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Benefits in the News

Older News | September 2, 2015

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The Haze of Medical Marijuana and Benefits
International Foundation of Employee Benefit Plans [IFEBP]
9/1/2015

"[A] health plan doesn't have to cover medical marijuana. What's not clear is whether a health plan even can cover it. If coverage is provided, the benefit would be taxable. [A recent articles notes] that VEBAs are tax-exempt trusts, and there's an argument that if a VEBA covers the cost of medical marijuana, it could lose its tax exemption. However, they write, if less than 3% of the VEBA's total expenditures are for nonpermitted purposes, its tax-exempt status should be safe."
2017 Commissioner's Standard Ordinary (CSO) Tables
Society of Actuaries
9/1/2015

"The Valuation Table Team has completed their work on the 2017 Commissioner's Standard Ordinary (CSO) Tables. These include male / female, smoker / nonsmoker and age-nearest birthday (ANB) / age-last birthday (ALB)."
Employee vs. Independent Contractor and Retirement Plan Impact
National Tax-Deferred Savings Association [NTSA]
9/1/2015

"Due to the employer tax implications, all employers should work with appropriate counsel to make certain that no employee is ever misclassified as an independent contractor. However, 403(b) plan sponsors should recognize the additional exposure related to the universal availability requirement of such plans, and 457(b) plan sponsors should recognize the special rules regarding such plans."
Model Retirement-Saver Portfolios for T. Rowe Price Investors
Morningstar
9/1/2015

"Although the temptation to earn a quick buck by rolling out trendy new funds has been too much for many rivals, T. Rowe has generally fielded a utilitarian lineup. And while manager departures have picked up in recent years ... T. Rowe has historically done a good job of retaining its investment personnel. Nor has the firm been reticent to close funds pre-emptively in an effort to preserve performance: As of late August 2015, 10 of the firm's 135 funds were closed to new investors. Yet, those closures present a few challenges for investors building a well-rounded T. Rowe Price portfolio from scratch today."
Have 'State-of-the-Art' Investment Menus Backfired on Fiduciaries?
Fiduciary News
9/1/2015

"Adding complex investment options that participants don't understand is like asking them to play Russian Roulette with their largest pile of money. Additionally, 52% of participants surveyed said that their 401k investment information is more confusing than their healthcare benefit information.... The confusion is not limited to 'complex' investments. Even traditional asset classes confound many who have little to no education in the field of investments."
Change in Average 401(k) Account Balances from January 1, 2014 Through September 1, 2015 (PDF)
Employee Benefit Research Institute [EBRI]
9/1/2015

This report shows the change in average 401(k) account balances, grouped by age and tenure, from January 1, 2014 through September 1, 2015, counting only those participants who had an account balance at the end of 2013.
Is the DOL Fiduciary Proposal Really a Big Problem for Smaller Firms? Why Tech Is a Game Changer
Financial Planning
9/1/2015 [Opinion]

"The issue of serving smaller clients and the retirement plans of small businesses comes down to two things: technology and business model. Numerous broker-dealer executives have argued their firm and advisors will not be able to serve smaller accounts if they are no longer able to be compensated through commissions.... Is the proposed fiduciary rule the problem, or is there an issue with current business practices, infrastructure and technology among broker-dealers?"
Passive and Target Date Trends in Defined Contribution Plans
CAPTRUST Financial Advisors
9/1/2015

"As plan sponsors seek to balance the forces of fiduciary governance, modern portfolio theory, behavioral finance, and industry trends, plans have reduced exposure to specialty asset classes and overlapping options.... Despite this trend, there are two places where plan menus have expanded: target date fund series and passively managed options. This research brief will illustrate these trends and provide context for plan sponsors evaluating such changes within their plans."
Guidelines for Guaranteed Income Touchpoints (PDF)
The SPARK Institute
9/1/2015

