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Benefits in the News

Older News | April 26, 2015

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arrow icon Fund Fees Plunge! Thank the Investors
Bloomberg
4/24/2015

"Fund expenses are coming down, but don't thank the financial services industry -- pat yourself on the back.... [I]nvestors have overwhelmingly favored low-cost index funds and exchange-traded funds over the past five years -- index funds, for the most part, but low-cost actively managed funds, too. All but 5 percent of the money going into funds went to products with expenses in the lowest 20 percent of the fund universe."
arrow icon This Retirement Investing Tool Actually Might Be Working
Bloomberg
4/24/2015

"With 10 years of history, there's now enough of a track record to judge just how well investors are doing in target-date funds. The average per-year return over the past decade was 5 percent ... Stock funds were up an annual 7.5 percent over the past decade, while bond funds were up an average 4.4 percent.... But target-date funds have one big advantage over other kinds of mutual funds ... The average mutual fund has a flaw, which is that the average investor ... tend[s] to jump in and out of funds at the wrong time.... Investors in target-date funds, at least so far, seem to have avoided this curse."
arrow icon Fifth Circuit Finds Out-of-Network Medical Provider Has Standing to Sue Health Plan
Seyfarth Shaw LLP
4/24/2015

"Relying heavily on the Ninth Circuit's 2014 decision in [Spinedex v. United Healthcare of Ariz.] the Fifth Circuit explained that courts 'look to the rights of the patient at the time of assignment.' It reasoned that participants have the right to be reimbursed by Cigna for medical costs incurred at an out-of-network provider, and the fact that participants assigned that right to the hospital 'does not cause [the right] to disappear.' As an express assignee of the patients' rights, the hospital had standing to sue for underpayment of benefits." [North Cypress Medical Ctr. Operating Co. v. Cigna Healthcare, No. 12-20695 (5th Cir. Mar. 10, 2015)]
arrow icon Blue Cross Plans to Launch Private Exchange for Retirees Across the Country
Forbes
4/24/2015

"In the latest endorsement of the fast-growing private exchange approach to health benefit offerings, Blue Cross and Blue Shield companies will launch an online portal for retirees to shop for different plans.... The marketplace will provide a 'personalized shopping experience to help retirees purchase the Medicare coverage that best meets their needs,' Maureen Sullivan, senior vice president and chief strategy officer for the Blue Cross Blue Shield Association said."
arrow icon Thousands May Have Been Shorted on Insurance Subsidies
Kaiser Health News
4/24/2015

"Thousands of families with a disabled or deceased parent may have received a lower subsidy than they deserved to buy health coverage through the federal insurance marketplace as a result of a calculation error by the federal government.... Healthcare.gov seemed to be tripping up in cases where children were receiving Social Security income, generally because a parent has died or is disabled.... By adding the child's Social Security income to the family's income, the marketplace was inflating the family's income. The result: Some people were wrongly turned down for Medicaid coverage and others received less in premium tax credits and cost-sharing subsidies than they were eligible for."
arrow icon Massachusetts Needs $15 Billion Over the Next 30 Years to Pay Retiree Healthcare Benefits
MassLive
4/24/2015

"In fiscal year 2014, the state owed $15.6 billion in future health insurance benefits, which must be paid out over the next 30 years. The state had only set aside money to pay for 3.3 percent of that, leaving an unfunded liability of $15 billion, according to state financial documents. The basic problem is that the cost of providing health insurance to public retirees is increasing faster than Massachusetts is setting aside money to pay for it."
arrow icon Proposed EEOC Guidance May Force Design Changes on Existing Wellness Programs
Polsinelli PC
4/23/2015 [Guidance Overview]

"According to the preamble to the EEOC rules, the provisions of the EEOC rules (other than the new notice provision discussed above) apply to all wellness programs that include medical examinations or disability related inquiries, regardless of whether the wellness program is part of a group health plan. However, it is uncertain how some of the EEOC rules would be applied in practice; for example, it is unclear how the 30% limit on wellness program incentives would apply to a wellness program that is not a part of a group health plan. It may be that the EEOC will interpret the EEOC rules to prohibit any incentives that are not de minimis in the case of wellness programs not tied to a group health plan."
arrow icon A Look at the End-of-Life Financial Situation in America (PDF)
Employee Benefit Research Institute [EBRI]
4/23/2015

"[A]mong all those who died at ages 85 or above, 20.6 percent had no non-housing assets and 12.2 percent had no assets left. Among singles who died at or above age 85, 24.6 percent had no non-housing assets left and 16.7 percent had no assets left. Data show those who died at earlier ages were generally worse off financially: 29.8 percent of households that lost a member between ages 50 and 64 had no assets left. Households with at least one member who died earlier also had significantly lower income than households with all surviving members."
arrow icon A House Divided?
Christopher Carosa, via National Association of Plan Advisors [NAPA]
4/23/2015 [Opinion]

"In the retirement industry, the government has ready-made allies in the brother vs. brother conflict wrought by the Great Fiduciary Debate. Yes, statists can sprinkle in fresh gunpowder to spark a more heated exchange, but it is the beauty of insiders revealing each others' best kept secrets that remains the most effective way to discredit the entire private retirement industry."
arrow icon Measured Matters: The Use of 'Big Data' in Employee Benefits
Employee Benefit Research Institute [EBRI]
4/23/2015

