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<< Older News   |  January 20, 2017

Benefits in the News


Use of Data and Cost-Benefit Analysis in DOL Decisions Is Top Accomplishment, Borzi Says
Pensions & Investments
Jan. 19, 2017
"Phyllis C. Borzi got the job she 'always wanted' when she took over leadership of [EBSA] in 2009 ... A belief in the value of data helped in the nurturing of what she sees as one her biggest achievements, the conflict-of-interest rule. 'One of the things I am most proud of in the conflict-of-interest rule is the economic analysis.' ... In addition to fighting for more research resources, Ms. Borzi and her EBSA team ... set out to leverage those resources in enforcement to see 'where we could get the biggest bang for our buck. We spent a lot more time looking at service providers rather than individual plans because a service provider can affect hundreds, if not thousands of plans and possibly millions of participants.' "
Franklin Resources Can't Get 401(k) Fee Lawsuit Dismissed
Bloomberg BNA
Jan. 19, 2017
"Franklin Resources Inc. lost its bid for quick dismissal of a lawsuit claiming that it stuffed its workers' 401(k) plan with in-house mutual funds that carried excessive fees and performed worse than competitors' funds... The lawsuit also challenges Franklin's decision to include a money market fund in the 401(k) plan instead of a stable value fund that would have provided 'inflation-beating returns.' " [Cryer v. Franklin Templeton Resources, Inc., No. 16-4265 (N.D. Cal. Jan. 17, 2017)]
The Dallas Pension Fiasco Is Just the Beginning
ValueWalk
[Opinion]
Jan. 19, 2017
"It's tempting to see the generous pension structure and bad investment decisions in Dallas as making it a special case. Detroit was seen by many as a special case when it went into bankruptcy in 2013 as it had seen its population fall by 25% in a decade.... Growing debt and pension obligations are signs of what is to come for many local and state governments who have been living beyond their means for decades."
Why a De-Risking Strategy Is More Important Now
Cowden Associates, Inc.
Jan. 19, 2017
"For some plan sponsors, the prospect of engaging in a pension risk transfer, via the purchase of non-participating annuity contracts for current retirees, or offering a lump-sum window for deferred vested participants, may seem cost-prohibitive. The cost of transferring risk is lower than what many sponsors perceive, as the transaction will generate a long-term savings on expenses that the sponsor would otherwise incur[.]"
Simplicity Is Sophistication When Contemplating Retirement Income (PDF)
MetLife
Jan. 19, 2017
"The core purpose of a DC plan should be to serve as an income source during retirement, according to 85% of plan sponsors who responded to MetLife's 2016 Lifetime Income Poll. In fact, one industry professional has suggested that, 'If the vehicle doesn't have a lifetime income option, it doesn't look like a retirement plan.' ... [This paper examines] the various retirement income products available in the marketplace and, importantly, how plan sponsors can decide which solution or combination of solutions is best suited for their DC plan participants."
New Guidance Restores 1994 ERISA Proxy Voting Interpretation
Morgan Lewis
[Guidance Overview]
Jan. 19, 2017
"IB 2016-1 states that if a fiduciary concludes that there is a reasonable expectation that shareholder engagement on ESG issues is likely to enhance shareholder value, after taking the costs involved into account, a fiduciary can, consistent with under ERISA, take into account ESG impacts in proxy voting and shareholder engagement.... The DOL also sought to lower the threshold for shareholder engagement activities, by changing the standard from the plan fiduciary having a reasonable expectation that such activities 'will enhance the economic value of the plan's investment' to 'is likely to enhance the value of the plan's investment,' restoring the original language of IB 94-2."
DOL Issues Additional FAQs Related to New Fiduciary Rule (PDF)
Sutherland Asbill & Brennan LLP
[Guidance Overview]
Jan. 19, 2017
"[T]he January FAQs primarily focus on the circumstances in which fiduciary status would or would not attach under the Final Rule.... The 35 technical FAQs, after an overview of the fiduciary 'investment advice' definition [FAQ 1], primarily address the operation of the new definition in a variety of specific factual settings, as summarized [in a chart in this article]."
Status Quo for Contraceptive Coverage Mandate Accommodation (PDF)
Conduent
[Guidance Overview]
Jan. 19, 2017
"The Obama administration will retain the current ACA contraceptive coverage mandate accommodation process for nonprofit religious objectors ? but it is unclear how the Trump administration will handle it going forward. While this issue has garnered significant media attention, it does not affect most employer plans subject to the contraceptive coverage mandate."
