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News Items

Editor's Note: This page is an archive of news items that appear in our daily email newsletters. To automatically receive the latest news items -- plus links to the latest jobs, press releases, webcasts and events -- subscribe to our daily email newsletters.

Is Discovery Allowed When a Breach of Fiduciary Duty Claim Is Asserted?
Lane Powell PC
Dec. 7, 2018
"[D]iscovery is usually limited in appeals of the denial of ERISA-governed benefits. This is especially true when there is de novo review. But watch out if a breach of fiduciary duty claim is asserted. That same rule (prohibiting discovery) does not apply when a party seeks discovery into purported breaches of fiduciary duty under 29 USC 1132(a)(3)."
Asset Purchasers Beware: Constructive Notice of Seller's Union Pension Liability
The Wagner Law Group
Dec. 6, 2018
"A recent 9th Circuit decision called out a common misconception -- in the form of 'incorrect legal advice' that the buyer received prior to closing -- that '[a]bsent an express assumption of liability, the Buyer does not assume the [withdrawal] liability' for a multiemployer pension plan. The decision went on to hold a private equity fund liable for $480,000 of withdrawal liability, even though all parties conceded that the purchaser had no actual notice of the liability." [Heavenly Hana LLC v. Hotel Union & Hotel Industry of Hawaii Pension Plan, No. 16-15481 (9th Cir. June 1, 2018)]
Student Loan Debt Trends and Employer Programs to Help
Employee Benefit Research Institute [EBRI]
Dec. 6, 2018
"[T]he percentage of families with student loan debt grew from 10.5 percent in 1992 to 22.3 percent in 2016. For families with heads younger than age 35, the percentage with student loan debt approaches one half (45 percent), and the percentage is over a third for those with a family head ages 35 to 44.... [E]mployers looking to attract and retain workers can develop creative programs to address one of the more pressing issues facing workers."
Law Firms Pad Parental Leave to Attract Diverse Attorney Pool
Bloomberg BNA
Dec. 6, 2018
"Paid parental leave has become the shiny new thing for employers in 2018 -- big name brands like Walmart, Starbucks, and Microsoft have all made headlines with updated policies. In the legal field, a handful of firms also have updated their policies to offer more leave, make the time off gender neutral, or add new types of benefits for parents."
Trends in Social Security Disability Insurance Enrollment (PDF)
Congressional Research Service [CRS]
Dec. 6, 2018
21 pages. "Multiple factors have contributed to the growth in the SSDI enrollment between 1985 and 2014. Some of the main factors are [1] the increased eligibility and rising disability incidence among women, [2] the attainment of peak disability-claiming years (between age 50 and full retirement age) among baby boomers ... [3] the increase in full retirement age (FRA) from 65 to 66, [4] fewer job opportunities during economic recessions, and [5] the legislative reform that expanded the eligibility standard in SSDI. Some factors may have prolonged effect s on SSDI benefit receipt." [Report R45419, Nov. 30, 2018]
IRS Extends Transition Relief for New Escheated IRA Tax Withholding, Reporting Rules
Morgan Lewis
[Guidance Overview]
Dec. 6, 2018
"[T]he extended transition relief applies to payments made before the earlier of January 1, 2020, or the date it becomes reasonably practicable to comply with the new rules.... [Rev. Rul. 2018‑17] is silent as to whether the IRA owner may roll the escheated IRA over to an eligible IRA and, if the rollover is permitted, when the 60-day period to make the rollover begins.... The Revenue Ruling is also silent as to whether an IRA owner who is under age 59‑1/2 at the time of an escheatment (in those states that escheat before the IRA owner reaches age 70‑1/2) would be liable for the 10% penalty tax for early IRA distributions.... [It also] does not address the tax withholding and reporting requirements for a SEP, SIMPLE, or Roth IRA."
The Proposed Hardship Distribution Regs: Some Misconceptions
Cammack Retirement Group
Dec. 6, 2018
"Plan sponsors are NOT required to eliminate the provision that borrowing be exhausted in order to take a hardship distribution ... Plan sponsors MUST eliminate the requirement to suspend elective deferrals for six months following a hardship distribution ... These regulations have no effect on 457(b) plans."
Hardship Regs Revisited: Communications and Nonqualified Plans
Morgan Lewis
[Guidance Overview]
Dec. 6, 2018
"The proposed hardship regulations were silent as to whether a nonqualified deferred compensation plan can continue to cancel deferral elections following a hardship withdrawal. Considering that effective January 1, 2019, suspensions following hardship withdrawals will no longer be required, plan sponsors with nonqualified plans may wish to review the suspension language in their nonqualified deferred compensation plans[.]"