"This article summarizes the presentations and discussion at the Dec. 11, 2014, EBRI policy forum held in Washington, DC, on the topic 'Measured Matters: The Use of "Big Data" in Employee Benefits': the use of massive amounts of data and computer-driven data analytics to determine how people behave when it comes to health and retirement plans, which programs work or do not, and how to get better results at lower cost."
arrow icon Pension Funded Status Drops by $6 Billion in March (PDF)
Milliman
4/23/2015

"The funded status of the 100 largest corporate defined benefit pension plans dropped by $6 billion during March as measured by the Milliman 100 Pension Funding Index (PFI). The deficit increased to $349 billion from $343 billion at the end of February due to the dual effect of a decline in the benchmark corporate bond interest rates used to value pension liabilities and flat asset performance during March. As of March 31, the funded ratio fell to 81.0%, down from 81.2% at the end of February."
arrow icon Why Labor Department Gets a Say on IRA Advice
The Wall Street Journal; subscription may be required
4/23/2015

"Why does Labor's rulemaking extend to IRAs? That dates back to a 1978 agreement between the Labor and Treasury departments that is sometimes referred to as the 'peace treaty,' says Norman Stein, a law professor at Drexel University.... Under that division of labor, the Labor Department defines when advisers to retirement plans and to retirement savers are 'fiduciaries' who must put clients' interests first.... The proposal ... says IRAs and workplace plans should have similar protections, given that both benefit from tax incentives to encourage retirement security. In that way, IRAs are more like workplace plans than other investment accounts, the Labor Department proposal says."
arrow icon DOL Proposes Sweeping Expansion of Fiduciary Duty Rules
Ropes & Gray LLP
4/23/2015 [Guidance Overview]

"The DOL mentioned and solicited advice with regard to, but did not formally propose, a 'streamlined' exemption which would allow advisers to receive compensation in connection with a plan's or IRA's purchase of certain high-quality, low-fee investment options, which might include mutual funds which are index funds or certain target date funds."
arrow icon What Does it Take to be a Non-ERISA 403(b) Plan?
Retirement Management Services
4/23/2015

"Plan sponsors who wish to maintain non-ERISA plans may not process distributions, approve hardship distributions or loan requests, review qualified domestic relations order (QDRO) requests received by the plan, authorize plan-to-plan transfers or otherwise make any discretionary determinations regarding plan administration.... [W]hile an annuity provider or other responsible third party selected by a person other than the employer can make these types of administrative decisions, if a Third Party Administrator (TPA) is retained by the employer to provide these services to the plan, the plan will no longer be a non-ERISA plan."
arrow icon PBGC Premiums Start to Factor Into Pension Decisions
Russell Investments
4/23/2015

"[T]he penalty on a funding shortfall will soon be running at almost 3% a year.... HATFA's funding relief uses an adjusted discount rate to produce a lower liability, but the shortfall used for the PBGC premium calculation does not use that adjusted discount rate; you could be fully funded for the HATFA calculation, yet still find yourself paying a substantial variable-rate premium to the PBGC. So this is a big enough penalty that in many cases it will change the balance in the funding decision[.]"
arrow icon Governmental Plan Determination Letters: Last Chance?
Calhoun Law Group, P.C.
4/23/2015

"From February 1, 2015 through January 31, 2016, the [IRS] is accepting requests for determination letters regarding the tax qualification of most governmental retirement systems.... [T]his may be the last chance for state and local retirement systems and other governmental plans to obtain formal IRS reassurance that their plans are qualified. This article discusses why a determination letter is important, and what needs to be done to obtain one."
arrow icon Seven Ways You Can Mess Up Your Required Minimum Distribution
Slott Report
4/23/2015

"[1] Using the wrong table to determine your life expectancy factor.... [2] Taking your RMD from the wrong type of account.... [3] Failing to adjust your prior year-end balance for an outstanding rollover or transfer.... [4] Failing to adjust your prior year-end balance for a recharacterization of a Roth IRA conversion made in the year after conversion.... [5] Taking your RMD from your spouse's retirement account.... [6] Forgetting to take your RMD altogether.... [7] Failing to timely correct any mistakes you uncover."
arrow icon Coal Companies Get Reprieve on Pension Costs
The Wall Street Journal; subscription may be required
4/23/2015

"The United Mine Workers of America 1974 pension plan ... is underfunded by about $2 billion ... The plan will require coal companies and other members to increase contributions by 10%, to $6.05 per union employee per hour worked, and maintain that rate until 2027 ... Benefit cuts for future retirees also are planned. A previous plan called for contributions to increase in stages from a minimum $12.50 in 2017 to as much as $26.50 as early as 2022 ... The United Mine Workers plan has roughly 12 retirees for every active worker[.]"
arrow icon House Panel Backs 401(k)-Like Plan for Military Personnel
Military.com
4/23/2015

