
Kroger, UPS Challenge Central States Reduction Plan
Pensions & Investments
5/2/2016
"Current and former plan participants of Kroger Co., Cincinnati, last week sued the $17.8 billion Teamsters Central States over the rescue plan.... The Teamsters union [had] negotiated a proposal to remove Kroger participants from Central States and create a new plan for Kroger employees, with the company agreeing to absorb the increased withdrawal liability, according to the federal court complaint. Because Central States trustees 'flatly refused to consider' after deliberating for just five days, the plaintiffs are asking the court to order reconsideration of the proposal, to appoint an independent fiduciary to judge the idea and to negotiate an arrangement with Kroger."
12 Counting Methods Employers Must Know When Sponsoring a Health Plan (PDF)
Compliance Dashboard
[Guidance Overview]
5/2/2016
"Employee counts are used to determine what laws, rules, fees, and penalties apply to a health plan and/or the employer sponsor. But the methods for counting employees are as varied as the laws that affect them.... [This article provides] a synopsis of 12 counting methods that employers must utilize to properly administer their health plans ... [including a summary of] these counting methods in a convenient, easy-to-follow chart."
The Thatcherism of State-Sponsored Private Sector Retirement Programs
Prof. Edward Zelinsky, OUPblog
[Opinion]
5/2/2016
"Margaret Thatcher would likely have been uncomfortable with a legally-imposed mandate requiring private sector employers to participate in a state-run pension plan. It is also likely that she would have preferred that the state not compete with commercial pension providers -- though she might have been mollified by the prospect that part or all of these state programs will be outsourced to private firms. However, Margaret Thatcher would probably have viewed state-sponsored private sector retirement plans as stimulating stock ownership by low income employees. This she would have strongly supported."
Connecticut Bill Creating Private-Sector Retirement Accounts Passes
ctpost
5/2/2016
"The Democratic lieutenant governor broke an 18-18 tie in the Senate Saturday, cementing final legislative approval of a measure first proposed several years ago. It now moves to the governor. The bill creates an agency that will establish a Roth individual retirement account program for workers whose employers have at least five employees paid at least $5,000 in the preceding year. The employers will be required to automatically enroll each worker, who can opt out."
PBGC Director: Budget Proposal Passage Would Rescue Agency
Bloomberg BNA
5/2/2016
"The multiemployer insurance program can remain solvent for at least 20 years, however, if the administration's budget proposal is enacted, [PBGC Director W. Thomas Reeder] said. The proposal would give the agency's board of directors the authority to increase premiums from plan sponsors to the aggregate tune of $15 billion over 10 years[.]"
Managing Prescription Drug Plan Costs: Pricing Tricks Employers Should Watch For
Marsh Consulting Group
5/2/2016
"Make sure the PBM contract has minimum pricing guarantees. A PBM that passes the pricing it pays the pharmacies on to you (rather than charging you a higher price than the PBM pays the pharmacies for drugs) is a great way to help ensure the best pricing. Carefully review and negotiate virtually every word in the contract to ensure the PBM will actually deliver the pricing promised. Negotiate generous rights to audit the PBM. Even with a carefully negotiated contract, it's not at all uncommon for PBMs to breach the negotiated contract with complete disregard for its provisions."
Understanding Domestic Partner Health Benefits After Obergefell
Calhoun Law Group, P.C.
5/2/2016
"[M]ost domestic partner health benefits plans today rely on some sort of certification by the employee, rather than state action, to determine who is a domestic partner.... In most instances, employers see a domestic partner benefit as being equivalent to a spousal benefit. However, domestic partner health benefits policies raise a variety of concerns not present in spousal benefits.... [1] Compliance with federal and state nondiscrimination statutes. [2] Defining who is a domestic partner. [3] Federal and state tax concerns. [4] COBRA issues."
Medicaid Managed Care Final Rule: Examining the Alignment with Qualified Health Plan Requirements
Health Affairs
[Guidance Overview]
5/2/2016
"CMS has rechristened standardized plans as 'simple choice plans.' These are plans with standardized benefit and cost-sharing parameters. Although CMS has not yet decided how exactly these plan options will be displayed or described, the blog post does say that they will be displayed prominently in Plan Compare and that consumers will be able to choose to see only standardized plans if they want to compare only these plans."
