Benefits in the News

DOL press release."Under the Department's new rule, AHPs can serve employers in a city, county, state, or a multi-state metropolitan area, or a particular industry nationwide. Sole proprietors as well as their families will be permitted to join such plans.... [The] Employee Benefits Security Administration will monitor these new plans to ensure compliance with the law and protect consumers. Additionally, States will continue to share enforcement authority with the Federal Government.... The new rule does not affect previously existing AHPs, which were allowed under prior guidance. Such plans can continue to operate as before, or elect to follow the new requirements if they want to expand within a geographic area, regardless of industry, or to cover the self-employed. New plans can also form and elect to follow either the old guidance or the new rules."

198 pages. "By establishing a more flexible 'commonality of interest' test for the employer members than the [DOL] had adopted in sub-regulatory interpretive rulings under ERISA section 3(5), and otherwise removing undue restrictions on the establishment and maintenance of Association Health Plans (AHPs) under ERISA, the regulation facilitates the adoption and administration of AHPs and expands access to affordable health coverage, especially for employees of small employers and certain self-employed individuals.... The final rule also sets out the criteria that would permit, solely for purposes of Title I of ERISA, certain working owners of an incorporated or unincorporated trade or business, including partners in a partnership, without any common law employees, to qualify as employers for purposes of participating in a bona fide group or association of employers sponsoring an AHP and also to be treated as employees with respect to a trade, business or partnership for purposes of being covered by the AHP."

24 pages. "Some research on health care costs in retirement estimates these expenses as a lifetime lump sum.... [A] better planning framework considers these costs as annual expenses personalized to an individual's health status, coverage choices, retirement age, and loss of any employer subsidies. For a typical 65-year-old woman, the Mercer-Vanguard model predicts an annual health care expense of $5,200 in 2018.... Half of individuals will incur no long-term care costs -- but there is a small but meaningful risk that costly care will be required for multiple years[.]"

32 pages. "In 2017, the average expense ratio for equity mutual funds offered in the United States was 1.25 percent. 401(k) plan participants who invested in equity mutual funds, however, paid less than half that amount -- 0.45 percent -- on average.... The average expense ratio that 401(k) plan participants incurred for investing in equity mutual funds fell from 0.48 percent in 2016 to 0.45 percent in 2017. The average expense ratio that 401(k) plan participants incurred for investing in hybrid mutual funds fell from 0.53 percent in 2016 to 0.51 percent in 2017.... Employers and employees generally share the costs of operating 401(k) plans."

"Workers who report higher levels of work-to-life interference are significantly more likely to reduce their labor supply in the next two periods following a spouse's health shock, and this effect is once more heterogeneous. The moderating effect of [work-life balance (WLB)] is stronger for women than men. Among female workers, it is stronger for those employed part-time at baseline."

"Victims of volcanic eruptions and earthquakes that occurred starting on May 3, 2018 in Hawaii may qualify for tax relief from the [IRS].... [C]ertain deadlines falling on or after May 3, 2018, and ending Sept. 17, 2018, are granted additional time to file through Sept. 17, 2018. In addition, penalties on employment and excise tax deposits due on or after May 3, 2018, and ending May 18, 2018, will be abated as long as the deposits were made by May 18, 2018."

17 pages. "[1] How to do a diagnostic review of your participant population and existing education, identifying gaps and areas of needed focus; [2] Selecting participant education delivery methods that will reach your participants; [3] Targeting education to be relevant to participants' different life stages; [4] Behavioral economics principles to guide your education and communication techniques; [5] Designing effective education programs and campaigns; [6] Follow-up surveys and data gathering to assess the success of your education."

"The new rules ... seem intended to make it easier for participants to take premature distributions from plan while eliminating some of the consequences.... Increased distributions mean more money will be subject to full taxation and the 10% early distribution penalty. Also, increased hardship distributions do nothing to help you accumulate the cash you need to fund your retirement income which, after all, is what these plans are all about."

12 pages; version 3.0. "The purpose of this document is to provide details on cost-sharing reduction (CSR) reconciliation discrepancy files that issuers will send to CMS.... CMS will only accept discrepancy files through Enterprise File Transfer (EFT)."

"Among key subjects to incorporate in education and training are developing the investment policy statement (IPS), the retirement industry as a whole and prudent fund lineups. An IPS ... is critical when understanding the role investment advisers, and managers, take on."

"[T]he very best [data solutions] have three things in common: ... [1] they use objective, observable data-points; ... [2] their analysis is informed by a sound methodology; ... [3] their conclusions are both meaningful and easy to understand.... Well-honed analysis, with communication aids to support it, can clarify employee choices, and improve their engagement with employer benefits tools."

