mal

Participant retired in 1988 with a 50% QJSA in favor of his wife (X). At the time of retirement he presented a valid marriage certificate and things were fine for 25 years. Participant just passed away and the retirement payment was reset to 50% and made payable to X. So far, so good. The plan administrator received a call from a woman (Y) who alleges that she was married to the participant in the 1960's and they never divorced. She is asking what benefits she is entitled to from the plan. The QDRO procedures obviously don't address this situation. We are inclined to tell Y that the plan intends to continue to honor the QJSA in favor of X until we receive a domestic relations order that tells us to do otherwise. I know this has come up before, but I cannot find any cases or guidance. Ideas are appreciated.

A money purchase plan contains rules concerning the payment of benefits when a unmarried participant dies and does not have a beneficiary card on file. In January an unmarried participant passed away with no spouse or children. The Plan's default rule in this case is to pay the participant's estate. However, because the participant was young and had limited assets, the family has stated that no estate is expected to be opened. Under applicable state law, the participant's parents would receive the account balance if it went through probate. They are the only ones with any viable claim. The employer is interested in amending the Plan retroactive to the first day of the plan year to modify the distribution rules and add parents and siblings to the list of those who can receive benefits outside of probate. In other words, when an unmarried participant passed away without a beneficiary card the administrator would move down the list-- spouse, children, parents (new), siblings (new), then to the estate. In order to save the parents the expense of opening an estate for a small benefit (> $10k) the employer is willing to make a retroactive amendment. If there were any chance of competing claims we wouldn't do this, but it looks like it will be the easiest way to handle the situation. Any problems with such a retroactive amendment?

The employee is concerned about hospitals and providers pursuing him for claims that may be incurred by his adult child. While they likely have no true legal right to hold him responsible if he doesn't agree, the father is still concerned that he may have to deal with collection calls, referrals to collection agencies, etc. It is a headache he wants to avoid. As of right now the plan document does not provide for any election to drop otherwise eligible children. However, in a divorce situation, we do not allow the spouse to be unilaterally dropped from the plan without a court order.

A self-funded health plan has been properly modified to extend coverage of adult children to age 26. The plan uses a composite rate for coverage, so once an employee gains eligibility the cost is the same for single, two-person or family coverage. Recently an employee asked to drop coverage for a deadbeat adult child. Are there any ramifications to the plan to honor this request? A plan amendment would likely be needed to clarify that the parent has this right, but are there any other pitfalls for consideration? In the past we have denied similar requests for minor children (b/c the parents wanted to keep them on CHIP). Thanks.

I'm posting this in the multiemployer section because I'm not sure anyone else would have any idea what I'm talking about. A Taft-Hartley defined benefit plan changed its accrual formula in 2009 to provide that a certain portion of each hourly contribution rate would be "outside" the accrual formula. In other words, for each $1 in contributions, only $.75 would actually earn the member a benefit. The extra $.25 would support the funding of the plan. This rule was properly put into place for those working under the primary collective bargaining agreement. However, the reciprocal monies received on behalf of those employees who were working out of the area was applied on a dollar for dollar basis. The group is now trying to figure out how to address the situation. Arguably, the plan could be read to be silent on the reciprocal money. Therefore, the easiest path would be to adopt a clarifying amendment, send notice and deal with the issue prospectively. Others would like to go back to 2009 and retroactively change the allocation formula. This seems like it would invite a host of headaches as some folks have already retired, benefit statements have been mailed and 5500's filed. Suggestions?

I know this discussion has come up on the Boards before, but I cannot seem to find it. A DB plan has a participant who will need to take an RMD by April 2013. We have contacted the participant but he absolutely refuses to cooperate with the plan. He will not complete paperwork or return calls. Before wasting half the day researching this, can anyone give me a push in the right direction? How should this be handled by the plan? Thanks in advance.

Section 111 of MMSEA requires group health plans to collect and report information on covered participants/dependents who are or may become eligible for Medicare coverage. A TPA has been performing this task as required but recently came across Social Security Numbers provided by a plan participant that appear to be false. (The Area Numbers are all in the 900's.) Given the penalties for non-compliance the TPA is trying to determine if it has any obligation to report the problem or if should merely pass the reported information along to CMS. Thanks in advance.

The PPA says that any schedule of contributions negotiated between the parties and consistent with a rehab plan are locked in until the expiration of that CBA. Our interpretation is that the actuary will have to update the rehab plan annually, but despite whether progress is being made or not the Board cannot compel an increase in contribution rates. What we are not sure about is if the negotiated rates end up being dramatically lower than required to make scheduled progress. Assume for example the parties negotiated a 5 year CBA, the market tanks and an additional $.50 per hour is needed in each of the next 4 years. The actuary is going to certify the plan is not making progress, but the Board can't compel additional money. After three years of no progress are the employers subject to an excise tax? They are paying the negotiated rates, but could they still be on the hook? It doesn't make much sense.

