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Older News | March 29, 2015

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arrow icon Text of IRS Rev. Proc. 2015-27: Modifications to Employee Plans Compliance Resolution System (PDF)
Internal Revenue Service [IRS]
3/27/2015 [Official Guidance]

17 pages. "The modifications to Rev. Proc. 2013-12 reflected in this revenue procedure include miscellaneous changes made to improve EPCRS, such as reducing VCP compliance fees relating to failures to meet the requirements of Section 72(p) with respect to participant loans, and clarifying that for certain Overpayments, as defined in sections 5.01(3)(c) and 5.02(4) of Rev. Proc. 2013-12, a plan may use correction methods other than the correction methods set forth in sections 6.06(3) and 6.06(4) of Rev. Proc. 2013-12. This revenue procedure also requests comments on recoupment of Overpayments.... This revenue procedure modifies, but does not supersede, Rev. Proc. 2013-12."
arrow icon Texas Court Halts Enforcement of New FMLA Rule Extending Leave Rights to Same-Sex Couples
FMLA Insights

"In issuing its order, Judge Reed O'Connor barred the DOL from enforcing the rule pending a final ruling on the merits of the Texas [attorney general's] claim. The ruling raises doubts about whether the DOL will enforce the new rule in the other states not covered by the court's injunction."
arrow icon Text of PBGC Submission to OMB and Comment Request: Reportable Events -- Notice of Failure to Make Required Contributions
Pension Benefit Guaranty Corporation [PBGC]
3/27/2015 [Official Guidance]

"PBGC intends to revise the current forms and instructions to: [1] Require that additional supporting and identifying information be provided ... [2] Require more description of the pertinent facts relating to an event ... and on information being included or missing with filing. [3] Add an information requirement included in the regulation to Forms 10 and 10-A (for change in contributing sponsor or controlled group event). [4] Provide enhanced instructions on the type of actuarial information required to be submitted.... [5] Remove information requirements that PBGC no longer needs or can gather from public sources. [6] Require additional information for certain events ... [and] [7] Require a signature and certification on Form 10 and Form 10-A as to the completeness and accuracy of the contents of the filing."
arrow icon Summary of Quarterly Survey of Public Pensions for 2014: Q4 (PDF)
U.S. Census Bureau

"For the 100 largest public-employee pension systems in the country, cash and security holdings totaled $3,337.1 billion in the fourth quarter of 2014, just short of the all-time-high of $3,365.4 billion set in the second quarter of 2014. Compared to the same quarter 2013, assets for these major public pension systems increased 4.3 percent from $3,200.8 billion."
arrow icon Five Years Old, Going on Ten: The Future of the ACA
The Brookings Institution
3/27/2015 [Opinion]

"It is important now to look ahead, rather than counting up past achievements. What will its tenth anniversary look like? Here are three developments to watch. [1] Will the slow-down in growth of health care spending continue? ... [2] Will employer-sponsored health insurance survive?... [3] Will the health exchanges make private health insurance markets work -- at last?"
arrow icon Text of IRS Announcement 2015-13: Reporting Airline Payment Amount Rollovers Under Public Law 113-243 (PDF)
Internal Revenue Service [IRS]
3/27/2015 [Official Guidance]

"Qualified airline employees who received airline payment amounts should include the full amount on Form 1040 for the year of receipt. Up to 90 percent of the aggregate airline payment amounts may be excluded from income if rolled over to a traditional IRA within 180 days of receipt. To exclude these amounts for 2014, a qualified airline employee must file a paper Form 1040 and include the amount rolled over on line 21 of Form 1040 as a negative amount and write 'airline payment' on the dotted line next to line 2."
arrow icon IRS E-File Form Submission Process for Forms 8947 and 8963 (PDF)
Internal Revenue Service [IRS]

27 presentation slides. "The following ACA-related information reports can be submitted electronically: [1] Form 8963 -- Report of Health Insurance Provider Information; [2] Form 8453-R -- Declaration and Signature for Electronic Filing of Forms 8947 and 8963; [3] Form 8947 -- Report of Branded Prescription Drug Information.... The [ACA Form Acceptance] site can only be accessed by registered users. Users can upload completed ACA Forms and obtain submission status."
arrow icon Senate Delays Vote on Bipartisan Bill on Medicare Physician Fees
Associated Press

"[As] the Senate worked into Friday's pre-dawn hours on a separate budget-balancing plan, leaders decided to wait until after Congress' two-week spring recess to finish the legislation. Senators from both parties have complained about parts of the measure."
arrow icon Ameriprise to Pay $27.5 Million Settlement in 401(k) Fiduciary Breach Suit