"Studies show that employers that devote just one-to-two percent of their payroll to an employee recognition program can improve retention. While working on a jobsite might not lend itself toward traditional notions of employee recognition, recognition does not have to take place in an office. Contractors can offer meals, snacks, coffee, a new training course, and positive reinforcement as part of an employee recognition program."

"The passage of the Tax Cuts and Jobs Act is driving how finance executives view their corporate defined benefit pension plans, with 64% of respondents saying they are 'very likely to use the tax savings from the new law to increase funding of our DB pension plan(s).' "

"May was a slow month for trading activity in defined contribution plans, ... with one day of above-normal trading activity for the month. When 401(k) investors made trades, they tended to favor fixed income funds over equities. May observations: [1] Continued movement away from equities, with 13 of 22 days favoring fixed income funds; [2] On average, 0.14% of balances were traded daily."

"Without effective state oversight, fake association health plans could saddle patients with large and unpaid medical bills and even threaten their health ... [T]he final rule has to be clear that states have broad authority to regulate association health plans in tandem with the federal government."

"[W]hen an individual who is 65 commences Social Security benefits, that individual is automatically enrolled in Medicare Part A.... [O]nce an employee or spouse is enrolled in Medicare Part A, they are no longer eligible to make contributions to an HSA. To complicate the contribution calculation, in the year an employee turns age 65 and commences Social Security benefits, enrollment in Medicare Part A will apply retroactively up to six months."

"Instead of taking a separate RMD from each IRA, you can take the total RMD for all of them from any one of the IRAs, or from across them in any way you wish.... Because total IRA balances are aggregated, it is not possible to withdraw just nondeductible contributions, ... no matter which IRA you withdraw funds from.... [A]ny distribution will be taxable in proportion to the ratio of pre-tax to post-tax funds in your aggregated IRAs."

"Much of the path toward retirement is focused on reaching the retirement date, but many people could actually be in retirement for twenty to thirty years. How do you want to spend that time? What will your days look like? And do you have enough money saved and/or enough income streams to fulfill those goals? This also taps into the emotional side of retirement that people need to prepare themselves for, which can be just as important as the financial side."

"[1] Is my business covered? ... [2] Which employees are eligible? ... [3] Who is a 'family member' under paid-sick-leave laws? ... [4] What is safe time? ... [5] How much paid time off must be provided? ... [6] Does more than one law apply?"

"MD Anderson had written encryption policies going as far back as 2006 [and] MD Anderson's own risk analyses had found that the lack of device-level encryption posed a high risk to the security of ePHI. Despite the encryption policies and high risk findings, MD Anderson did not begin to adopt an enterprise-wide solution to implement encryption of ePHI until 2011, and even then it failed to encrypt its inventory of electronic devices containing ePHI between March 24, 2011 and January 25, 2013."

"This is the base challenge: How can a shrinking group of working-age people support a growing number of retirement-age people? The easy and quick illustration to this question is to talk about the number of workers supporting each Social Security recipient. In 1940, it was 160. By 1950 it was 16.5. By 1960 it was 5.1.... [It] will be 2.3 by 2030."

"[1] They are 'space cases' and fail to recognize the need for FMLA leave. [2] They are 'lazybones'; they are aware that there is a need for FMLA leave but don't alert HR. [3] They are 'oversharers,' telling employees why they think it isn't a good time for leave to be taken. [4] They are jerks to workers who are on FMLA leave. [5] They badger employees on FMLA leave with work concerns. [6] They are trouble-makers, such as managers who bully employees for taking FMLA leave."

"With a strong push for PFL legislation at the national level, state-mandated employee benefits offerings may change drastically in the next few years. Proactively taking the lead on monitoring and updating clients on new regulations passed and providing recommendations on how to remain compliant could help set you apart from the competition."

"The class action plaintiffs are paid $150 million in 35 years, if at all. The plaintiffs' lawyers are paid fees of $5 million in 2 years.... The case was settled with an experienced and respected mediator. Yet the Fifth Circuit was quite concerned about the payment of legal fees and sent the case back to the District Court ... The Fifth's concern about payment of class counsel's fees may have been misplaced." [Jones v. Singing River Health Services Foundation, No. 16-60550 (5th Cir., revised July 27, 2017)]

"Employees are a captive audience.... Employers are also able, if they're large enough ... to select low-fee fund options for their employees ... [But] an employer-based system misses those without conventional employment (part-timers, freelancers, contractors, small business employees or owners) ... The very employer match that serves as an incentive to make a contribution, can act as a ceiling, in which employees take the match as the recommended maximum contribution level."