"The purpose of this standard is to provide a framework to map participant web recordkeeping systems to income product requirements, and to identify gaps necessary for developing solutions specific to their individual recordkeeping systems, desired experience and strategy. This process allows a recordkeeper to eliminate analysis for transactions and services not relevant to their web offering, eliminate, at their discretion, requirements not specific to the income product or products they want to offer, and provides a basic view of the remaining requirements." [Also see SPARK Guaranteed Income Touchpoints Tables (Excel spreadsheet).]
Interim Report on the IRS' Verification of ACA Premium Tax Credit Claims (PDF)
Treasury Inspector General for Tax Administration [TIGTA]
9/1/2015

26 pages. "Because of incomplete and unreported data from the Exchanges, the IRS is unable to ensure that taxpayers claiming the PTC purchased insurance through an Exchange and properly reconciled APTCs received. However, the IRS has developed processes to identify erroneous PTC claims. Our review of these processes identified that 79 of the 80 reject code conditions and 16 of the 20 PTC error codes were working as intended. Computer programming errors always identifying tax returns with the particular error condition. The IRS plans to make programming corrections." [Dated May 29, 2015; released online Sept. 1, 2015.]
Pension Finance Update, August 2015
October Three Consulting
9/1/2015

"Fears of a slowdown in China rippled through financial markets in August, producing drops in stock markets around the world and erasing most of the 'cushion' pension sponsors had built up during 2015. Both model pension plans we track lost ground in August -- Plan A slipped more than 3% and Plan B lost more than 1% on the month -- but both plans remain up about 2% on the year through August."
CMS National List and Description of Current and Proposed EHB Benchmark Plans
Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS]
9/1/2015 [Official Guidance]

"For plan years 2014-2016, two documents are provided for each [Essential Health Benefits (EHB)] benchmark plan in the 50 states and D.C.: [1] a summary of the plan's benefit coverage and limits, including a list of covered prescription drug categories and classes; and [2] a list of state-required benefits. The list of each state's required benefits has been compiled to help states and issuers determine which state-required benefits must be included in plan designs. For 2017, two documents are provided for each proposed EHB benchmark plan: [1] a summary of the plan's coverage of certain benefits that appear on the Plans & Benefits Template, including a list of covered prescription drug categories and classes; and [2] supporting plan documents that provide detail regarding all plan coverage, limits, and exclusions.... [W]hen designing plans that are substantially equal to the EHB benchmark plan issuers may need to conform plan benefits, including coverage and limitations, to comply with [recent federal] requirements and limitations."
Text of IRS Project Questionnaire: Reporting of 4971(a) Excise Tax by 401(k) Plans (PDF)
Internal Revenue Service [IRS]
9/1/2015 [Official Guidance]

"Our records indicate you sponsor a 401(k) plan for the benefit of your employees and you filed a Form 5330 (Return of Excise Taxes Related to Employee Benefit Plans) reporting excise tax under Internal Revenue Code (IRC) section 4971(a). This appears to be in error as 401(k) plans are not subject to the minimum funding requirements and, therefore, would not owe this type of excise tax.... It is important to us that you report the correct amount of excise tax due for transactions involving your retirement plan. Please review your records including the information regarding excise taxes and have someone knowledgeable about your above referenced plan provide the following information."
EPCU Summary Report: Reporting of 4979 Excise Tax by 401(k) Plans Using Form 5330
Internal Revenue Service [IRS]
9/1/2015

"The goal of this project was to verify nondiscrimination compliance was met by requesting and reviewing information to: [1] Determine the plan provisions properly allowed and adopted a 401(k) as part of a CODA. [2] Determine compliance with IRC Section 401(k)(11) for SIMPLE 401(k) plans. [3] Determine compliance with IRC Section 401(k)(12) for Safe Harbor plans. [4] Verify corrective measures were taken to satisfy ADP or ACP tests and any applicable 1099-Rs were issued. [5] Verify reporting and the accuracy of calculations used to determine the amount of excise tax asserted under IRC Section 4979, requesting corrections when errors were identified."
Text of CMS Instructions for 2014 Risk Corridors Discrepancy Worksheet (PDF)
Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS]
9/1/2015 [Official Guidance]