"The agreement calls on [Ameriprise Financial Inc.] to continue refraining from receiving payment for administrative services provided to [the 401(k) plan for its employees] other than reimbursement of direct expenses from the plan, to continue paying fees to the record keeper on either a flat fee or per-head basis, provide necessary disclosures of plan fees to the participants and to consider the use of collective investment trusts and separately managed accounts. Most notably, the plan's fiduciary committee for investment selection will not include any member who is an executive with [a subsidiary of Ameriprise:] Columbia Management Investment Advisers or its investment management affiliates.... Ameriprise said that they never had a member who is an executive with Columbia on the fiduciary committee for investment selection[.]"
arrow icon Plan Administrator's 'Second Plan Interpretation' Violates Anti-Cutback Rule
Proskauer's ERISA Practice Center

"The plan administrator had been interpreting the plan terms to provide for an unreduced pension benefit commencing before age 65. In connection with certain plan restatements, a provision was added to the plan to provide for actuarially reduced benefits for those who commenced benefits prior to normal retirement age. The plan's actuaries subsequently informed the plan administrator that paying unreduced pensions jeopardized the plan's tax qualified status. The plan administrator thus informed individuals who had already retired that they could commence benefits, but at an actuarially reduced amount.... The Third Circuit, affirming the district court's decision, held that the plain terms of the pre-amended plan document provided for an unreduced pension." [Cottillion v. United Refining Co., Nos. 13-4633, 13-4743(3d Cir. Mar. 18, 2015)]
arrow icon The ACA After Five Years
Thompson SmartHR Manager

"[T]oday, due to the law, more than 10 million more people have health insurance than did five years ago, partly because of state-based health insurance exchanges selling coverage to individuals, universal issue of individual policies and rules requiring longer coverage of dependents. Exclusions due to pre-existing conditions are prohibited.... On the other hand, the price of health care is still advancing at a rate higher than that of the consumer price index, many companies and individuals have had large premium increases and progress on care coordination under the law remains to be seen, experts say. A number of experts described good and bad impacts caused by the law since it took effect five years ago."
arrow icon Secretary of Labor Says New Fiduciary Rule Will Distinguish Between Investor Education and Investment Advice

"Mr. Perez said the rule would not ban commissions, would contain a 'robust economic analysis' justifying the need for the measure and would draw a clear line between investor education and investment advice.... The regulation will contain so-called prohibited transaction exemptions that would OK certain conflicts, which in addition to commissions might include revenue sharing."
arrow icon Texas Supreme Court Affirms Significant Houston Workers Pension Ruling
Baker Botts LLP

"Following extensive briefing and oral argument, the Texas Supreme Court ... ruled against the city and the handful of employees who had wanted to get early distribution of their pension benefit while continuing to be paid for the same job and also be eligible for a new 401(k) plan benefit." [Klumb, et al. v. Houston Municipal Employees Pension System, No. 13-0515 (Tex. Mar. 20, 2015)]
arrow icon Telemedicine and Employers: The New Frontier
Epstein Becker Green

"[O]nly about 20 percent of U.S. employers offer telemedicine services to employees today, but nearly 40 percent of employers surveyed said that they plan to offer access to such services in 2015, while 33 percent are considering offering access to telemedicine services within the next three years.... Effective use of telemedicine services could eliminate 15 percent of physician office visits, 15 percent of emergency room visits, and 37 percent of urgent care visits. This all results in significant savings to employers that cover any part of the costs of their employees' health care."
arrow icon King v. Burwell: The Supreme Court Hears Case About Health Insurance Subsidies (PDF)
Alston & Bird LLP

7 pages. "The King petitioners argue that the plain text of the statutory provision forecloses the IRS Rule and that there is no basis for rejecting the plain text of IRC Section 36B.... In response, the government focuses on the point that the ACA was enacted to provide quality, affordable health care for all Americans; in accordance with the ACA's purpose, the Treasury Department made tax credits available to eligible individuals in all States through the IRS Rule."
arrow icon TRI-AD Health and Welfare News, March 2015

Topics: [1] Two new events that allow employees to change benefit elections during a plan year; [2] Government opens special enrollment period for federal marketplace (exchange); and [3] More changes to Summary of Benefits & Coverage form.
arrow icon Two States Consider Pension De-Risking Legislation; Insurance Lawmaker Group Adopts Guidelines
Bloomberg BNA