"Under the existing defined-benefit plan, most officers and enlisted personnel who serve 20 years receive annual retirement pay equal to half of their average basic pay over their last three years of service. The [proposed] legislation would ... reduce that figure from 50 percent to 40 percent, in part to fund a 401(k)-like Thrift Savings Plan for the more the 80 percent of service members who leave the military without getting any retirement benefit."
arrow icon ICI Submission to Senate Finance Committee Working Group on Savings and Investment (PDF)
Investment Company Institute [ICI]
4/23/2015 [Opinion]

74 pages. "It is important to assess Americans' retirement prospects and the role that the current system plays in helping American workers reach their retirement goals.... The current retirement tax incentive structure is the foundation of the U.S. retirement system's success.... Reform options should build on the existing system -- not put it at risk.
arrow icon Practical Advice for Compliance with Recent Amendments to Section 162(m) Regulations
Orrick
4/23/2015 [Guidance Overview]

"Public companies that want to preserve both the flexibility of their pre-IPO equity plans ... and the tax deductibility of their equity award grants may want to consider the following grant practices: [1] Grant performance-based restricted stock in lieu of performance-based RSUs during the reliance period.... [2] Grant only stock options during the reliance period. [3] Grant a lesser number of RSUs with modified vesting schedules such that all or a portion of the RSUs will be settled in stock during the reliance period.... Public companies that want flexibility with their plans can have a single limit for all equity grants or separate limits for different classes of equity[.]"
arrow icon 2015 Global Employee Benefit Trends: Shifting Dynamics of $50 Oil (PDF)
Ascende
4/23/2015

7 pages. "In a market where operators can ask or demand that a drilling company renegotiate a rig contract, cost control becomes a critical consideration.... Wringing savings out of plan suppliers/vendors and cost shifting to employees will be a staple of consideration. U.S. cafeteria plan requirements may limit all but the very desperate from making mid-year plan changes, leaving 401(k) contributions as the most significant available cost reduction lever (after actual headcount reductions) available to employers."
arrow icon Text of CMS Guidance on Annual Eligibility Redeterminations and Re-Enrollments for Marketplace Coverage for 2016 (PDF)
Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS]
4/23/2015 [Official Guidance]

8 pages, dated April 22, 2015. "These procedures incorporate some modifications from the alternative procedures specified by the Secretary for benefit year 2015, to accommodate the programmatic and operational experience gained during the process for 2015, and will be implemented by each Federally-facilitated Marketplace (FFM). Like the alternative procedures specified by the Secretary for benefit year 2015, the alternative procedures ... preserve a core feature of the annual redetermination process, namely, that in general, an enrollee may take no action and retain coverage for 2016[.]"
arrow icon IRS Traded in Your Chevy for a 'Cadillac (Ac-Ac-Ac-Ac-Ac) Tax': Agency Issues First Guidance on the Implementation of Code Section 4980I
Ogletree Deakins
4/23/2015 [Guidance Overview]

"The first section of this article provides a general overview of the Cadillac Tax, including its background and purposes. The second section explores the key terms, calculations, and details related to the imposition of the tax. Part three discusses the areas in which the IRS seeks comment from affected employers and addresses beneficial steps employers can take to prepare for final regulations."
arrow icon Transitional Reinsurance Program: Refund Requests Must be Submitted by April 30 (PDF)
Buck Consultants at Xerox
4/23/2015 [Guidance Overview]

"Plan sponsors who made their 2014 submission by the December 5, 2014 deadline must request a refund by April 30, 2015, which provides very little time for action. A plan sponsor that correctly applied one of the counting methods cannot make a request to change its enrollment count or payment after the reporting deadline for a particular benefit year."
arrow icon EEOC Requests Comments on Plan Design, Best Practices and Practical Effects of Proposed Wellness Program Regs
Mintz Levin
4/23/2015 [Guidance Overview]

"EEOC asks stakeholders to comment on a number of issues pertaining to wellness programs ... including: ... [1] Whether incentives provided in a wellness program that asks employees to respond to disability-related inquiries and/or undergo medical examinations are coercive to the extent they render health insurance coverage unaffordable under the [ACA].... [2] Which best practices ensure that wellness programs are designed to promote health and do not operate to shift costs to employees with health impairments or stigmatized conditions? ... [3] What will be the practical effect of adopting the specific incentive limit set forth in the proposed rule? Specifically, what, if any, will be the impact of the proposed rule's 30% limit on incentives offered with respect to wellness programs intended to prevent or reduce tobacco?"
arrow icon Philadelphia Joins Growing List of Cities with Paid Sick Leave Laws
Epstein Becker Green
4/23/2015 [Guidance Overview]

"The Ordinance ensures that Philadelphia employers provide employees with paid sick time ... An 'employee' under the Ordinance includes any individual who works at least 40 hours per year within the city of Philadelphia.... The Ordinance defines 'family member' broadly ... The Ordinance does not require employers to pay for accrued, unused sick time upon termination, resignation, retirement, or separation."
arrow icon 'Reasonable Accommodation' Requirement in EEOC's Proposed Wellness Program Regs Will Pose Challenges for Employers
Crowell Moring
4/23/2015 [Guidance Overview]