Review of 2018 Developments for Health and Welfare Plans (PDF)
Alston & Bird
[Guidance Overview]
Dec. 6, 2018
23 pages. Topics: [1] Tax Reform Act; [2] Appropriations Act; [3] Short-term, limited duration insurance (STLDI) regulations; [4] Proposed legislation impacting account based plans; [5] State based laws; [6] DOL fiduciary update; [7] AHP regulations; [8] Wellness program rule reversal; [9] Proposed HRA regulations; [10] New contraception regulations; [11] Section 1557 update; [12] Adjusted limits for 2019; and [13] Forms and filings.
Missing Participants and Fiduciary Responsibilities: A Risk for TPAs
Drinker Biddle
Dec. 6, 2018
"[It] is important for plan sponsors to know that the DOL is taking demanding positions about fiduciary responsibilities for dealing with the issue of missing participants. As a result, TPAs should communicate with their plan sponsor clients about the DOL position, who has the responsibility for performing the searches required for missing participants, and what are considered to be reasonable search methods -- despite a lack of clear DOL guidance on the issue."
CMS Releases Medicare Advantage and Part D Drug Pricing Proposed Rule for Contract Year 2020
Epstein Becker Green
[Guidance Overview]
Dec. 6, 2018
"The agency has proposed five changes to amend Medicare Advantage and Medicare Prescription Drug Benefit (Part D) regulations to support health and drug plans' negotiation for lower drug prices and to reduce out-of-pocket costs for MA and Part D enrollees.... [1] Providing plan flexibility to manage protected classes ... [2] E-prescribing and the Part D prescription drug program; updating Part D e-prescribing standards ... [3] Medicare Advantage and step therapy for Part B drugs ... [4] Pharmacy price concessions to drug prices at the point of sale ... [5] Part D explanation of benefits."
Can an Employer Withhold a Year-End Bonus or Incentive Payment from the Employee Who Took FMLA Leave?
FMLA Insights
[Guidance Overview]
Dec. 6, 2018
"[Perhaps] you want to offer a pay incentive to employees to improve attendance or production? Take, for instance, a point-based attendance bonus policy in which employees are assessed points for every tardiness or absence (even for FMLA or ADA-covered leave), which, in turn, disqualifies an employee from receiving the bonus. In these situations, can an employer disqualify an employee from the bonus or incentive? In short, Yes."
Year-End Required Minimum Distribution Considerations
Watkins Ross
Dec. 6, 2018
"If you have a RMD from a 401(k) plan, the RMD amount must be calculated separately. You cannot lump the amount together with another plan account or IRA.... RMD's are not eligible for a rollover.... If the account holder died during the year, the RMD must still be made."
Year-End Bonuses and Compensation in Defined Contribution Plans
Watkins Ross
Dec. 6, 2018
"Make sure your HR and payroll people know what compensation should and should not be included for contributions. This is especially important if you have a new plan, new HR representative, new payroll provider or a change has been made to your plan document."
Michigan's Senate and House of Representatives Adopt Changes to the Paid Sick Leave Act
Ogletree Deakins
[Guidance Overview]
Dec. 6, 2018
"Businesses with fewer than 50 employees are not covered and employees who are exempt from overtime pay under the [FLSA's] 'white collar' exemptions ... are not eligible for paid sick leave.... The bill reduces the maximum amount of paid sick leave to 40 hours in a 12-month period, which accrues at a rate of one hour for every 35 hours worked ... There have also been significant changes to how employees must request and substantiate their need for paid leave."
Magic Words Unnecessary -- But Staying Out of Work Not Enough -- to Request Medical Leave Under the FMLA
Poyner Spruill LLP
Dec. 6, 2018
"The evidence established that Shoemaker did not make a request for leave due to a medical condition when she called in her absence. Consequently, her employer's knowledge of her recent medical issues ... was not enough to put it on notice that Shoemaker's absence might qualify as FMLA leave." [Shoemaker v. Alcon Laboratories, Inc., No. 17-1738 (4th Cir. Aug. 6, 2018)]
Supreme Court Hears Oral Argument on Differing State Tax Treatment of Federal/State Government Retirement Benefits
Kilpatrick Townsend
Dec. 6, 2018
"On December 3, 2018, the United States Supreme Court heard oral argument in Dawson v. Steager, a case addressing West Virginia's personal income tax regime, which exempts state employee retirement benefits without offering the same exemption to federal employee retirement benefits.... At oral argument, several justices expressed skepticism about the West Virginia scheme.... The decision is expected to have implications for state statutes that distinguish between federal and state government employee retirement benefits."