"Lawmakers in two states, Connecticut and New York, are considering legislation that would expand disclosures and protections from creditors for plan participants. And legislators in several other states have expressed interest in developing legislation to deal with pension de-risking issues.... Scott Kaplan, head of Prudential's pension risk-transfer team ... [said the best practices recommendations] are 'a positive step forward to make sure retirees have retirement security, and not only to make sure that they have retirement security, but also to address any other areas where they may be worried about their pension.' "
arrow icon What's in the House Bill to Fix Medicare Payments to Doctors?
Kaiser Health News

"According to a summary of the bill, unveiled by Republican and Democratic committee leaders earlier this week, the current system would be scrapped and replaced with payment increases for doctors for the next five years as Medicare transitions to a new system focused 'on quality, value and accountability.' "
arrow icon Amendment to Require Paid Sick Days Passes Senate with Strong Bipartisan Support
Committee on Health, Education, Labor and Pensions, U.S. Senate

"Senate Health, Education, Labor, and Pensions (HELP) Committee Ranking Member Patty Murray (D-WA) introduced an amendment to the Senate FY16 Budget to expand access to paid sick days. The amendment, similar to the Healthy Families Act Murray introduced earlier this year, would allow workers to earn up to seven paid sick days yearly. The amendment passed the Senate with a strong bipartisan vote of 61-39."
arrow icon 2014 ERISA Advisory Council Report: Issues and Considerations Surrounding Facilitating Lifetime Plan Participation
Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]

"[T]his report provides ideas for plan administrators and plan participants, including communications strategies and plan design options to facilitate lifetime retirement plan participation. The Council recommends DOL develop educational materials for Participants and Sponsors on the value of lifetime plan participation and educate Plan Sponsors on various plan features that may encourage such participation. The Council also makes recommendations with respect to plan loans and development of sample forms to simplify plan rollovers and facilitate consolidation of retirement assets within a plan."
arrow icon 2014 ERISA Advisory Council Report: PBM Compensation and Fee Disclosure
Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]

"After receiving testimony and information from multiple sources, including representatives of PBMs, plan sponsors, plan consultants, plan auditors, pharmacy groups, governmental agencies, and other interested persons, the Council recommends that the Department should consider making Section 408(b)(2) Regulations applicable to welfare plan arrangements with PBMs, and thereby deem such arrangements reasonable only where PBMs disclose direct and indirect compensation, including compensation paid among related parties such as subcontractors, in a manner consistent with current Section 408(b)(2) Regulations. The Council also recommends that the Department should consider issuing guidance to assist plan sponsors in determining whether to and how to conduct a PBM audit of direct and indirect compensation."
arrow icon 2014 ERISA Advisory Council Report: Outsourcing Employee Benefit Plan Services
Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]

"The 2014 ERISA Advisory Council examined the outsourcing of employee benefit plan services with a particular focus on functions that historically have been handled by employers, such as 'named fiduciary' responsibilities. The Council also looked at multiple employer plans or 'MEPs' and their potential role in the outsourcing industry. Through its examination, the Council's intent was to identify areas in which the Department could provide education, outreach, regulatory guidance, and sub-regulatory guidance pertaining to employer's outsourcing of employee benefit plan services. Further, the Council hopes that employers will find its report helpful in understanding outsourcing practices and their underlying legal obligations under [ERISA]".
arrow icon New Areas for 401(k) Lawsuits Emerge

"New areas ripe for suits include failure to promptly follow fee disclosure regulations, arrangements where plan service providers have discretion over fund menus and employee stock ownership plans. Even smaller -- $20 million to $50 million -- plans aren't safe from suits. The trend is highlighted by a series of multimillion dollar settlements involving unreasonably high fees in retirement plans."
arrow icon Key Insights for Alternative Fund Managers Looking to Defined Contribution Plans as a Growth Opportunity
BNY Mellon

"Since liquid alternatives are relatively new and don't come with a decades-long benchmarking history, fact-based education and training will play a central role in their adoption by DC plan fiduciaries, advisors and participants. Education should focus on both the benefits and risks of these investments in a portfolio[.]"
arrow icon Combat Veterans Support Offering Troops a 401(k)-Style Retirement Plan

"The retirement overhaul is one of 15 recommendations from the congressionally mandated Military Compensation and Retirement Modernization Commission.... Under the existing defined-benefit plan, most officers and enlisted personnel who serve 20 years receive annual retirement pay equal to half of their average basic pay over their last three years of service. The panel proposed cutting that figure from 50 percent to 40 percent, in part to fund a 401(k)-like defined-contribution plan for the more than eight in 10 service members who leave the military without getting any retirement benefit."
arrow icon Latest Fiduciary Rule Battle Cry: Broker Ads Mislead Investors
Financial Planning