37 pages. "While conducting reviews of MLR and risk corridors submissions, CMS identified a number of material differences from data that issuers submitted for other programs, including reinsurance and risk adjustment.... CMS needs additional information to explain the data in issuers' MLR and risk corridors submission.... Each company that submitted risk corridors data for the 2014 benefit year will be required to complete and attest to a checklist which identifies critical components of the risk corridors and MLR submission.... Companies will complete the Discrepancy Worksheet only if they have been instructed to do so by CMS in a letter dated August 31, 2015 and have been provided with a unique web link to access the form." [Also available: 6-page Supporting Statement.]
IRS Revisits 'Minimum Value Lite' Plans; Transition Relief Expiring
Lockton
9/1/2015 [Guidance Overview]

"The [IRS] has revisited its fascination with so-called Minimum Value (MV) Lite plans that, as originally designed, claimed to satisfy the [ACA's] minimum value health plan standard without covering inpatient hospitalization or physician services.... Under new proposed rulemaking, plans that relied on transition relief for 2015 won't meet the minimum value standard for 2016 unless the coverage is 'substantial' for both inpatient hospitalization and physician services. The IRS has yet to define 'substantial,' but has asked for comments on this issue."
ACA Reporting Requirements for Carriers and Employers (Part 7 of 24): Mergers and Acquisitions
Mintz Levin
9/1/2015 [Guidance Overview]

"When it comes to mergers and acquisitions involving at least one applicable large employer (ALE), the substantive rules governing employer shared responsibility ... and the corresponding reporting rules ... share at least one thing in common: we don't yet know how they work. This leaves parties to corporate deals with some challenging questions: How should acquired employees be treated? Does the form of the transaction matter? Do 'successor employer' rules of the sort found in the COBRA final regulations apply? Are the parties free to apportion exposure? What presumptions might be invoked if the matter of [ACA] compliance is not addressed?"
Report of Essential Health Benefits under the ACA (PDF)
Congressional Research Service [CRS]
9/1/2015 [Guidance Overview]

"Because each state selected its own [essential health benefit (EHB)]-benchmark plan under the 2014-2016 approach to the EHB, there is considerable variation in EHB coverage from state to state. This variation occurs in terms of specific covered services as well as in terms of amount, duration, and scope.... Furthermore, because states can allow non-group and small-group plans to substitute certain services within the categories, coverage in plans within a state also may vary by benefit amount, duration, and scope." [Report No. R44163, dated Aug. 27, 2015.]
EPCU Summary Report: Application of 403(b) Universal Availability Rule by K-12 Schools
Internal Revenue Service [IRS]
9/1/2015

"We discovered... that over ninety percent of schools offer employees the opportunity to defer salary to a 403(b) plan. Most appear to make the plan available with little restriction as to minimum deferral amounts required. The vast majority exclude substitute and part-time teachers as a group ... Some schools allow excludable employees working under 20 hours to participate ... Nearly half offered other deferral options like a 401(k) plan in addition to the 403(b)."
EPCU Summary Report: Application of 403(b) Universal Availability Rule and Use of Plan Documents by Higher Education Institutions
Internal Revenue Service [IRS]
9/1/2015

"The purpose of the project was to educate plan sponsors on aspects of UA that higher education organizations may not understand, and to provide information regarding compliance with the new plan document requirements.... About 40% of the respondents reported one or more issues with possible future impact. The area with the largest possible future impact is the communication of the opportunity to begin regular elective deferrals, 48% of the entities did so only once at hire. In addition, only 30% communicated the opportunity to change regular elective deferrals only once at hire."
Suing to Recover Benefit Overpayments? It May Not Be So Easy
Osler, Hoskin & Harcourt LLP
9/1/2015