Understanding Your Retirement Plan Fee Methodology
Strategic Benefit Services
Jan. 19, 2017
"There are two basic retirement plan fee structures: per capita hard dollar fees and fees charged as a percentage of assets. Determining whether to charge per participant hard dollar fees or fees as a percentage of assets is a philosophical decision, with each scenario possessing distinct positive and negative attributes."
Fixed Annuity Sellers May Get Fiduciary Rule Relief
Bloomberg BNA
Jan. 19, 2017
"Much of the exemption looks similar to the finalized fiduciary rule's best-interest-contract exemption ... The DOL said it devised the proposal in response to requests from nearly two dozen insurance intermediaries that contract with independent insurance agents to sell fixed annuities. They sought relief from the rule similar to the BICE. The BICE allows certain investment advice fiduciaries to receive various forms of compensation that, in the absence of an exemption, wouldn't be permitted under the fiduciary rule."
IRS OKs Use of Forfeitures as QNEC/QMAC/Safe Harbor Contributions (PDF)
Conduent
[Guidance Overview]
Jan. 19, 2017
"The proposed regulations [issued on January 18, 2017] would be effective for taxable years beginning on or after publication in final form. However, IRS states that taxpayers may rely on the proposed regulations for earlier periods. If the final regulations are more restrictive than the proposed changes, the final rule will be applied prospectively.... Plan sponsors and their recordkeepers may wish to ensure that current document language supports current operations or, if forfeitures are not currently utilized, revise plans accordingly taking into account this 'new' flexibility."
Text of IRS Notice 2017-14: Individual Shared Responsibility Payment Hardship Exemption (PDF)
Internal Revenue Service [IRS]
[Official Guidance]
Jan. 19, 2017
"An individual meeting the requirements [described in HHS guidance released on August 12, 2016] may claim a hardship exemption on a 2016 Federal income tax return without obtaining a hardship exemption certification for any month or months between July 2016 and December 2016 for which that individual (or qualifying family member) would have been eligible for the [health care tax credit (HCTC)] if he or she enrolled in HCTC-qualifying coverage."
Complying with San Francisco's New 2017 Paid Leave Law (PDF)
ABD Insurance & Financial Services
[Guidance Overview]
Jan. 19, 2017
45 presentation slides. Topics include: [1] Effective date determined by employer size; [2] Which SF employees are covered? [3] How much must employees receive under the SF PPLO -- and who pays? [4] Timing of SF PPL payment difference for birth mothers; [5] Maximum benefit amount; [6] Recordkeeping and notice requirements.
Deadline Around the Corner for Form 1095-C Employee Statements -- Unlikely to Change If ACA Is Repealed
Accord Systems, LLC
[Guidance Overview]
Jan. 19, 2017
"The deadline for employers to furnish the Form 1095-C employee statements is March 2, 2017.... [T]here is not much time left to accurately complete lines 14, 15, and 16, print and address the Forms, and place the Forms in the mail. Predictably, some employers are waiting to see what happens in the opening weeks of President Trump's administration. This could place providers processing these employers' Form 1095-Cs in an impossible position to meet the March 2, 2017 deadline and has only a miniscule chance of being beneficial to the employer."
CRS Report: The Excise Tax on High-Cost Employer-Sponsored Health Insurance -- Estimated Economic and Market Effects (PDF)
Congressional Research Service [CRS]
[Guidance Overview]
Jan. 19, 2017
16 pages. "This report ... evaluates the potential of the Cadillac tax to affect health insurance coverage and the health care market. It also examines the expected incidence (burden) of the tax -- that is, which group's income will be reduced by the tax. Finally, the report discusses implications for economic efficiency in the context of tax administration." [Report R44159, Jan. 12, 2017]
How to Make Your 401(k) or 403(b) Plan a Litigation Target
Cohen & Buckmann, P.C.
Jan. 19, 2017
"[1] Adopt an Investment Policy Statement, then never consult it again.... [2] Don't benchmark your fees or do periodic RFPs.... [3] Load your investment menu with proprietary funds.... [4] Try to do everything in house.... [5] Enter into a revenue sharing arrangement, then fail to monitor payments.... [6] Use multiple recordkeepers and providers.... [7] Set it and forget it, because nobody is complaining.... [8] Don't hold regular committee meetings."
When Plan Sponsors Select Service Providers, Trust Trumps Fees
TriStar Pension Consulting
Jan. 19, 2017
"Know your value proposition and communicate it clearly in your marketing, mission statement, and in meetings with clients.... Offer group meetings for the Plan Sponsors' employees.... Don't shy away from discussing your compensation.... Discuss any needs you have of your client to properly advise them ... Get a list of their priorities ... and offer a broad plan in which you can emphasize these priorities."