"The Public Investors Arbitration Bar Association (PIABA) ... an association of attorneys who represent investors, issued a report that claims brokerage firms advertise themselves and their advisors as fiduciaries, yet argue in arbitration cases that they are not to be held to that standard.... The authors of the report argue that the firms' actions underscore the importance of adopting a national fiduciary standard, urging regulators to swiftly implement one."
arrow icon Taking Aim at Tech Industry Inequality, Microsoft Mandates Paid Leave for Contractor Employees
The Washington Post; subscription may be required

"Microsoft is ... requiring all its vendors with more than 50 workers to offer those detailed to Microsoft contracts no fewer than 15 days of paid leave.... Requiring suppliers to offer any level of benefits appears to be at least a rare step for a company of this size, and perhaps an unprecedented one."
arrow icon State Street Finds Pension Funds Willing to Increase Risk Profile
Financial Post

"[T]hree-quarters of [survey] respondents expect to increase their risk appetite. They will do that by 'making a major shift in allocations to less-familiar asset classes such as alternatives to drive growth and meet long-term liabilities.' And the funds will pursue that goal by placing 'big bets on alternatives,' a group of assets that includes hedge funds, private equity, direct loans, infrastructure and real estate."
arrow icon Kentucky Pension Obligation Bond Bill Fizzles Out as Legislative Session Ends
Pensions & Investments

"A bill to help prop up the Kentucky Teachers' Retirement System with $3.3 billion in pension obligation bonds fell apart Wednesday after state lawmakers failed to sign off on the proposal before the legislative session ended. HB 4, which also called for phasing into the full actuarial required contribution rate, passed the House on Feb. 23 but met resistance in the Senate. State senators voted earlier this month to create a task force of legislators to study the funding level and benefits provided by the $18.1 billion Frankfort-based pension fund in lieu of a bond issuance."
arrow icon Penalties and Reporting for Violations of ACA Requirements
McKenna Long & Aldridge LLP
3/26/2015 [Guidance Overview]

"Given the magnitude of the potential excise taxes that could become due under Code Section 4980D, and the possibility of a complete waiver if errors are quickly addressed, you should: quickly determine whether you have any issues with the portability, access and renewability requirements imposed by the ACA on your single employer group health plan(s), especially any medical reimbursement programs or health reimbursement accounts (HRAs), and periodically review your compliance with these requirements to make sure that problems are promptly identified, corrected and reported (if required)."
arrow icon Companies Spend More on Wellness Programs But Employees Leave Millions on the Table
Fidelity Investments and the National Business Group on Health [NBGH]

"[E]mployers will spend an average of $693 per employee on wellness-based incentives in 2015, up from $594 in 2014 and $430 five years ago. Of the 79 percent of employers who offer health improvement programs, larger companies, those with more than 20,000 employees, are spending the most on these programs, where the per-employee average climbed to $878, up from $717 in 2014. The average for companies with between 5,000 and 20,000 workers rose to $661, up from $493 in 2014.... Fewer than half (47 percent) of employees earned their full incentive amount in 2014, while 26 percent earned a partial amount. Together, this translates into millions of dollars of unclaimed incentives."
arrow icon Employer and Worker Contributions to Health Reimbursement Arrangements and Health Savings Accounts, 2006-2014
Employee Benefit Research Institute [EBRI]

"Among the 15 percent of individuals enrolled in a CDHP, 57 percent (or 9.3 million) had an HRA or had opened an HSA, while 43 percent were enrolled in an HSA-eligible health plan but had not opened an HSA.... Among individuals with traditional, employment-based health benefits and a choice of health plans, 35 percent were eligible for an HRA or an HSA-based plan in 2014 ... Two out of 3 workers (67 percent) with an HRA or HSA reported that their employers contributed to the account in 2014[.]"
arrow icon Are America's Pensions in Peril?
Pension Pulse
3/26/2015 [Opinion]

"[P]ension policy in the United States has failed millions of Americans struggling to save enough money and all these conservative think tanks are spreading dangerous myths telling us that DC plans 'offer cost stability for employers, transparency for taxpayers and portability for public employees.' The only transparency DC plans offer is that they will ensure more pension poverty down the road, less government revenue (because people with no retirement savings won't be buying as many goods and services), and higher social welfare costs to society due to higher health and mental illness costs."
arrow icon Lifetime Retiree Health Care Cost Projections Up 6.5%

"A healthy couple retiring at 65 this year will likely spend more than $266,000 on Medicare Part B, which covers doctors' visits and outpatient services, and Part D prescription drug plans as well as supplemental Medigap insurance over their lifetime ... That is up 6.5% from last year's projection ... When expected dental, vision, hearing costs not covered by Medicare, as well as co-pays and other out-of-pocket medical costs are included, lifetime cost estimates increase to nearly $395,000 for a 65-year-old couple retiring this year."
arrow icon High-Deductible Plans Bring Lower Costs Now, But Will They Have Pricey Consequences?
Kaiser Health News

