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Text of PBGC Premium Rates for 2018
Pension Benefit Guaranty Corporation [PBGC]
[Official Guidance]
Oct. 18, 2017
"The per-participant flat premium rate for plan years beginning in 2018 is $74 for single-employer plans (up from a 2017 rate of $69) and $28 for multiemployer plans (no change from 2017). The increase in the single-employer rate was provided in The Bipartisan Budget Act of 2015.... For plan years beginning in 2018, the variable-rate premium (VRP) for single-employer plans is $38 per $1,000 of unfunded vested benefits (UVBs), up from a 2017 rate of $34. This $4 increase was provided in The Bipartisan Budget Act of 2015 (BBA 2015). Although the VRP rate is subject to indexing in addition to the BBA 2015 increase, indexing had no effect for 2018. For 2018, the VRP is capped at $523 times the number of participants (up from a 2017 cap of $517). Plans sponsored by small employers (generally fewer than 25 employees) may be subject to a lower cap."
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Interesting Angles on the DOL's Fiduciary Rule, Part 66
FredReish.com
Oct. 18, 2017
"Because of the change in the definition of fiduciary advice (which applied on June 9, 2017), all advisors to retirement plans need to review their prior 408(b)(2) disclosures to see if changes are necessary.... [Would] the following types of disclosures [be] narrow enough to provide information that allows the plan fiduciaries to make those determinations? [1] For mutual funds, the broker-dealer may receive between 0% to 10% front-end commissions. [2] As ongoing trailing commissions, the compensation may range from 0% to 2% per year. [3] The compensation for managed accounts will not exceed 2.5% per year."
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2017 Hurricane Disaster Relief Guidance for Employers with Retirement Plans
Ascensus
[Guidance Overview]
Oct. 18, 2017
"Individuals whose principal residence is within a presidentially declared disaster area affected by Hurricane Harvey, Irma, or Maria -- and who have sustained an economic loss as a result -- are eligible to request 'qualified hurricane distributions' from their IRA or employer-sponsored retirement plan (plan permitting).... Broader relief applies to individuals who live in, or have a business within, a presidentially declared disaster area.... certain features of permissible loan programs have been relaxed.... [and] they may be eligible for extensions on deadlines"
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The Alexander-Murray Market Stabilization Package: What's In It, and Where Is It Going?
Health Affairs
Oct. 18, 2017
"The key component to the deal is stable funding for the cost-sharing reduction (CSR) subsidies ... [Also included] is a loosening of criteria for the section 1332 waiver process under the ACA ... [It] changes the requirement that state proposals be 'as affordable as' ACA coverage would be; it requires only that they have 'comparable affordability.'.... The pending agreement also [1] includes up to $106 million to restore consumer outreach efforts that the Trump Administration had rescinded.... [2] would allow anyone to buy a Copper plan, regardless of age or income level.... [3] authorizes funding for state reinsurance programs ... [4] would compel CMS to generate regulations implementing the section 1333 interstate compact component of the ACA, which so far have not been issued."
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Assessing the Optimal Shape of Retirement Planning
Nerd's Eye View
Oct. 18, 2017
"[E]ach shape leads to its own unique views on what is 'best' for retirement planning, and what is considered 'safe' -- from cash under the curve approach (the most conservative portfolio on the efficient frontier), to the lifetime annuity under the triangle approach (guaranteeing that essential expenses are covered for life), to a laddered portfolio of TIPS bonds with the rectangle approach (aiming to perfectly match assets to liabilities and immunize the household against future changes in interest rates or inflation).... [T]he best approach for retirement planning may incorporate all three[.]"
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Health Insurer Anthem Brings Pharmacy Business In-House, Taps CVS to Help
Reuters
Oct. 18, 2017
"Health insurer Anthem Inc will start managing its billions of dollars of patient prescriptions itself in 2020 ... ending a deal with Express Scripts Holding that had deteriorated into lawsuits over terms. Anthem, which sued the pharmacy benefit manager last year over claims of being overcharged by $3 billion annually, said it would use drug retailer CVS Health Corp to handle prescription fulfillment and claims processing for five years for the new company, called IngenioRX."