"As plan audits have uncovered more and more payment errors, many plans have acted as if no time limits or other restrictions applied to their repayment demands.... [P]lan fiduciaries can consider the following steps to improve their chances of prevailing in these suits: [1] Make sure that plans have specific provisions for recouping overpayments. [2] Give the payee the opportunity to argue that the payment is correct under ERISA's claims and appeals procedures.... [3] Do self-audits regularly and if a lawsuit seems necessary, file it promptly. [4] Pay attention when retirees call to question whether they are receiving the right payments." [Pharmacia Corp. Supp. Pension Plan v. Weldon, No. 4:14CV1498 (E.D. Mo. Aug. 24, 2015)]
Tables Provide Summary of Multiemployer Actuarial Certifications Received by IRS (PDF)
Internal Revenue Service [IRS]
9/1/2015

"The charts [in this document] are comparisons of the certification information received each year by status... The [first] chart reflects a sharp increase in plans in Critical Status occurring in 2009, most likely due to economic issues. Subsequent years show some, but not full recovery.... The [second] chart reflects a sharp increase in plans in Seriously Endangered Status occurring in 2009, most likely due to economic issues. Subsequent years show decreasing percentage with 2013 rates lower than 2008."
IRS Proposes Modification to Minimum Value Rule; CMS Proposes 2017 EHB Benchmark Plans
Timothy Jost, in Health Affairs
9/1/2015 [Guidance Overview]

"While the actuarial value standard would apply as of December 31, 2013, the additional requirement for covering substantial physician and hospital services would apply for plan years beginning on or after November 3, 2014 for purposes of determining premium tax credit eligibility.... Along with the 2017 [Essential Health Benefits (EHB)] benchmark plans, CMS also published each state's 2014-2016 benchmark plan and a list of each state's current mandated benefits. An updated list of state mandated benefits will be published later, although coverage benefits enacted after 2011 are presumably not part of the EHB unless the state is prepared to cover their cost for qualified health plans."
Action Steps for Reviewing Your State's 2017 EHB Benchmark Plan
National Health Law Program [NHeLP]
9/1/2015

"HHS has set forth a short 30-day public comment period regarding the proposed [Essential Health Benefits (EHB)] benchmark plans with comments due by ... September 30, 2015.... This EHB Step Guide is designed to help state advocates review and analyze their state's benchmark plan, and raise any concerns to HHS before there is final federal approval."
Telehealth Commercial Coverage and Parity Laws: Trends, Challenges and Opportunities
Foley & Lardner LLP
9/1/2015

"Many, but not all, of the 29 states with telehealth commercial insurance laws have equal coverage (some impose restrictions and limits resulting in less than coverage parity). Payment parity exists in a smaller subset of those states, which means that not only must the services be covered, but the rate the health plan pays the provider for telehealth services must be equal or equivalent to the rate the health plan pays that same provider for the in-person service.... In states that lack payment parity, many hospitals and providers receive less than the in-person payment rate for the same service. That creates a disincentive for providers to utilize telehealth service[.]"
Health Care Premiums Rise, More Increases Coming
Business Insurance; free registration required
9/1/2015

"Group health care premiums continue to outpace inflation ... The increases may be more difficult for smaller employers to control, as they are 'really dependent on the insurer,' whereas larger firms can create the health plans they offer by working directly with insurers, [said Steve Wojcik, NBGH vice president of public policy]. He added that historically, smaller employers have typically faced higher premium rates than large employers."
What Constitutes 'Retaliation' under ERISA?
Stephen Rosenberg, The Wagner Law Group
9/1/2015

"[A] viable cause of action under ERISA for retaliation requires, to succeed, a strong linkage between a job action or other harmful decision and the participant's request for benefits or effort to protect those benefits. Most of the typical disputes that go on day after day between participants and plan administrators don't rise to this level, no matter how it feels to the particular participant trapped in the dispute. Instead, a viable ERISA claim for retaliation looks much more like the facts of [Perez v. Brain], in which the [DOL recently] recovered several hundred thousand dollars in back pay and other damages for a trio of employees and plan participants who blew the whistle on malfeasance by a plan fiduciary and cooperated with a federal criminal investigation."
International Employers Challenged by National Benefit Plan Mandates
Moss Adams LLP
9/1/2015