"The need to provide reasonable accommodations in this context would invariably require employers to engage in the interactive process with affected employees to determine whether a reasonable accommodation or alternative to participation in the wellness program is available. Complying with the ADA's reasonable accommodation and interactive processes are already some of the most challenging workplace issues facing employers today. Extending these requirements to wellness program participation will likely create increased challenges and burdens for employers as they attempt to structure incentives and the methods by which those incentives can be achieved."
arrow icon Text of Ninth Circuit Opinion: Insurance Certificate Cannot Be Superseded by Terms of SPD (PDF)
U.S. Court of Appeals for the Ninth Circuit
4/23/2015

"MetLife would have us dismiss the insurance certificate as containing nothing more than the 'terms of the insurance contract between MetLife and IBM,' under which IBM made an election to have MetLife fund the Plan's benefits.... [C]ontrary to MetLife's assertions, the certificate contains the Plan's relevant 'terms and provisions' and is clearly issued to and written for IBM 's employees who are beneficiaries under IBM's long-term disability plan.... [T]he SPD itself declares that 'official plan documents ... remain the final authority ' and 'shall govern' in the event the SPD's terms conflict with those of official Plan documents. Accordingly, the district court clearly erred in finding that 'the SPD, and not the insurance certificate, constitutes the Plan document.' " [Prichard v. Metropolitan Life Ins. Co., No. 12-17355 (9th Cir. Apr. 21, 2015)]
arrow icon Senator Murray Launches New Tool to Hear Stories on Paid Sick Days
Committee on Health, Education, Labor and Pensions, U.S. Senate
4/23/2015

"Senate Health, Education, Labor, and Pensions (HELP) Committee Ranking Member Patty Murray (D-WA) launched #HFAnow: Share Your Story, a new tool to hear from workers and business owners in Washington state and across the country on why paid sick days are so important. This effort is the latest in Senator Murray's fight to get more Senate support for the Healthy Families Act, her legislation that would expand access to paid sick days to millions of workers."
arrow icon Broad Reach of Cadillac Tax Could Have Significant Impact on Employers
HealthLeaders InterStudy
4/23/2015

"After analyzing its plan, CalPERS found that if the tax were in place today, its Blue Shield Access+ plan offered through Blue Shield of California in the San Francisco area and the Anthem Traditional HMO plan in Sacramento would both trigger the tax because they cost more than the limit. The purchasing coalition estimated it would pay $3.9 million in excise taxes."
arrow icon Hospital Ratings Create More 'Confusion Than Clarity'
Chelko Consulting Group
4/23/2015 [Opinion]

"[H]igh reputation hospitals are correlated with higher costs (not higher quality). Is this because they are able to leverage those billboards and cable commercials to become 'must haves' in insurance company networks? So, not only are the prominent hospital rankings confusing indicators of what happens to patients, they also may be driving up your costs by creating plan member perceptions based on that confusion."
arrow icon Ibbotson Target Date Report 1Q 2015 (PDF)
Ibbotson Associates, Inc.
4/22/2015

"Target date funds produced a second consecutive quarter of positive results, posting an average return of 2.4%. Diversification into non-core asset classes continues to be a headwind as large-cap stocks outperformed most equity asset classes and core bonds outperformed most bond asset classes. Over the last 12 months the average target date fund returned 6.2%."
arrow icon Asset Location for Stocks in a Brokerage Account Versus IRA Depends on Time Horizon
Michael Kitces in Nerd's Eye View
4/22/2015

"[W]hile the traditional 'rule of thumb' for asset location is that tax-inefficient bonds go into an IRA, while equities eligible for preferential tax rates go into a brokerage account, the reality is that for investors with long time horizons the optimal solution may be the opposite. Once stock dividends and portfolio turnover are considered, the ongoing 'tax drag' of the portfolio can be so damaging to long-term returns that placing equities into an IRA may be more efficient, even though they are ultimately taxed at higher rates! ... [In] the end, good asset location decisions depend not only on returns and tax efficiency, but an investor's time horizon as well!"
arrow icon Five Frightening Retirement Statistics That Demonstrate Baby Boomers Are in Serious Trouble
Motley Fool
4/22/2015

"[1] Approximately four-in-10 baby boomers have nothing saved for retirement.... [2] 36% of boomers plan to rely on Social Security as their primary source of income.... [3] Early boomer households are facing average shortfalls of $71,299 per individual in a family.... [4] 19% of baby boomers who are offered a 401(k) or similar retirement plan don't participate.... [5] Full-time workers have a Retire Ready Index Score of just 4.1 out of 10, while retirees scored 5.5 out of 10."
arrow icon DOL Fiduciary Rule Includes Carve-Out for Investment Education (PDF)
Buck Consultants at Xerox
4/22/2015 [Guidance Overview]

5 pages. "[It] appears possible to avoid fiduciary status when providing participants with [1] the list of plan options, and [2] tools for identifying the type and amount of assets that should achieve desired goals, respectively -- but not when furnishing these two types of material in tandem. The need to separate this information may reduce its value to participants."
arrow icon Details of DOL's New Proposed Rules Defining Fiduciary Investment Advice
Proskauer's ERISA Practice Center
4/22/2015 [Guidance Overview]