Ninth Circuit Upholds Dismissal of 401(k) Fee Case
October Three Consulting
Dec. 6, 2018
"The court sided with defendants on one of the critical issues in current 401(k) fee litigation: whether a plaintiff may state a claim for breach of the ERISA duty of prudence merely by alleging that there was a less expensive, 'identical' alternative to the service/fund provider selected by plan fiduciaries.... The Ninth Circuit's most recent decision, ... while brief, included a pointed discussion of the critical issue[.]" [White v. Chevron Corp., No. 17-16208 (9th Cir. Nov. 13, 2018; unpub.)]
IRS Extends Deadline for ALEs to Distribute 2018 ACA Reporting Forms to Individuals
The Wagner Law Group
Dec. 6, 2018
"This extended deadline applies only to distributing the 2018 ACA reporting forms to employees and covered individuals and not to the deadline for filing the forms with the IRS.... ALEs are advised to use the additional time provided by the extended deadline ... to ensure that the forms are accurate and complete.... [F]ilers will have less time between the distribution deadline and the filing deadline to make any required corrections."
Drug Companies Draw Fire for Not Using Tax Savings to Lower Drug Prices
The Wall Street Journal; subscription may be required
Dec. 6, 2018
"Critics of high drug prices are launching a new line of attack against manufacturers of the medicines, faulting the firms for using savings from the tax overhaul to buy back shares rather than lower prices.... The Congressional scrutiny is the latest sign that drug pricing is emerging as a leading issue in Washington, and drug companies could have a big bullseye on their backs as both Republicans and Democrats respond to popular discontent with how much drugs cost."
2019 Health Care Predictions
Dec. 6, 2018
"[1] The new 'healthcare front door' won't be a physical door at all.... [2] As health needs evolve, more non-acute care will go virtual.... [3] Virtual care delivery will integrate behavioral health into the primary care setting.... [4] Virtual care moves beyond the tipping point as regulatory conditions, economic imperatives, and consumer expectations align in its favor.... [5] AI will play a valuable role in healthcare as augmented intelligence.... [6] Virtual care will curb costs by reducing barriers to care."
MetLife Sued by Pension Plan Participants
Pensions & Investments
Dec. 6, 2018
"A class-action lawsuit ... [claims] the company underpaid retirement plan participants by using outdated mortality rates to calculate certain alternative retirement benefits.... The plaintiffs are demanding the insurer ... [pay] all previously withheld benefits, recalculate the benefits that have been paid, and provide an accounting of all prior payments of benefits to determine how much should have originally been paid." [Masten v. Metropolitan Life Ins. Co., No. 18-11229 (S.D.N.Y. complaint filed Dec. 3, 2018)]
California Supreme Court Hears First Challenge to Public Employee Pension Reform
Dec. 6, 2018
"The state Supreme Court, with four similar cases on the backburner, gave few signs during oral arguments on a labor-union challenge to Gov. Brown's pension reform yesterday that it's ready to take on the 'California Rule' preventing pension cuts."
ECFC Applauds Report on Reforming the Healthcare System by Increasing Consumer Choice
Employers Council on Flexible Compensation [ECFC]
Dec. 6, 2018
"[The report prepared by DOL, HHS, and the Treasury Department] outlines several legislative changes that could be made to increase the use of HSAs by: [1] Allowing innovative insurance products (such as those that provide payment for generic drugs below the deductible or fixed fee payments for primary care) to be coupled with HSAs; [2] Allowing individuals enrolled in a health insurance plan with a 70 percent actuarial value (AV), or below, to contribute to an HSA; and [3] Raising the contribution limits to HSAs."
Could Telehealth Increase the Price of Health Care?
Healthcare Economist
Dec. 6, 2018
"[T]he effect of telehealth on prices depends on: [1] how responsive suppliers (i.e., physicians and other health care providers) are to this changing dynamic; [2] the price of telehealth technology; ... [3] patients' perceived inconvenience cost of going to the physician; [and] [4] how third party payers (i.e., insurers) interact with the market."

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