"Consumers with high deductibles sometimes skip procedures, think harder about getting treatment and shop for lower prices when they do seek care. What nobody knows is whether such plans, also sold to individuals and families through the health law's online exchanges, will backfire. If people choose not to have important preventive care and end up needing an expensive hospital stay years later as a result, everybody is worse off."
arrow icon Freezing of Public DB Plans Doesn't Mean Higher Taxes
The Wall Street Journal; subscription may be required
3/26/2015 [Opinion]

"[T]he public-pension industry -- government unions and the various financial and actuarial consultants employed by pension-plan managers -- claims that 'transition costs' make switching employees to defined-contribution pensions prohibitively expensive. Fear of 'transition costs' has helped scuttle past reforms in Pennsylvania, as in other states.... [But] nothing requires a closed pension plan to pay off its unfunded liabilities rapidly, and there's no reason it should. Unfunded pension liabilities are debts of the government; employee contributions are not used to pay off these debts. Whether new hires are in a defined-contribution pension or the old defined-benefit plan, the size of the unfunded liability and the payer of that liability are the same."
arrow icon The Federal Medical Loss Ratio Rule: Implications for Consumers in Year Three
The Commonwealth Fund

"[T]otal rebates for 2013 were $325 million, less than one-third the amount paid out in 2011, indicating much greater compliance with the MLR rule. Insurers' spending on quality improvement remained low, at less than 1 percent of premiums. Insurers' administrative and sales costs, such as brokers' fees, and profit margins have reduced slightly but remain fairly steady. In the first three years under this regulation, total consumer benefits related to the medical loss ratio -- both rebates and reduced overhead -- amounted to over $5 billion."
arrow icon Balancing Compensation Costs (PDF)
H.C. Foster & Company

"Employers tend to view pension and welfare plan benefits costs as added costs rather than as an integral part of an employee's commercial value. One consequence is a growing number of longer-service employees have little hope of meaningful pension benefits when they retire, so may cling to their jobs beyond productive years.... An employee not willing to accept Form W-2 wages that support his commercial value after his pension and welfare benefit costs will not remain with the employer if he finds other work that pays higher direct compensation wages that will be with reduced benefits unless his commercial value is greater to another employer."
arrow icon Explaining Pay for Performance: An Inexact Science, for Now
Towers Watson

"[C]ompany explanations of how pay is linked to performance vary widely -- when they're offered at all. While the prevalence of pay-for-performance discussions in proxy statements increased steadily since Dodd-Frank was enacted in 2010, it appears to have plateaued in the last year. Just over a quarter (27%) of Fortune 500 companies provided some type of pay-for-performance discussion in 2014, which was down slightly from the 28% of companies that included such a summary in 2013."
arrow icon DOL Releases Final Regulations on DB Plan Funding Notices
Towers Watson
3/26/2015 [Guidance Overview]

"The most significant changes in the final regulations address 'material effect events' and delivery to all alternate payees. The exception for plans involved in a standard termination has been expanded. The regulations also include a model notice that has been slightly revised from the models in FAB 2009-01 and the 2010 proposed regulations."
arrow icon Employer Contributions to HSAs Decreasing
United Benefit Advisors

"In 2014, employees saw a 10 percent decrease in their average single Health Savings Account (HSA) employer contribution from the previous year, from $574 in 2013 to $515 in 2014 ... Average family contributions also decreased 7 percent during the same period, from $958 to $890. Survey results reveal a correlation between enrollment in HSAs and Consumer Driven Health Plans (CDHPs), linking higher HSA contributions to increased enrollment in the cost-saving plans."
arrow icon Recurring Proxy Statement Disclosure Issues: Performance Share Reporting
Winston & Strawn LLP

"Nearly every company in America is making at least some of its equity award performance-based. Many have done so for years. In addition to the Form 4 reporting, two other questions ... relating to the unique reporting status of performance shares (or units) are: ... [1] Reporting Performance-Based Awards that Vest on the Last day of the Fiscal Year ... [2] Reporting Performance-Based Awards in the Summary Compensation Table."
arrow icon HHS Finalizes 2016 Reinsurance Contribution Rate and Out-of-Pocket Maximums (PDF)
Buck Consultants at Xerox
3/26/2015 [Guidance Overview]