"[T]he proposal does not require a meeting of the minds as to the extent to which the recipient will actually rely on the advice, but the parties must agree or understand that the advice is individualized or specifically directed to the particular advice recipient for consideration in making investment decisions.... [T]here is no requirement that the advice be specific to the needs of the plan, participant or beneficiary or IRA owner; rather, the advice only needs to be specifically directed to such recipient.... By requiring the 'best interest' standard to be included within the investment advice contract as an exemption condition, the exemption would provide IRA owners a private right of action for the adviser's failure to comply with such standard, which would not otherwise be available."
arrow icon Limited Relief Provided by Carve-Outs and Exemptions in DOL's New Conflict of Interest Proposal
Dentons
4/22/2015 [Guidance Overview]

"The breadth of the general definition makes it vital to come within the terms of a carve-out if one is available. However, the carve-outs are not available to a person who admits to being an ERISA fiduciary.... [E]ven for advisers and financial institutions that undertake the many compliance duties and disclosures necessary to come within the 'best interest contract' exemption, in the end, the exemption only exempts the person from the prohibited transaction rules, including potential excise taxes for IRAs under the Internal Revenue Code.... [T]he exemption does not exempt a person... from the general fiduciary duties under ERISA ... or from potential civil liability to make up any loss to the plan resulting from a breach of those duties."
arrow icon New Deadline for Puerto Rico Reduced Taxation on Retirement Funds (PDF)
Buck Consultants at Xerox
4/22/2015 [Guidance Overview]

"Puerto Rico's Tax System Adjustment Act allowed participants and beneficiaries of retirement plans to pay tax at special rates on their plan benefits during a limited time ... To take advantage of this opportunity, participants and beneficiaries had to either receive a distribution from the plan or pre-pay tax on their plan benefit during that window.... On March 30, 2015, Puerto Rico ... [extended] the end of the window for taking advantage of the special tax rates until April 30, 2015."
arrow icon EEOC Issues Guidance for Some Employer-Provided Wellness Programs
McDermott Will & Emery
4/22/2015 [Guidance Overview]

"The proposed rule applies only to employer wellness programs that include disability-related inquiries or medical examinations. Other types of wellness programs, such as education programs and programs that provide employees with general health information, are not subject to the proposed rule. However, HIPAA nondiscrimination requirements (for example, the requirement to provide a reasonable alternative standard for an activity-only wellness program) may apply to these other types of programs.... Certain parts of the proposed rule apply only to wellness programs provided by an employer in connection with a group health plan (whether insured or self-insured), whereas other parts of the proposed rule apply to all health programs."
arrow icon Mismatch Between EEOC Proposed Rules and HIPAA/ACA Limits Will Affect Wellness Program Design
Ballard Spahr LLP
4/22/2015 [Guidance Overview]

"To a significant degree, the regulations dovetail with guidance on wellness program incentives issued under other nondiscrimination laws, in particular, [HIPAA] and the [ACA]. However, they differ in ways that could materially affect how employers design and operate their wellness programs.... The HIPAA/ACA limit applies only to health-contingent wellness programs in a health plan ... The EEOC limit applies to wellness programs across the board.... If family members can participate in a wellness program, the HIPAA/ACA limit may be based on the cost of the coverage tier selected by the employee (self-only, employee plus one, etc.). The ACA rules base their limit exclusively on the cost of self-only coverage.... The HIPAA/ACA limit may be expanded to 50 percent of the cost of group health coverage to the extent that the wellness program addresses tobacco cessation. The EEOC limit does not allow for that extension."
arrow icon Recent Developments for Public Employee Pensions, April 16, 2015
Cypen & Cypen
4/22/2015

Topics include: [1] CalPERS responds to DB FOE; [2] Exclusion of attendee from meetings of municipal pension board violated Florida sunshine law, thus voiding all actions taken at such meetings; [3] Why is 69-1/2 the IRA owner's most important age? [4] The single most obnoxious retirement fund fee...and how to dump it; and [5] New survey conforms outliving money is top retirement concern.
arrow icon Teamsters Mount Grassroots Campaign to Block Pension Cuts
LaborNotes
4/22/2015

"A dozen meetings around the Midwest and South over the last month have attracted 100 to 200 angry members apiece, as activists and local retiree clubs learn their benefits are in danger. The meetings are likely to grow in size and number: Central States has just sent out notices to every member warning that cuts are coming.... [T]he average Central States pension is $1,230 a month ($14,760 a year).... For those with decent pensions -- some make $36,000 a year -- the cuts could be as high as 65 percent."
arrow icon Advisors Urged to Help Clients Rethink Retirement Savings
Financial Planning
4/22/2015

"Jan Scott Gundersen, managing director of advisory services at TIAA-CREF, noted that many investors are actively seeking out information on how to prepare for retirement ... He argues that advisors can help their clients think through their retirement needs by moving away from the focus on a lump sum savings total, and instead presenting their retirement picture in terms of how much income their savings would generate. Then he counsels advisors to talk to their clients about their goals for retirement, and to explain how spending patterns can change throughout those years."
arrow icon CMS Announces 2015 Compliance Priorities for Federally Facilitated Exchange Plans
Epstein Becker Green
4/22/2015

