News Items

"The Federal Civil Monetary Penalties Inflation Adjustment Act Improvements Act of 2015 requires EBSA to adjust ERISA's civil monetary penalties annually for inflation. ERISA monetary penalties assessed by a court (e.g., sections 502(c)(1) and (3)) rather than EBSA are not adjusted for inflation under the 2015 Inflation Act.... The table [in this Fact Sheet] shows the penalty amounts enforceable by EBSA for penalties assessed after January 22, 2019 for violations occurring after November 2, 2015."

"Plan Sponsors should tread carefully, being sure to consider whether the particular facts connected with a proposed window would create concerns under other qualified plan rules such as nondiscrimination requirements under the Code. In addition, plan sponsors should be aware that this guidance from the IRS will not prevent the DOL from pursuing any perceived violations of fiduciary duty with respect to the implementation of such an offering."

"80.8 percent of all Traditional and Roth IRAs in 2012 were still open in 2015 rather than closed or depleted. Of the accounts still open, 68.0 percent had higher balances by the end of 2015. The EBRI IRA Database tracked 6.1 million Traditional IRAs and 1.4 million Roth IRAs owned by those ages 60 or older -- ages at which owners are most often in their retirement years.... Only when owners reached ages 85 or older did a significantly higher percentage of accounts fail to have a positive balance after three years, either due to depletion or account closure."

"Auditors are the ones that see the overall operations of the plan, being able to see the forest through the trees. The third-party administrator sees what they are given from the plan sponsor, and the plan sponsor sees what is received from the third-party administrator. Many times, with this, the right hand does not see what the left hand is doing. Auditors investigate the greater detail from both parties, as well as the transactions taking place in the actual trust of the plan."

12 pages. "[T]he potential long-term benefits of more personalized strategies such as retirement managed accounts (RMAs) may outweigh the advantages of target date funds in some situations.... RMAs have four distinct benefits: [1] Influence investor behavior; [2] Encourage increased saving rates; [3] Provide personalized and appropriate diversification; [4] Help provide lifetime income."

"Just as asking customers about your products can yield important information, asking employees how they feel about their benefits can add great value.... Questions to ask should include: [1] What is your overall perception of the benefit plans? ... [2] How are you and your family using the benefits? [3] How satisfied are you with the plan? [4] What would you do to improve the plan's effectiveness?"

"There is strong evidence that our health spending provides less-than-optimal value. For example, we know that a portion of health care spending is for things that are not, in fact, health care.... In addition, unmet needs persist -- for example, in prevention, mental health and substance abuse care, and chronic disease management.... [H]ealth care has become so expensive that even many of those who are technically insured can't afford it ... [T]here is a gap between what we spend on our health system and the health-return that we get from it. To close that gap, we must either spend less or spend more wisely (or a combination of the two)."

"[T]aken together, these settlements highlight the peculiar staying power of 403(b) ERISA cases even in uncharted waters.... If the 403(b) excessive fee litigation continues along a trajectory similar to its 401(k) predecessors, then we can expect the recent 403(b) settlements to usher in a new volley of suits brought against institutions overseeing slightly smaller retirement plans than the billion-dollar-plus plans at issue in the first wave of 403(b) cases."

"[T]he workplace wellness industry has more than quadrupled since 2011, drawing in $8 billion in annual revenue and covering almost one in three in American workers.... [A] rigorous study of a comprehensive workplace wellness program concludes that it didn't change employees' behavior or health care costs in the first year. Employees who took part didn't become healthier or more productive, and were not more likely to go to the gym or run in a local race. Total health care costs didn't drop, either."

14 pages. "The Social Security full retirement age (FRA) is the age at which workers can first claim full Social Security retired-worker benefits.... Under legislation enacted in 1983, the FRA is increasing gradually from 65 to 67 over a 22-year period (for those reaching age 62 between 2000 and 2022).... Currently, the FRA is 66 and 6 months for workers who become eligible for retirement benefits in 2019 (i.e., workers born in 1957)." [Report R44670, updated March 7, 2019]

"Even though insurance caps the employer's financial liability to the pre-set monthly contribution, a level funded plan is fundamentally a self-funded plan. As a result, it has to comply with the federal rules governing self-funded plans. These include: Use of plan assets ... ACA reporting.... HIPAA privacy and security.... 105(h) nondiscrimination rules.... On the other hand, because level funded plans are not insured plans, they are exempt from state regulation."

"While most of the penalties were assessed against providers, there are some lessons employers with health plans can learn from these enforcement efforts: [1] It's not the breach; it's the lack of compliance.... [2] We are (still) living in a material world.... [3] BAAs Matter.... [4] Those who know shouldn't speak."

"The FAQs document answers 25 questions about the [Paid Medical Leave Act (PMLA)], including ... [1] Are there any employees who are not covered by the [PMLA]? ... [2] How does an eligible employee accrue paid medical leave? ... [3] May an employee carry over unused paid medical leave from one benefit year to the next?"