"Employers need to understand which benefits are automatically provided by a foreign government and which are required to be provided by employers for their employees working in that country. For example, paid time off benefits, such as vacation, holidays, maternity and paternity leave, and medical leave, may not be required for employers in the US but are common government-mandated benefits in other countries."
CalPERS Looks to Cut Financial Risk?
Pension Pulse
9/1/2015 [Opinion]

"If you're already in a pension deficit, taking on more risk investing in stocks, high yield bonds, emerging markets, or even real estate, private equity and hedge funds, you might end up digging an even bigger hole for your pension, one you'll never climb out of. On the investment front, CalPERS is doing what it has to do to reduce risk and stabilize the volatility of its funding level. It wisely nuked its hedge fund program which it never really took seriously and is now looking to reduce risk by increasing its exposure to bonds."
Share Class Offerings Shift with Fiduciary Focus
planadviser
9/1/2015

"Overall ... nearly 60% of asset managers will make changes to share class offerings heading into 2016. In this group, a quarter plans to add share classes, 'primarily cited as R6 or some zero revenue share class,' and a similar number will move away from share classes that generate revenue through commissions or sales fees. The movement away from commissions and revenue sharing reflects regulators' focus on fiduciary care and conflicts of interest."
Text of CMS Emergency Request for OMB Approval of MLR Data Submission Requirements
Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS]
8/31/2015 [Official Guidance]

"Based on CMS's identification of more significant data discrepancies than previously anticipated, we are requesting an emergency revision to the risk corridors data validation information collection requirement. We are requiring all companies with QHP issuers to complete a checklist to attest that their submission complied with critical guidelines for risk corridors and MLR data submission. For companies with issuers whose reported claims or premium amounts for risk corridors and MLR differ from data collected for other premium stabilization programs by a greater magnitude than expected, CMS is requiring that issuers quantify these differences, and provide a written explanation of the magnitude of the discrepancy. We require these descriptions to be approved by an actuary.... We are requesting OMB review and approval of this collection by September 4, 2015, with a 180-day approval period. Written comments and recommendations will be considered from the public if received by [September 3, 2015]."
Text of IRS Proposed Regs: Minimum Value of Eligible Employer-Sponsored Health Plans
Internal Revenue Service [IRS]
8/31/2015 [Official Guidance]

"This document withdraws, in part, a notice of proposed rulemaking published on May 3, 2013 ... and replaces the withdrawn portion with new proposed regulations providing guidance on determining whether health coverage under an eligible employer-sponsored plan provides minimum value.... [T]hese proposed regulations incorporate the substance of the rule in the HHS regulations. They provide that an eligible employer-sponsored plan provides minimum value only if the plan's share of the total allowed costs of benefits provided to an employee is at least 60 percent and the plan provides substantial coverage of inpatient hospital and physician services. Comments are requested on rules for determining whether a plan provides 'substantial coverage' of inpatient hospital and physician services.... These regulations are proposed to apply for plan years beginning after November 3, 2014. However, for purposes of section 4980H(b), the changes to the minimum value regulations ... do not apply before the end of the plan year beginning no later than March 1, 2015 to a plan that fails to provide substantial coverage for in-patient hospitalization services or for physician services (or both), provided that the employer had entered into a binding written commitment to adopt the noncompliant plan terms, or had begun enrolling employees in the plan with noncompliant plan terms, before November 4, 2014."
The Big Box Retailers in Health Care: Hospitals
National Center for Policy Analysis Health Policy Blog
8/31/2015 [Opinion]

"[W]hy does everything cost more in a big box hospital? It's not because of hospitals have high overhead (Home Depot has high overhead). It's due to the lack of competition. Ninety-seven percent of hospital bills are paid for by third-parties, so hospitals don't have to compete on price."
The Problem with Proposed Sales of Health Insurance Across State Lines
The New York Times; subscription may be required
8/31/2015