Simplifying Choices in the Marketplace: Simple Choice Plans and Quality Star Ratings
Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS]
[Guidance Overview]
5/2/2016
"To improve decision making, Simple Choice plans will display prominently in Plan Compare, with clear visual cues that show consumers the plans that are easy to compare vs. the ones that should be researched for differences. Consumers also will be able to choose to only see these types of plans, if they want to quickly compare them."
Q&As on DOL Fiduciary Rule: Plan Sponsor Responsibilities
fi360
5/2/2016
"[T]he new Fiduciary Rule is intended to make it easier for the plan sponsor to identify who is a 'real' fiduciary and who is not.... [To] a large extent plan sponsors are shielded from fiduciary liability as long as they follow a prudent process in selecting and monitoring the advisor's activities.... Sponsors should, at a minimum, review the materials available to employers on the DOL's website ... [and] designate an appropriate staff person to take a fiduciary training course or hire a fiduciary advisor to provide them with an objective overview of the plan sponsor's responsibilities."
IRS Confirms California 'Waiting Time Penalties' Are Not Wages for Federal Income Tax Purposes
Proskauer's ERISA Practice Center
5/2/2016
"A recent IRS information letter confirms that 'waiting time penalties' paid under California law are not wages for federal income tax withholding purposes. Section 203 of the California State Labor Code imposes penalties on employers that fail to pay final wages to terminated employees within a specified period of time.... [T]he guidance clarifies that these penalty payments are not includable as wages for benefit plan purposes under a plan (like a 401(k) or pension plan) that calculates benefits based on 'W-2 income.' "
CMS Releases Revised Transparency Proposal for QHPs
Health Affairs
[Guidance Overview]
5/2/2016
"Insurers may link to existing documents, such as their summaries of benefits and coverage, that provide this information. The general public must be able to access the information, however, without having to log on, create a user ID, or enroll in a plan. This information will be collected on an insurer-level, rather than a plan-level basis, but if policies differ by state or market, insurers must provide 'applicable material.' If policies are changed, the website should be updated within seven days."
Robo-Advisor Movement Is Dying as Growth Rates Crash
Michael Kitces in Nerd's Eye View
5/2/2016
"[T]he combination of rising client acquisition costs and declining average revenue per client may be an outright death knell for the direct-to-consumer robo-advisor movement, as they approach the unsustainable crossover point where the lifetime value of a client, cumulatively, is less than the cost to acquire a single client ... [T]ech-augmented human advisors are rapidly growing past both their robo-advisor and traditional human advisor peers, and an outright 'arms race' of technology is emerging amongst financial advisor custodians and broker-dealers all seeking to be the future platform of choice."
New Incentive Compensation Rules: Implications for Private Equity Firms (PDF)
Debevoise & Plimpton LLP
[Guidance Overview]
5/2/2016
"[T]he Federal Deposit Insurance Corporation and several other agencies have released revised proposed rules to implement Section 956. The proposals released to date preview what are expected to be substantially similar proposed rules coming from the SEC in the near term. The SEC's version of the proposed rules should provide additional detail that would apply specifically to investment advisers -- including advisers to private equity funds and other private funds -- and to broker-dealers. The proposed rules differ significantly from the original rule proposals issued in 2011."
Official DOL Family and Medical Leave Act (FMLA) Poster
Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]
[Official Guidance]
5/2/2016
"All covered employers are required to display and keep displayed a poster prepared by the [DOL] summarizing the major provisions of The Family and Medical Leave Act (FMLA) and telling employees how to file a complaint. The poster must be displayed in a conspicuous place where employees and applicants for employment can see it. A poster must be displayed at all locations even if there are no eligible employees."
Why Bankrupt San Bernardino Didn't Cut Pensions
Calpensions
5/2/2016
"San Bernardino follows the path of previous bankruptcies in Vallejo and Stockton by limiting the main cuts in long-term debt to bonds and retiree health care, while raising taxes, slowly rebuilding reduced services, and leaving pensions untouched.... The San Bernardino disclosure gave the same basic reason as Stockton for not attempting to cut pensions in bankruptcy: Pensions are needed to be competitive in the job market, particularly for police."

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