Assume a group health plan complies with the ERISA regulations and properly denies a claim and subsequent appeal. What options are available to the plan and/or participant if new evidence is discovered (post-appeal) that would have impacted the outcome of the decision? It would seem that the plan may want to reopen the appeal in order to be fair to the participant. On the other hand, it would seem that the plan could be inviting trouble with by reviving a claim that has been properly moved through the claims and appeals procedure-- especially if it involved a claim that would trigger stop-loss reimbursement. Any thoughts would be appreciated.

A building trades union is contemplating a diversion of future contributions from the money purchase plan to their defined benefit plan. The diversion would last 1-2 years and is designed to help support a rehabilitation plan. This would leave the money purchase plan with no contributions (other than reciprocity) for that period of time. I seem to recall that this can create a problem for the MPP and that the IRS may view such action as effectively freezing/terminating the plan. Before I spend the time researching this issue, I thought it may be worthwhile to solicit opinions here. Thanks in advance.

Once a multiemployer plan enters critical status does 305(f)(2) of ERISA prohibit it from making actuarial adjustments to those participants who retire past normal retirement age? If not, can the late retirement increase be treated as an adjustable benefit?

Here is our basic situation: -Calendar year plan certified as critical by the actuary in mid-February -Notice of critical status was mailed on last day of February -A handful of participants already had applications completed and were waiting to retire on March 1 with a Social Security Level Income form of payment. (This form of benefit does not comply with ICR 432(f)(2)(A) or ERISA 305(f)(2)(A) and is prohibited.) -The Annuity Starting Date was March 1 for these retirees. -The applicable statutes indicate that the restrictions on these types of benefit payments becomes effective on the date the notice of critical status is sent. -This group of participants has fallen through the cracks and have been drawing the payments since March. The problem was recently discovered. The Board would prefer to let these retirees continue with the level income payments since they had absolutely no notice that the changes were coming. While the fund complied with the notice rules these particular retirees likely received it a couple of days after they were retired. The November changes to the 204(h) regulations indicate that the plan is deemed to comply with the 204(h) requirements so long as they sent a proper critical status notice. Is there any way to provide relief to these individuals or are the Trustees obligated to reduce their payments?

Assume: 1. DB plan was certified as critical in March 2010 and trustees diligently work to develop a rehabilition plan with default and alternative schedules. The default schedule costs $1.00 per hour, while the alternative schedule is $2.00. 2. This rehab plan is then presented to the bargaining parties before their primary collective bargaining agreement (PCBA) expires. 3. During bargaining over the PCBA the parties agree to provide funding of the alternative schedule. At this point the surcharges stop and the trustees implement the alternative schedule. Many adjustable benefits are saved. 4. A couple of months later a secondary collective bargaining agreement (SCBA) covering a small number of participants expires. During negotiations that group of employers agrees to provide funding of only $1.00 per hour required by the default schedule. 5. Plan participants routinely float between work covered by the PCBA and SCBA. Questions: Under this scenario how is the Board to proceed? The SCBA provides for the money needed under a default scenario, therefore the surcharges would not seem to apply. However, the participants who work under the SCBA are clearly earning a benefit that is not being fulled paid for by the SCBA employers. Moreover, because the work force is fluid, there is no practical way to bifurcate the plan and create a second tier of benefits for those working under the SCBA. I need a push in the right direction. (Regulations would also be nice...)

I sent you a message with text of a memo we put together on this issue.

Wouldn't it be nice if we could get some regulations directed at multiemployer plans? I would agree with you on the extension. The extension process could be viewed as an end-run around the intent of the PPA/WRERA.

Yes, it is legal and required by the IRS. You can't use the money purchase plan as a savings account. There has to be a bona fide event that triggers distribution (e.g. retirement, death, disability or separation from employment). This is a tough call for multiemployer trustees. Is a person who has been laid-off for 6-8 months really separated from the trade?? In all likelihood he is still on a hiring hall list and an active union member. Nonetheless, the 12 month threshold is fairly common. The IRS regulations are clear as mud on this point when it comes to multiemployer plans.

I would agree with the prior response. The statute requires the bargaining parties to adopt a CBA consistent with the terms of the rehabilitation plan.