"The trouble with the idea is that varying or numerous state regulations aren't the main reason insurance markets tend to be uncompetitive. Selling insurance in a new region or state takes more than just getting a license and including all the locally required benefits. It also involves setting up favorable contracts with doctors and hospitals so that your customers will be able to access health care. Establishing those networks of health care providers can be hard for new market entrants."
Text of IRS Temporary Regs: Administration of Multiemployer Plan Participant Vote on an Approved Suspension of Benefits Under MPRA
Internal Revenue Service [IRS]
8/31/2015 [Official Guidance]

"A participant vote requires the completion of three steps. First, a package of ballot materials is distributed to eligible voters. Second, the eligible voters cast their votes and the votes are collected and tabulated. Third, the Treasury Department (in consultation with the PBGC and the Labor Department) determines whether a majority of the eligible voters has voted to reject the proposed suspension.... [T]he Treasury Department is permitted to designate a service provider or service providers to facilitate the administration of the vote.... Because the ballot for each eligible voter is accompanied by a unique identifier, the plan sponsor cannot itself distribute the ballot. Instead, the plan sponsor is responsible for furnishing a list of eligible voters so that the ballot can be distributed on the plan sponsor's behalf.... [B]allot packages be distributed no later than 30 days after the application has been approved and specify that the voting period begins on the ballot distribution date.... The temporary regulations do not provide for the collection of votes using paper ballots ... Within 7 days after the end of the voting period ... the Treasury Department (in consultation with the PBGC and the Labor Department) will either certify that a majority of all eligible voters has voted to reject the suspension or, if a majority of eligible voters did not vote to reject the suspension, issue a final authorization to suspend."
EPCU Summary Report: Prohibited Stock Allocations in ESOPs Project
Internal Revenue Service [IRS]
8/31/2015

"The purpose of this project was to verify compliance with the prohibited stock allocation (PSA) rules and to ensure Form 5330, Return of Excise Taxes Related to Employee Benefit Plans, is filed appropriate to the Form 5500.... A review of responses indicates returns identified as having a PSA shows the information was either reported in error or the conversion of the information into IRS systems was flawed. None of the plans identified had PSA issues."
EPCU Summary Report: Proposed Amendment Timely Executed (PATE) Project
Internal Revenue Service [IRS]
8/31/2015

"This EPCU project focused on plan sponsors who filed for a determination letter between December 2006 and January 2011, with a proposed caveat ... The focus of this project was to determine whether the designated caveat amendments were signed within the 90 day time frame, or if not, to determine the reason why.... An analysis of the closures indicate the majority of cases involved were found to be in compliance or were already under review through an examination process, SCP/VCP or by the Pension Benefit Guaranty Corporation (PBGC)."
EPCU Summary Report: SIMPLE IRA Plan Follow-Up Project
Internal Revenue Service [IRS]
8/31/2015

"This project allowed EPCU to determine the effectiveness of contacting these sponsors of SIMPLE IRA plans. While a significant number of plans were timely amended (including extension), project results indicate as many as 25% of the amendments may be due to our contacts sent in 2006."
Retirement Plan Sponsors Seek a Breakup from Mutual Funds
Institutional Investor
8/31/2015

"Aside from the rise of index funds, it has taken hundreds of fee-related class-action lawsuits, two Department of Labor rules and numerous advances in recordkeeping technology to push down 401(k) fees. But plan costs are also coming down for a reason that has nothing to do with mutual funds themselves. The fact is, plan sponsors have been increasingly jettisoning mutual fund lineups in favor of more efficient retirement plan vehicles."
New EPCU Project: 401(k) Plans Reporting 4971(a) Tax
Internal Revenue Service [IRS]
8/31/2015

"A review of the Form 5330 return showed that excise tax was paid under IRC Section 4971(a) for late payment of required minimum contributions. The Form 5500 series return reports the plan contains a 401(k) feature and was not subject to the minimum funding requirements of IRC section 412. The EPCU will be mailing the contact letter and Information Request to plan sponsors. A closing letter will be issued to the plan sponsor upon completion of our review."
EPCU Interim Report: Multiemployer Actuarial Certification Projects
Internal Revenue Service [IRS]
8/31/2015