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Underinsured Rate Increased Sharply in 2016
The Commonwealth Fund
Oct. 18, 2017
"Twenty-eight percent of working-age adults in the United States who had health insurance all year were underinsured in 2016, up from 23 percent in 2014 ... More than half of the underinsured (52%) had medical bill problems and 45 percent went without needed health care because of cost.... More than half (56%) of the estimated 41 million adults who are underinsured get their coverage through an employer."
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Experiences of the Non-Group Marketplace Enrollees
Henry J. Kaiser Family Foundation
Oct. 18, 2017
"This report examines people's experiences with the current health insurance market, with a particular focus on individuals who currently have health insurance they purchased themselves.... 10.3 million people have health insurance that they purchased through the ACA exchanges or marketplaces. For comparison, the report also examines individuals ages 18-64 without health insurance as well as those who get their insurance through their employer."
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IRS Publishes New Mortality Tables, Affecting DB Plan Benefits
Cheiron
[Guidance Overview]
Oct. 18, 2017
"The new mortality table will increase the amount of lump-sum distributions payable by a private sector plan ... by 3% to 5%, depending on the age of the participant, when compared to the lump sum using the table for 2017.... For a retirement age of 65 and a 5.5% interest rate, the lump-sum equivalent of the maximum dollar limit of $215,000 will increase by approximately 3.5% (about a $90,000 increase)."
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Participants Seek Final Approval of $98.3 Million Settlement of 'Church Plan' Case with Bon Secours Health System
Cohen Milstein
Oct. 18, 2017
"Thousands of class members affected by seven Bon Secours Health System Inc. pension plans ... asked a Maryland federal court [on Oct. 13] to give final approval to a settlement that would require the health care organization to provide $98.3 million to bolster funding. The settlement agreement calls for the hospital to contribute $14 million a year for the next seven years to the seven plans at issue ... In addition, the settlement calls for the hospital to pay another $300,000 to benefit about 500 people who have unique circumstances under one of the plans." [Hodges v. Bon Secours Health System, Inc., No. 16-1079 (D. Md., proposed settlement submitted Oct. 13, 2017)]
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High-Cost Claims Are Raising Employer Risk
Mercer
Oct. 18, 2017
"Two factors have combined over the past few years to heighten employer risk for high-cost claims: [1] the rise of costly new medical technology and treatments -- including specialty drugs -- and [2] the ACA requirement to remove limits on annual and lifetime benefits payable. As a result, the market for employer stop loss insurance has become increasingly complicated and costly."
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Is Your HDHP Ruining Your Disease Management and Wellness Program Outcomes?
Hill, Chesson & Woody
Oct. 18, 2017
"[A recent study] suggests that HDHPs resulted in participants accessing preventive healthcare less, even when the preventive visit was completely covered with no cost sharing. Office visits to medical providers were noted to decrease, with subsequent reductions in imaging and lab studies. These reductions appear to be related to both inappropriate and appropriate care. Furthermore, a reduction in medication adherence was noticed -- that is, participants were less likely to fill and use medications they were prescribed."
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Phillips 66 Participants Challenge Continued Investment in Stock of Former Parent Company
National Association of Plan Advisors [NAPA]
Oct. 18, 2017
"[The lawsuit] alleges that the investment committee of a company's DC plan breached its duties of prudence and diversification under ERISA for continuing to invest plan assets in the stock of the parent company following the spinoff of the subsidiary ... Noting that the plan held investments of nearly $1 billion (approximately 25% of its assets) in the ConocoPhillips funds, the plaintiffs contend that the plan's overly concentrated position caused them to lose millions of dollars as the price of ConocoPhillips stock fell during the class period." [Schweitzer v. Inv. Cmte. of the Phillips 66 Savings Plan, No. 17-3013 (S.D. Tex., complaint filed Oct. 9, 2017)]
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Beware of These Four Disability Insurance Contract Details
Corporate Synergies
Oct. 18, 2017
"And/or provisions dictate when a disability insurance policy pays.... Employers should have a firm grasp on what, if any, pre-existing conditions prevent a member from making a disability claim.... [S]ome Return to Work clauses allow a partial return to work, while others do not.... [It's] important to know how claims would pay out if someone with variable pay went on disability. Familiarize yourself with this clause and ensure it's appropriate to your specific workforce."