"A new priority for 2015 is prescription drug formulary compliance, including meeting drug coverage minimums and the provision of a process to allow enrollees to request and access clinically appropriate drugs not included in the formulary. All other areas of focus are the same as those identified as 2014 priorities, including: [1] complying with issuer participation standards, [2] maintaining a sufficient provider network, [3] ensuring access to Essential Community Providers, [4] not employing marketing practices or benefit designs that discourage enrollment of individuals with significant health needs, and [5] ensuring compliance of appointed agents/brokers."
arrow icon Six Million Employees Enrolled via Private Exchanges in 2015
Wolters Kluwer Law & Business
4/22/2015

"Many employers did not drop coverage in 2015, as initially forecasted. In fact, an Accenture survey shows 76 percent of consumers with employer-sponsored coverage see health insurance as a primary factor for continuing to work at their current employer, limiting some employers' ability to drop or defund health coverage. As employers seek a compelling alternative, private exchanges will emerge for some as a compelling model to reduce costs and administrative burden."
arrow icon IRS Approves Transfer of 401(h) Surplus Assets to Provide Retiree Medical Benefits After Pension Settlement
Towers Watson
4/22/2015 [Guidance Overview]

"A recent IRS private letter ruling (PLR 201511044) addressed whether a Section 420 transfer of surplus pension assets to a Section 401(h) account could be used to provide medical benefits to retirees following a settlement of their pension obligations.... [The] result is consistent with a 1991 IRS information letter on surplus transfers, which indicated that surplus pension assets could be transferred for any employee who received a pension distribution, is receiving a distribution or is entitled to such a distribution in the future, including those who received a lump sum distribution many years earlier."
arrow icon Defined Contribution Pension Plans for State and Local Government Employees in the Financial Accounts of the United States
Matthew Hoops, Irina Stefanescu, and Ivan Vidangos, members of the Board of Governors of the Federal Reserve System
4/22/2015

"This note provides some background information on the DC pension plans available to [state and local (S&L)] government workers, briefly discusses the methodology used to construct the estimates of assets held by S&L DC pension plans, and presents the estimates currently reported in the Financial Accounts. Finally, it discusses the impact of the introduction of S&L DC pension assets on the balance sheet of the household sector."
arrow icon New Drug Plan Regs Protect Pharmacies, Harm Consumers (PDF)
National Center for Policy Analysis [NCPA]
4/22/2015 [Opinion]

"Considering the benefits of safe and affordable prescription drugs, lawmakers are unwise to impose stifling regulations on drug plans, boosting costs to consumers and employers. These regulatory initiatives purportedly 'protect consumers', but are actually designed to protect local pharmacies from competition. State regulations reducing competition often boost the profits of local stakeholders. These profits generally come at the expense of insurers, employers, pharmacy benefit managers and consumers."
arrow icon After King v. Burwell, Could New State Exchanges Qualify for Subsidies?
The Incidental Economist
4/22/2015 [Opinion]

"The fight in [King v. Burwell] is about the meaning of a provision of the Internal Revenue Code linking the subsidies to the cost of a plan purchased on " 'an Exchange established by the State under 1311.' Section 1311, in turn, says that '[e]ach State shall, not later than January 1, 2014, establish an American Health Benefit Exchange.' Did the states have to hit that January 2014 deadline in order to establish exchanges 'under 1311'? ... If the Supreme Court sides with the plaintiffs, it will have taken a highly literal approach to the ACA -- an approach that might give juice to the argument that post-King exchanges haven't been properly established 'under 1311.' "
arrow icon Watered-Down Fiduciary Rule May Be the Best Case Scenario for Investors
Employee Fiduciary
4/22/2015 [Opinion]

"While a clean fiduciary standard offers brokers and insurance agents a straight-forward path for delivering conflict-free investment plan advice, a 'best interest contract exemption' makes that path fuzzy and subject to attack in court. That may not be a bad thing.... [R]etirement plan lawsuits, brought by lawyers like Jerry Schlichter, have been more successful in driving down excessive 401k fees than DOL fee disclosure regulations. Maybe a fuzzy fiduciary standard will fuel more suits that drive the cost of advice lower than a clean fiduciary standard would?"
arrow icon Retiree Medical Plans: Reducing Risk, Keeping the Promise
Towers Watson
4/21/2015

"In response to shifting demographics, increasing costs and risks, and other factors affecting their retiree medical benefit programs, U.S. employers have gone beyond tweaking plan designs. Many have taken different, though somewhat traditional, approaches to retiree health care in recent years.... In light of transformative changes in health care -- notably reform legislation and new benefit delivery channels -- employers are taking a fresh look at ways to keep their health care delivery promise to retirees over the long term."
arrow icon DOL Reproposes Expanded ERISA Fiduciary Definition and Revised Complex of Exemptions
Sutherland Asbill & Brennan LLP
4/21/2015 [Guidance Overview]