"HHS also finalized the clarification of the treatment of other than self-only (family) OOPs that was included in the proposed guidance. Under this guidance, an 'embedded' individual OOP is required for family coverage.... High-deductible plans with health savings accounts (HSAs) often apply a single overall family deductible, and/or family OOP maximum, without an underlying or embedded self-only deductible or OOP maximum. That design is no longer allowed, unless the family-deductible and OOP are no greater than the ACA maximum for the self-only OOP ... If the family deductible in 2016 exceeds the self-only $6,850 OOP limit, then an embedded self-only deductible and OOP is required."
arrow icon Questions to Ask a Potential Plan Recordkeeper (PDF)
Retirement Management Services

"In addition to asking the potential new recordkeeper to explain how it will address the problems that the plan is experiencing with the current provider, the plan sponsor should ask to be shown a comprehensive overview of the new recordkeeper's plan sponsor website so that it knows exactly what the screens will look like and what types of on-line reporting functions are available.... When evaluating a potential new recordkeeper, the plan administrator should ask for detailed responses to the following questions[.]"
arrow icon Retirement Plans and Strategies for Small Business Owners and Self-Employed Entrepreneurs
National Association for the Self-Employed [NASE]

"One of the greatest fears as a business owner or a self-employed entrepreneur is the inevitable time at which they will have to step away from everything they have created.... [T]here are quite a number of options for retirement plans, and most [business owners] are not even aware of most of the types of retirement accounts available. In this article, [the authors] discuss the various types of retirement plans and offer insights into a few strategies that are commonly used by small business owners and self-employed entrepreneurs."
arrow icon The Great Fiduciary Debate: Will U.S. Brokers Be Held to a Fiduciary Standard?
Osler, Hoskin & Harcourt LLP
3/26/2015 [Opinion]

"[We] can't count on any regulatory changes actually coming into effect any time soon. What does this mean for plan fiduciaries? If they are following best practices, new rules will probably be a non-event because they will already be getting their investment advice from ERISA fiduciaries.... Plan committees don't need action by a government authority in order to hire these professional fiduciaries and protect themselves. If they all did so, this debate would be moot for 401(k) plans (IRAs may be a different story) because non-fiduciaries wouldn't be consulted."
arrow icon Retirement Assets Total $24.7 Trillion in Fourth Quarter 2014
Investment Company Institute [ICI]

"Total U.S. retirement assets were $24.7 trillion as of December 31, 2014, up 1.7 percent from $24.2 trillion on September 30, 2014, and up 6.0 percent from year-end 2013. Retirement assets accounted for 36 percent of all household financial assets in the United States at the end of the fourth quarter of 2014."
arrow icon Text of IRS Q&As: Reporting Social Security Numbers to Your Health Insurance Company
Internal Revenue Service [IRS]
3/26/2015 [Guidance Overview]

"Q: Why is my health insurance company asking for this information now? A: The new reporting requirement will begin for the 2015 tax year and health insurance companies need advance time to program and test systems to make certain that this new reporting is done correctly and efficiently. Q: Is there a specific [IRS] form that will be mailed to me to provide the information to my health insurance company? A: No. Your health insurance company may mail you a written request which discusses these new rules."
arrow icon Many Families May Face Sharply Higher Costs If Public Health Insurance for Their Children Is Rolled Back
Health Affairs

"Millions of US children could lose access to public health care coverage if Congress does not renew federal funding for the Children's Health Insurance Program (CHIP), which is set to expire September 30, 2015 ... For many children at risk of losing eligibility for public coverage, the primary alternative pathway to coverage would be through their parents' employer-sponsored insurance, yet relatively little is known about the cost and quality of that coverage.... [Estimates] show that many families would face sharply higher costs of covering their children. In many cases, the only employer-sponsored coverage available would be a high-deductible plan."
arrow icon How King v. Burwell Could Harm Us All
The Century Foundation
3/26/2015 [Opinion]

"Although we may not all receive subsidies from the ACA ... the 158 million Americans who receive employer-sponsored insurance still get government subsidies because their health care benefits are tax exempt. This tax break costs the federal government almost $250 billion every year.... So, while many are cheering for cutting down ACA subsidies, they are simultaneously pocketing their own government benefits. In truth, government supports health care at all levels of society, and the nation is greater for it."
arrow icon Plaintiffs Fail to Float Claim Past Federal District Court
Fiduciary Matters Blog