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Kraft Retirees Had No Vested Right to Health Care Benefits Beyond Termination of CBAs
Wolters Kluwer Law & Business
Oct. 18, 2017
"Kraft contended there was nothing in the language of the relevant [collective bargaining agreements (CBAs)], [memoranda of agreements (MOAs)] or SPDs that promised to provide medical benefits to retirees that would continue beyond the termination of the CBA in effect when the individual retired or that the medical benefits could never be changed.... [T]he relevant SPDs both expressly provide a right to 'amend or terminate' the health plan at any time... [T]he court declined to consider extrinsic evidence offered by the union in an effort to demonstrate vested rights." [Gruss v. Kraft Heinz Foods Co., Inc., No. 15-788 (W.D. Wis. Sept. 15, 2017)]
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Make Better Health and Wealth Decisions During Open Enrollment
Fidelity
Oct. 18, 2017
"[1] Build your health care budget, starting with last year's out-of-pocket costs. [2] Find creative ways to save and look for new locations for you to receive health services. [3] Compare different plans and know the differences in insurance premiums and deductible levels. [4] Consider adding new benefits at various stages of your life. [5] Make your health and financial decisions before the enrollment deadline."
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2016 Funding Status Update for Multiemployer Plans Seeking MPRA Benefit Suspensions
Burypensions
Oct. 18, 2017
"Now that 5500 filing season is over and most of the 2016 forms are searchable on the DOL website [this article provides] the status of union plans that have applied for benefit suspensions under MPRA with links to their latest 5500 filing and a focus on the worst funded plan with a reported funded ratio of 2.99% (yes that is the funded ratio and not the RPA interest rate)."
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Teachers and Schools Are Well Served by Teacher Pensions
Economic Policy Institute
[Opinion]
Oct. 18, 2017
"While attrition is high in the first years, teachers who end up leaving the profession are a small share of the teaching workforce and at a minimum recover their contributions to the pension plan plus interest ... [T]eachers who spend their careers in one district earn higher benefits because all their service credits are tied to their final salaries, typically averaged over three to five years.... A shift to account-style plans would not benefit most teachers and would increase teacher turnover to the detriment of students."
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Trump's ACA Moves Put Focus on Courts
Mercer
Oct. 18, 2017
"The administration announced last week that it would immediately stop making monthly cost-sharing reduction (CSR) payments to reimburse insurers for subsidies to low-income individuals who buy ACA exchange coverage.... A number of states quickly responded to the announcement with a lawsuit seeking an injunction to ensure that the payments continue ... The decision also puts new pressure on Congress to appropriate funding for the subsidies."
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NCPA Statement for House HELP Committee Hearing on the Cost of Prescription Drugs: How the Drug Delivery System Affects What Patients Pay (PDF)
National Community Pharmacists Association [NCPA]
[Opinion]
Oct. 18, 2017
"PBMs serve as the 'middlemen' in most prescription drug transactions in the United States. First, they leverage the number of beneficiaries in a plan to negotiate lucrative rebates from pharmaceutical manufacturers. Second, they formulate limited pharmacy provider networks that will supply or dispense these drugs to plans' beneficiaries and in turn, charge plan sponsors for these products.... PBMs extract 'spread' profits from both activities. Unless a plan has negotiated a true 'pass through' contract with its PBM -- and typically only the largest and most sophisticated plans are able to do so -- the PBM will keep a significant percentage of the rebate dollars that they have obtained only by virtue of the number of the plans' beneficiaries for themselves."
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