"DOL made a legitimate effort, from its frame of reference, to address a number of criticisms of the earlier proposal made formally during the 2010-2011 rulemaking process and informally during the intervening years.... On balance, however, there is substantial reason to question both the justification for and the execution of the reproposal. At bottom, the reproposal does not target 'bad actors' for reform. Instead, it would materially modify otherwise permissible practices in the affected industries and impose substantial compliance costs, uncertainties and exposure on 'good actors.' Consequently, important interests of plan sponsors, participants, IRA owners, financial services providers and the retirement system as a whole are in play."
arrow icon Is Wall Street Robbing Pensions Blind?
Pension Pulse
4/21/2015 [Opinion]

"[Dan Davies, a senior research adviser at Frontline Analysts,] states the expenses at Ontario Teachers were twice as much as the average of the New York funds over the last ten years, but he fails to understand the different composition of the asset mix. Ontario Teachers and other large Canadian funds moved into private markets and hedge funds way before these New York City pensions even contemplated doing so."
arrow icon Yes, Millennials, Please Invest in Your 401(k)
Barrons
4/21/2015 [Opinion]

"James Altucher, in a short video on Business Insider, is telling young people not to invest in a 401(k). This is terrible counsel on many levels. The disappearance of pensions and underfunding of Social Security have made the 401(k) our de-facto national savings plan. Altucher's recklessness is exacerbated by an implication that 401(k) accounts are some sort of black box -- 'you have no idea what's happening to that money,' he says darkly. His timing couldn't be worse, as new graduates who soon land in the workforce will pay dearly if they do as he says."
arrow icon Few Consumers Use Quality, Price Information to Make Health Decisions
Kaiser Health News
4/21/2015

"[T]wo of three people say it is still difficult to know how much specific doctors or hospitals charge for medical treatments or procedures.... Only about one in five people said they had seen specific cost or quality information about a hospital, insurer or doctor.... About 6 percent of people ever used quality information in making a decision regarding an insurer, hospital or doctor. And fewer than 9 percent used information about prices, most commonly in relation to health plans.... This lack of practical information may be related to another major finding from the poll: people are overconfident about their ability to pay medical bills without financial strain."
arrow icon DOL Not Budging on Fiduciary Rule Comment Period
ThinkAdvisor
4/24/2015

"Labor Secretary Thomas Perez indicated Thursday that his department will not extend further the 75-day comment period for its redraft to amend the definition of fiduciary under [ERISA]. When asked ... if DOL would honor the Tuesday request by industry trade groups to extend the comment period another 45 days, Perez reiterated DOL's previously stated comment guidelines."
arrow icon Wellness Programs Alive and Well?
Sutherland Asbill & Brennan LLP
4/23/2015 [Guidance Overview]

"There are two things that the EEOC proposed rules do not do: [1] Address the extent to which an employer can condition a wellness reward on a family member's participation in a wellness program, which may run afoul of Title II of the Genetic Information Nondiscrimination Act (GINA).... [2] Discuss in any detail whether the statutory provision, which at least two courts have held provides the basis for permitting wellness programs under the ADA (i.e., the insurance safe harbor or exception, which among other things permits an employer to observe the terms of a bona fide employee benefit plan) provides an alternative means for wellness programs to comply with the ADA."
arrow icon Sixth Circuit: Employer Breached Fiduciary Duty by Issuing Inaccurate SPD and Disability Insurer Breached Its Duty by Denying Benefits Described in It
The Wagner Law Group
4/23/2015

"[The Sixth Circuit] ruled that the employer (i) functioned as an ERISA fiduciary when it prepared and furnished the LTD plan's SPD to participants, and (ii) breached its fiduciary duty by furnishing the participant with a misleading SPD.... [T]he court confirmed that the insurer had a fiduciary duty to the plaintiff ... [and] had breached its fiduciary duty by interpreting the plan in a manner that served its own financial interests and was contrary to the representations made in the SPD. " [Stiso v. International Steel Group, No. 13-3503 (6th Cir. Mar. 25, 2015)]
arrow icon Mixed Messages from EEOC Proposed ADA Regulations on Wellness Programs
Morgan Lewis
4/23/2015 [Guidance Overview]

"Although all this guidance represents a welcome step in the right direction, the EEOC's proposed ADA regulations are still more restrictive than the HIPAA/ACA regulations and are applicable to one of the fundamental building blocks of any wellness program -- screenings designed to identify health risks that can be managed under the program."
arrow icon DOL's Re-Proposed Fiduciary Definition Widely Prohibits Personalized Investment Assistance Even If the Assistance Is in Customer's Best Interest
Davis & Harman LLP
4/23/2015 [Guidance Overview]

7 pages. "The framework set up by the DOL could work conceptually, but in its current form, it would have the same effects as the original 2010 proposal -- cutting off the option for low and middle-income individuals and small businesses to receive personalized investment assistance.... The re-proposal [includes] an exemption from the prohibited transaction rules that could, if it worked correctly, preserve access to investment assistance. But the exemption does not work: it is extremely narrow, is not principle-based, and includes such impractical conditions that it is unusable."
arrow icon The New Fiduciary Regulation Proposal, Part I: All It Was Cracked Up to Be? (PDF)
Ferenczy Benefits Law Center LLP
4/23/2015 [Guidance Overview]