"Unless Congress legislates new law, the [DOL] addresses the question raised by the courts, or the losing plaintiffs appeal to a higher court, it is looking like in most circumstances, float earnings are not considered plan assets.... At this point, a fiduciary must now determine whether it is important to continue the same governance activities of the past or abandon those activities as a waste of time. Of course, under the current short-term interest rate environment float earnings do not amount to much especially for small plans, so the question is where do we go from here?" [In re Fidelity ERISA Float Litig., No. 13-10222 (D. Mass. March 11, 2015)]
arrow icon Health Insurance Premium Credits in the ACA in 2015 (PDF)
Congressional Research Service [CRS]
3/26/2015 [Guidance Overview]

"New federal tax credits, authorized under the [ACA], first became available in 2014 to help certain individuals pay for health insurance. The tax credits apply toward premiums for private health plans offered through exchanges (also referred to as health insurance marketplaces). The ACA also established subsidies to reduce cost-sharing expenses." [CRS Report R43945]
arrow icon Health Plan Features: Implications of Narrow Networks and the Trade-Off between Price and Choice (PDF)

"Research on the impact of narrow networks is limited, but early studies suggest that several factors affect whether narrow network strategies will succeed. These factors include the way networks are constructed, the characteristics of the broader market in which narrow network plans operate, and whether consumers have the knowledge and tools to make informed choices about coverage. Additional research is needed to help policymakers better understand how to define and develop enforceable standards to measure the adequacy of narrow networks. Research can also help identify the quality considerations to be incorporated into the network design process, the development of network adequacy standards, and the type of guidance that can help consumers understand plan differences when making choices among products."
arrow icon It's Prices, Not Coverage
America's Health Insurance Plans [AHIP]
3/26/2015 [Opinion]

"[B]enefit design alone cannot address the outrageous increases in prescription drug prices. Skyrocketing drug prices have a harmful ripple effect throughout the health care system, raising monthly premiums and increasing health care costs for individuals, families, and employers. This is an oft-overlooked point, but a critical one. Affordable health care coverage requires affordable treatments."
arrow icon Health Plan Enrollment Fears Prove Moot

"Across all 600 employers that participated in the survey, the average percentage of employees who were eligible for coverage rose just one percentage point. And the average percentage of eligible employees who enrolled actually dropped a point, from 84% to 83%. That left the average percentage of all employees (both eligible and ineligible) who enrolled in 2015 essentially unchanged from 2014, at 74%."
arrow icon Use E-File for Health Provider Information Form, IRS Advises
Wolters Kluwer Law & Business

"The IRS is encouraging covered entities that are subject to the health insurance provider fee under the [ACA] to submit Form 8963 via e-file.... [T]he IRS notes that e-file reduces the risk of transcription errors and reduces the report processing time. In addition, electronic filers receive immediate acknowledgment of receipt and are able to track submission status online."
arrow icon How Private Exchanges Should Integrate Well-Being (PDF)
Buck Consultants at Xerox, via workspan magazine

"One way that employers can embrace well-being for their employees is by selecting a private exchange with a well-being program that is fully integrated with other benefits services -- one that yields measurable outcomes and addresses all aspects of health (physical, mental and social) and financial well-being. And while companies can certainly integrate well-being using other types of programs, this article focuses on the integration of well-being with private exchanges."
arrow icon Who Can Incur Qualified Eligible Medical Expenses in an FSA, HRA, or HSA?
Kushner & Company
3/25/2015 [Guidance Overview]

"[A] child that files his or her own taxes and has not turned 27 by December 31st may still incur qualified medical expenses against the employee's FSA or HRA for that child. Whether the child is enrolled in college, or is actually enrolled in the employer's group health plan does not have any effect on whether they may incur qualified medical expenses against the employee's FSA or HRA.... For HSA purposes, unlike an FSA or HRA, the rules remain as they were prior to 2010 to exclude a child who is not a tax dependent from having their expenses reimbursed from the HSA."
arrow icon Health, Wealth and Happiness in Retirement: The Impact of Health on Retiree Lifestyles and Satisfaction with Life (PDF)

"Healthcare expenses are higher than what retirees had expected. Pre-retirees are worried about encountering health problems in retirement. Retirees share pre-retirees' sentiment, and they are acutely aware of the increasing cost of healthcare. Retirees are concerned about their ability to manage healthcare expenses in the case of chronic and debilitating illness, including the cost of long-term care.... Retirees are concerned about the potential for health declines in the future and they indicate wanting to avoid placing any burden on their family, particularly their children."
arrow icon Are Retirees Falling Short? Reconciling the Conflicting Evidence
Center for Retirement Research at Boston College