"The government has proposed to limit the preferred tax treatment for stock options.... The proposed rule will only affect employees of 'large, long-established, mature firms'. The Budget does not define these companies but has indicated that start-ups and 'rapidly growing businesses' will be exempt. $200,000 of options granted each year will remain eligible for preferred tax treatment at the time they are exercised."

"69 percent of about 20,700 transports in the data set were out-of-network in 2017. This is higher than what research shows for ground ambulance transports (51 percent in 2014 according to one study) and other emergency services.... GAO reviewed over 60 consumer complaints received by two of GAO's selected states -- the only states able to provide information on the amount of individual balance bills -- and all but one complaint was for a balance bill over $10,000." [GAO-19-292; Mar 20, 2019]

"[F]ully one-third of healthcare executives surveyed ... believe non-healthcare market entrants could upend industry business models.... [N]early 40% of respondents said a market in which the majority of value-based relationships include both upside and downside shared-risk remains three to five years off -- a concerning finding that might indicate payers and providers continue to struggle in their efforts to scale complex, value-based care and reimbursement models from pilot to production." [Free registration required for download of full survey results.]

"[Four of the] bills require certain groups or divisions to provide coverage for telemedicine services under varying conditions.... HB 917 (An Act to Facilitate the Provision of Telehealth Services) ... would not require health insurance plans to cover telehealth services. Instead, it proposes definitions, practice standards, prescribing, and informed consent rules for telehealth services."

"The Seventh Circuit's decision applied two tests: [1] the 'three-prong test' ... which requires that a statute have 'a secular legislative purpose,' not have the 'primary effect' of advancing or inhibiting religion, and 'not foster an excessive government entanglement with religion;' and [2] the 'historical significance' test ... which looks to 'historical practices and understandings.' The Seventh Circuit concluded both tests were satisfied." [Gaylor v. Mnuchin, Nos. 18-1277, 18-1280 (7th Cir. Mar. 15, 2019)]

"The Windfall Elimination Provision (WEP) reduces Social Security benefits for retirees who also draw pension benefits from government employment not covered by Social Security. The Equal Treatment of Public Servants Act, a recently introduced congressional bill, would change how benefits are reduced.... Under the proposal, benefits for certain workers could be reduced by more than 30 percent and in some cases, by more than the amount of their noncovered pension benefit. The largest reductions would affect those who work in government employment for shorter periods, the same workers who already get the least benefit from their state and local government pension plans."

"On March 5, 2019 the [FTC commissioners] voted 3-2 to issue a proposed amendment to its Standards for Safeguarding Customer Information Rule ... The Proposal ... if finalized, could raise the baseline for plan fiduciaries when developing prudent cybersecurity programs.... [W]hile the steps outlined in the FTC's proposal do not apply to many financial institutions, the Proposal provides insight into changes that the other regulators could make and what plans and participants may expect."

"Based on the DCIIA sample of those that provided both custom TDF and plan assets, custom TDF strategies accounted for 43% of total plan assets for the year-end 2017. On average, the number of individual funds, or vintages, per custom TDF was ten.... DCIIA estimates that the sum of all TDF strategies ... totaled $2.1 trillion as of year-end 2017. Mutual funds accounted for $1.1 trillion, or 51%, of these TDF assets.... [In] 2015 the total TDF market accounted for an estimated $1.3 trillion across vehicles."

"[1] 69.23% of plans use a safe harbor 401(k) plan design to avoid annual ADP/ACP and top heavy testing. Up from 68% in 2016. [2] 9.53% of plans automatically enroll employees that fail to make an affirmative enrollment election. Up from 8.71% in 2016...[3] The two most popular service requirements were 1 year -- used by 50.34% -- and none at all -- used by 21.81%. Very similar to our 2016 finding. [4] A 1 year of service eligibility requirement is most commonly combined with semi-annual entry dates and the hours of service crediting method -- the most restrictive combination allowed by law."

25 pages. "The AV Calculator [XLSM] represents an empirical estimate of the AV calculated in a manner that provides a close approximation to the actual average spending by a wide range of consumers in a standard population. This document is meant to detail the specific methodologies used in the AV calculation."

"While acknowledging that the FMLA permits an employer to require, or to permit an employee to elect, to 'substitute' accrued paid leave ... to cover any part of the unpaid FMLA entitlement period, [DOL Opinion Letter FMLA2019-1-A] states that '[t]he term substitute means that the paid leave provided by the employer ... will run concurrently with the unpaid FMLA leave.' ... While acknowledging that the FMLA allows employers to adopt leave policies more generous than those required by the FMLA ... the Opinion also says an employer may not designate more than 12 weeks of leave -- or more than 26 weeks of military caregiver leave -- as FMLA-protected."

"Mandatory arbitration provisions are not a simple matter and should be adopted only after careful consideration.... [1] What is the effectiveness to thwart class actions versus the risk of numerous participant arbitrations regarding the same subject matter and inconsistent arbitration awards? [2] Will the arbitration involve arbitrators with sufficient ERISA background and experience? ... [3] What are the potential time and cost savings derived from arbitration as an alternative to litigation? ... [4] What will be the effect on fiduciary indemnification and insurance coverage? ... [5] What is the risk of an adverse arbitration award that is generally non-appealable?"