A multi-employer group health plan received an audit notice from the IRS relating to the COBRA subsidy application. They want copies of the "Request for Treatment as AEI" forms submitted by those eligible for the subsidy. As counsel we reviewed the audit request and assumed that one of the HIPAA exceptions would apply. However, no exceptions appear to cover a general information request that is not accompanied by a summons or subpoena. We also found an IRS memo (2004-034) from the Office of Chief Counsel confirming that plans cannot supply PHI pursuant to a simple information request. (Note that the same information in the hands of an employer is not PHI-- per EBIA and regs). This problem was brought to the attention of the IRS and the agent is attempting to help us work through these issues. However, they are apparently unwilling to issue a subpoena or summons. Instead the plan is being told that if it chooses not to comply, it will lose the subsidy. Their office is apparently being told that the COBRA subsidy applications are not PHI, even though the DHHS preamble to the HIPAA regulations states that enrollment and disenrollment information is PHI. Any great ideas on how to proceed? Is there a HIPAA exception that would allow the group to comply without risk of violating the privacy regulations? The group doesn't want to lose the subsidy, but is also aware that HIPAA enforcement is going to ramp-up next year. It would seem that the Service would need to have some mechanism to deal with this problem. It is not reasonable to ask a GHP to risk violating the HIPAA regulations to collect a subsidy to which it is entitled.

A multiemployer plan is going to be certified as critical and their trustees are not going to use the WRERA option to freeze their funding status. In other words, they are critical. There is a host of secondary information that says any type of accelerated forms of benefit payments must be eliminated. One optional form of benefit offered by this group is a Social Security Level Income benefit. It pays a greater annuity prior to the retiree becoming eligible for Social Security. Once they become eligible, the benefit is reduced. The idea is to give the retiree a stable monthly benefit over the remainder of his life. My reading of ERISA sections 305(f) and 204(G) leads me to believe this type of payment will NOT need to be eliminated. I think the trustees will have the option to cut it (like any other adjustable benefit) but I don't think it is required. The law seems to have carved out a narrow exception for this type of benefit. Agree? Disagree?

Take a look at the abatement regulations. They seem to suggest that the interim withdrawal liability payments between the time the employer left the plan and then reentered must be paid. It allows future payments to be abated. Absent a timely application for abatement, I think the Board has to continue to collect EWL payments on the schedule set forth by the actuary. http://edocket.access.gpo.gov/cfr_2002/jul...29cfr4207.3.htm

I agree PPA changes are going to be needed, but for the meantime I'm trying to figure out the FSA rules. For example, the Congressional Research Report "Summary of the Pension Protection Act of 2006" talks about new requirements for multiemployer plans that are “seriously underfunded.” The article states, in pertinent part, that a plan in critical status “has one year to develop a rehabilitation plan designed to reduce the amount of underfunding. The plan sponsors will not be required to make “lump-sum” contributions that normally are required to meet the minimum funding standard when a plan has an accumulated funding deficiency. Employers will not be subject to an excise tax if a funding deficiency occurs as long as the plan is meeting the obligations under the rehabilitation plan and under the collective bargaining agreements negotiated to improve plan funding.” Where can I find this in the actual statutes??

Hopefully this is an easy question... Under the PPA it is clear that when the funding standard account goes negative, the employers do no have to pay the excise tax so long as the plan is operating under a rehabilitation plan. We have found plenty of secondary material that indicates employers are also relieved from making up the shortfall in contributions while under a rehab plan. Where is this specified in the PPA?

Given the state of our defined benefit plans, a lack of work in the region and skyrocketing health care costs, several groups are having difficulty finding management representatives willing to sit on a jointly trusteed board. One solution that has been proposed is to offer trustees a small stipend (>$500 per month) for their service to the trust. This would not be payable to anyone already receiving full-time pay from the union, an employer or an employer association. A trust amendment would be adopted by the settlors. For example, we have a contractor representative who recently retired and wanted to resign. Can the Board offer him a small monthly stipend to remain involved? How about a union trustee who is unemployed or retired? What about an attorney or accountant who would be willing to serve for the union or association in exchange for the small stipend and paid conference expenses? The relatively small cost of retaining or attracting qualified trustees would be well worth the money, but I cannot seem to find any guidance on the issue. The regs seem to speak only to "lost wage" reimbursement.

There are a couple of case floating around that prohibit differentiation by a plan based on union versus non-union status. One I can recall is Deak v. Masters and Mates Pension Plan. I believe the court found this type of amendment to violate the exclusive purpose rule.

Participant (P) and Alternate Payee (AP) have gone through a bitter divorce. She was awarded a separate interest in a DB plan along with hefty spousal support. The QDRO is drafted to require AP to begin receiving payments no later than the date P actually retires. P is sick of paying "outrageous" child support and is advised by counsel to retire since the payments from the Plan to AP will reduce P's spousal support obligation. Plan contacts AP and sends her election forms. AP tells Plan to pound sand and that she won't sign anything. P and AP are both going back to court over this issue, but how should the Plan respond? I would assume that she will be entitled to the benefit payments (without interest) at a later date, but I'm not certain of this. Input is appreciated.