"Federal Reserve data show that retirement preparedness has been declining over time, but studies on the level of preparedness offer conflicting assessments. The National Retirement Risk Index (NRRI) finds half of households are 'at risk,' while studies of optimal savings suggest less than one-tenth will fall short. The optimal savings results depend crucially on two assumptions: households spend less when their kids leave home (the NRRI assumes no decline); and households plan for declining consumption in retirement (the NRRI assumes steady consumption). While the issue remains unsettled, the Federal Reserve data are consistent with the NRRI finding that retirement shortfalls are a growing problem."
arrow icon Longer CEO Lives Spur Pay Growth as Companies Cushion Pensions

"Standard & Poor's 500 Index companies that have filed proxy statements for fiscal 2014 contributed an average $1.5 million to their CEOs' pensions, compared to an average of about $550,000 in 2013 ... Pensions comprised about 11 percent of total CEO pay at those companies, compared to 4 percent in 2013. The ballooning pensions were often triggered by preset agreements on CEO retirement pay, rather than new decisions by boards to give their executives more. Longer lifespans and lower discount rates are forcing companies to add more to their CEOs' pensions to meet return expectations and support future payouts[.]"
arrow icon PBGC Requires Plan Sponsors to Report Risk Transfer Activities (PDF)
3/25/2015 [Guidance Overview]

"For sponsors of plans with calendar year plans, the first filing with the de-risking disclosures is due Oct. 15, 2015. The PBGC's rationale for this new requirement is that there currently is no available comprehensive, detailed, and reliable source for information on risk transfer activities, which can result in substantially reduced premium payments to the agency."
arrow icon Fixed Annuities Post Highest Sales Since 2009
Insured Retirement Institute [IRI]

"Industry-wide annuity sales in the fourth quarter of 2014 reached $56.6 billion, a 0.5 percent decrease from $56.9 billion in the previous quarter and a 4.6 percent dip from $59.3 billion in the fourth quarter of 2013. Despite the slight drop during the quarter, industry-wide sales were up for the full year. Industry-wide annuity sales reached $229.4 billion in 2014, a 3.8 percent increase from $220.9 billion in 2013 and an 8.2 percent increase from $212 billion in 2012."
arrow icon Calculating Retirement Savings Needs by Age, Gender, and Chance of Success (PDF)
Employee Benefit Research Institute [EBRI]

"Given [certain] assumptions ... a single male age 25 earning $40,000 with no previous savings would need a total contribution rate (employee and employer combined) of less than 3 percent per year until retirement (age [65] for a 50 percent chance of success. A 6.4 percent contribution rate would achieve a 75 percent success rate and a 14 percent contribution rate would achieve a 90 percent success rate. But if a male earning $40,000 were to wait until age 40 to begin saving, he would need a 6.5 percent total contribution rate for just a 50 percent chance of success and a 16.5 percent total contribution rate for a 75 percent chance of success; a 90 percent probability of success would be impossible even with a 25 percent contribution rate."
arrow icon Qualified Charitable Distributions from IRAs Have Lapsed Again for 2015 But May Be Reinstated Again: Do Them Anyway!
Michael Kitces in Nerd's Eye View

"[T]he best strategy to handle the uncertainty of whether QCDs will be extended or not is just to do them anyway! At worst, if the rules are not reinstated, the outcome will be no worse than just being forced to take an RMD and making a charitable contribution anyway. However, if the rules are brought back once again, those who make direct charitable distributions from their IRAs will enjoy all the benefits of QCDs... even if the rules are only 'fixed' after the fact!"
arrow icon IRS Employee Plans News 2015-3, March 25, 2015 (PDF)
Internal Revenue Service [IRS]
3/25/2015 [Guidance Overview]

Topics in this issue: [1] Expanded annual actuarial certifications for multiemployer plans due March 31 for calendar year plans; and [2] Automatic approval for change in method due to takeovers of single-employer defined benefit plans.
arrow icon What a New Fiduciary Standard Means for Plan Sponsors
Lawton Retirement Plan Consultants

"All retirement plan sponsors should be working with investment advisors who have signed on to their plans as fiduciaries. If your investment advisor is not a fiduciary, either ask him/her to become one immediately or find a more qualified advisor. There are very few plan sponsors that will be impacted by a change in the fiduciary standard."
arrow icon Ten Myths of Executive Compensation
Meridian Compensation Partners, LLC

"[1] The board and CEO cannot be supportive partners in designing compensation plans.... [2] More pay results in better performance.... [3] We cannot afford to hire or recruit that executive.... [4] We should constantly adjust our compensation plans.... [5] Our compensation plan should look like that of our peers.... [6] Disclosing executive compensation always will backfire.... [7] There is nobody like us, so comparisons don't work.... [8] It is too difficult to set reliable, measurable long-term goals.... [9] Employment agreements are restrictive and will tie our hands.... [10] Compensation is the only reward that matters."

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