"The DOL refers to the participants, beneficiaries, and IRA holders who will continue to receive conflicted advice under the Proposal as 'the investors [that] are particularly vulnerable to abuse.' The DOL also notes in the preamble to the Proposal that these consumers of advice services 'often do not read the legal documents.' Yet, the proposed exemption would leave these individuals to depend most substantially on the first two mechanisms to protect them: disclosure (which the DOL says they will not read) and integrity (which the DOL clearly believes investment advisors do not have ... at least, not in large enough measure).... The big difference is the ability of the DOL to get involved[.]"
arrow icon California Labor Agency Cautions Employers Who Ask for Doctors' Notes to Verify Paid Sick Leave
Ford & Harrison LLP
4/23/2015 [Guidance Overview]

"[T]he state legislature passed a law late last year providing mandatory paid sick leave to approximately 6.5 million workers without any provision for allowing employers to seek documentation verifying an employee's use of paid sick leave under the law.... [In a recent] public webinar ... the state labor agency took the position that the new law could prevent employers from conditioning the use of paid sick leave on the submission of documentation verifying the leave because such a requirement arguably interferes with the employee's use of paid sick leave."
arrow icon Text of FASB Proposed Accounting Standards Updates: Pension Plans and Health & Welfare Benefit Plans
Financial Accounting Standards Board [FASB]
4/23/2015 [Official Guidance]

96 pages. Updates to three accounting standards: [1] Plan Accounting: Defined Benefit Pension Plans (Topic 960); [2] Defined Contribution Pension Plans (Topic 962); and [3] Health and Welfare Benefit Plans (Topic 965). These updates cover: Fully Benefit-Responsive Investment Contracts (File Reference No. EITF-15C-I), Plan Investment Disclosures (File Reference No. EITF-15C-II) and Measurement Date Practical Expedient (File Reference No. EITF-15C-III).
arrow icon Congressional Brief: Retirement Accounts and Policy Recommendations (PDF)
National Center for Policy Analysis [NCPA]
4/23/2015 [Opinion]

"[L]onger lifespans -- and the need to draw from retirement savings for more years -- increase the risk of outliving one's retirement savings. Encouraging 401(k) plans to offer a lifetime annuity as the default payout option at retirement would go a long way toward addressing this potential problem.... We need a level playing field that treats all savers equally.... Simplify and unify the many retirement savings vehicles by creating universal Roth IRA."
arrow icon HIPAA Business Associate Agreements Broken Down
HealthITSecurity
4/23/2015

"Keeping track of [business associate (BA)] relationships can be a challenge for large covered entities, as those facilities can often have numerous BAs in place. The origin of the relationship could also affect this, that some are managed by legal or compliance departments.... [One] question centered on self-insured organizations, and how that related to HIPAA requirements. Essentially, as a covered entity, do they carry out risk assessments and what is the reasonable period to do that? ... [It] is easier to do risk assessments when they have been broken down into smaller sections."
arrow icon Execs See Fiduciary Proposal as Complicated, Costly
On Wall Street
4/23/2015

"Early assessments of the Department of Labor's fiduciary proposal find the new rules will be complicated to implement and costly for the industry, according to wealth management executives.... [A]nalysts at investment banking firm Keefe, Bruyette & Woods ... estimated that the DOL's proposal could be a 2% drag on Morgan's earnings, which the authors described as modest. For Raymond James, the analysts estimated 'roughly $2,400-$4,800 in increased compliance and litigation cost per advisor which equates to roughly $15 million to $30 million of incremental expenses.' "
arrow icon Large Employers Holding the Line on Premium Increases
Society for Human Resource Management [SHRM]
4/23/2015

"Since 2011, total premiums (including both employer and employee portions) increased for large employers by 9.4 percent, or about 2 percent every year. From 2014 to 2015, total premiums increased 2.6 percent, which is relatively modest when compared to the previous decade."
arrow icon The Big Picture of the Employer Shared Responsibility Tax (PDF)
Greta Cowart, Esq., Winstead PC, via Bloomberg Pension & Benefits Daily
4/23/2015 [Guidance Overview]

"While the regulations include a complex set of rules for determining who is a full-time employee, some rules apply both for determining if an ALE exists and which individuals are full-time employees on which a tax can be assessed. Not every violation of the rules will result in a tax assessment. Some of the rules can only be used to determine if an individual is a full-time employee on whom a tax may be assessed. So each time an employer discovers a situation where it may not have followed the ESR regulations precisely, it should step back and consider whether this is a violation that triggers a tax assessment or if it might be a violation without a consequence."
arrow icon Fidelity Asks IRS to Modify or Withdraw Guidance on Hardship Withdrawal Documentation
Thompson's HR Compliance Expert
4/23/2015

"While Fidelity said the new IRS newsletter article 'may be indicative of the position the IRS is likely to take when reviewing plan procedures,' it said the agency's position 'does not appear to be supported by IRS regulations and is contrary to recent indications from IRS representatives suggesting that such documentation is not required.' "

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