Work-from-Home Arrangements as FMLA: 7th Circuit Decision Shows Need for Proper Supervisor Training
Polsinelli PC
Jan. 19, 2017
"Judge Posner reasoned that since the employee had successfully worked from home in the preceding months, the jury's best inference was that the company was angered by her request to stay home. This inference was supported by the HR representative's 'phony line' that she could not use FMLA leave to care for her child, which contradicted the express language of the statute." [Wink v. Miller Compressing Co., Nos. 16-2336, 16-2339 (7th Cir. Jan. 9, 2017)]
Supreme Court Declines to Hear Challenge to Michigan Claims-Paid Tax
McDermott Will & Emery, via Lexology
Jan. 19, 2017
"[T]he Sixth Circuit, had decided, on remand from the Supreme Court, that the Michigan Health Insurance Claims Assessment Act was not preempted by ERISA. The Act imposes a 1 percent tax on all paid claims by insurers or third-party administrators for health services rendered in Michigan to Michigan residents.... On remand, the Sixth Circuit reaffirmed its original decision, finding that nothing in Gobeille warranted overturning its decision. SIIA's attempt to appeal this decision to the Supreme Court was declined on January 9, 2017." [Self-Insurance Inst. of America v. Snyder, No. 12-2264 (6th Cir. July 1, 2016; cert. denied Jan. 9, 2017)]
Six-Month Market Exclusivity Extensions to Promote Research Offer Substantial Returns for Many Drug Makers
Health Affairs
Jan. 19, 2017
"[F]or the thirteen FDA-approved drugs that gained supplemental approval for a rare disease indication from 2005 through 2010, the median projected cost of clinical trials leading to approval was $29.8 million. If the exclusivity extension had been in place, the median discounted financial gain to manufacturers would have been $94.6 million.... Extending market exclusivity would provide substantial compensation to many manufacturers, particularly for top-selling products, far in excess of the cost of conducting these trials."
Interstate Insurance Sales: Wishful Thinking or a Viable Policy Option?
Health Affairs
Jan. 19, 2017
"A provision in [the ACA] allows states to establish what are called 'health care choice compacts,' which permit insurers to sell policies to individuals and small businesses in any state that participates in the compact -- provided they abide by specific rules.... [As] of yet, nothing has materialized. Several explanations point to why ... Whatever the reason or combination of reasons may be, the upshot is that interstate insurance sales are already legal under certain conditions."
Did 2016 Marketplace Consumer Respond to Changes in Gross Premiums or to Changes in Premiums Net of Tax Credits? (PDF)
Assistant Secretary for Planning and Evaluation [ASPE], Office of Health Policy, U.S. Department of Health and Human Services [HHS]
Jan. 19, 2017
10 pages. "A substantially greater fraction of Marketplace enrollees switched plans in 2016 when average premiums increased but benchmark premiums did not keep pace than if premiums did not change.... When average premiums increased but benchmark premiums increased by the same amount, the fraction of Marketplace enrollees that switched plans in 2016 increased by a small amount, consistent with the fact that only a small percentage of enrollees are not eligible for premium tax credits.... These results suggest that consumers primarily respond to net premiums, rather than to gross premiums, when making plan selections in 2016."
ACA's Impact on Small Business Wages and Employment
American Action Forum
[Opinion]
Jan. 19, 2017
"[R]egulations from the [ACA] are driving up health care premiums and are costing small business employees at least $19 billion in lost wages annually. These figures varied by state ... Premium increases ... also significantly diminished the number of business establishments and jobs nationwide. Across the country, small businesses (20-99 workers) lost 295,030 jobs, 10,130 business establishments, and $4.7 billion in total wage earnings."
Environmentalism Provides Moral Cover for New Taxes to Fund Pensions
PensionTsunami
[Opinion]
Jan. 19, 2017
"There are two intertwined themes that define unionized government in California. First, funding government retiree pensions will soak up every new source of tax revenue they will ever collect. Second, cloaking new taxes and fees -- and new agencies -- in the virtuous raiment of environmentalism will deflect criticism and demonize critics."
Supreme Court Declines to Hear Challenge to Validity of Forum Selection Clauses in ERISA Plans
Greensfelder
Jan. 19, 2017
"The U.S. Supreme Court on Jan. 17 ended a yearlong legal challenge to the enforceability of a forum selection clause in an ERISA-governed benefit plan, when the court denied the plaintiff's petition for writ of certiorari. The petitioner unsuccessfully opposed transfer, moved for retransfer and twice sought review of the Eighth Circuit before filing her petition for writ of certiorari with the Supreme Court."

<< Older News   |  January 20, 2017


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