"The purpose of this project is to collect and document actuarial certifications for multiemployer defined benefit plans required to be filed by PPA of 2006 and IRC Section 432.... MECA Project: 2008 was the first plan year certifications were required. At that time over 75% of the plans were in 'Green Status' indicating they were 'Neither Endangered nor Critical'. By 2009, the percentage of cases in 'Green Status' dropped to 31.80%; revealing a nearly complete reversal of plan funding. This was most likely due to the effects of the economic crisis. The 2012 filings show a significant improvement with 57.59% of certifications reporting their funding as 'Green Status'. Plans in the Critical, Seriously Endangered, or Endangered Status started to decline in number, which is a direct result of Legislative action under WRERA."
ACOPA Meets with PBGC on Form 501, Forced Cash-outs
American Society of Pension Professionals & Actuaries [ASPPA]
8/31/2015

"PBGC has found instances in which benefits are improperly transferred to individual retirement plans when a participant is a missing participant. In such cases, the plan administrator must follow PBGC's Missing Participant regulation, which requires that the plan either purchases an annuity for the participant or transfers the participant's benefits to PBGC, and in either case provides information to PBGC."
Changing Health Behavior: Engaging Employees as Consumers (PDF)
Buck Consultants at Xerox
8/31/2015

"In order to positively impact workforce health and reduce costs, employers must move their health programs beyond words to a state of consumer engagement and action. This article summarizes relevant concepts and findings from the fields of psychology, decision research, and social marketing and identifies best practices in developing consumer engagement. Employers can utilize this information when creating health care programs and tools to control costs and improve workforce health and productivity."
San Bernardino Pension Shift to Save $2.7 Million
Calpensions
8/31/2015

"Bankrupt San Bernardino approved a plan last week to disband the city fire department and annex the city to a large county fire district. Part of the expected savings is $2.7 million a year from avoiding future CalPERS rate increases. City firefighters now in CalPERS would be transferred to the San Benardino County Employees Retirement System. And the county system is said to face lower rate increases, because it has more quickly paid down pension debt."
When Does ERISA Apply to Small Business Owner Benefit Plans?
DeBofsky & Associates, PC
8/31/2015

"The court noted that for the ERISA exemption to apply, the corporation would need to have been owned by one person and his or her spouse. In this particular situation, however, the plaintiff owned the company along with two others, so the ERISA exemption did not apply." [Silverman v. Unum Group, No. 14-CV-6439 (S.D.N.Y. July 30, 2015)]
Third Circuit Says ERISA Administrative Appeal Denial Letters Must State Plan-Imposed Time Limits
Proskauer's ERISA Practice Center
8/31/2015

"Given that three circuits already have ruled consistently on these issues, plan fiduciaries should make sure that administrative appeal denial letters specifically set forth plan-imposed time limits. Furthermore, given the courts' tendency not to penalize participants for failure to consult SPDs and plan documents when pursuing a claim for benefits, plan sponsors and administrators should consider whether there is other information pertinent to the claims process to which they should affirmatively alert participants when determining claims for benefits."
Has Faster Growth in Health Care Spending Returned?
Robert Wood Johnson Foundation
8/31/2015

"Recent data show 2014 GDP growth is expected to be 3.9 percent. Thus, there does not yet appear to be evidence of an underlying spike in health spending; such a spike may still occur but most of the recent bump can be explained by the ACA coverage expansion."
401(k) Plan Participants React Visibly to Market Dip
Aon Hewitt
8/31/2015

"[T]rading activity [on Friday August 21 was 2 times the normal level, while activity on Monday [August 24] was 7 times the normal level, the third highest day of trading since 2008.... Preceding Friday's market drop, the Aon Hewitt 401(k) Index showed no days of above normal trading in July or the beginning of August. The trading movement on Friday and Monday was out of equities and into fixed income."
Seeking to Avoid Community Rating Under Health Care Reform, Health Benefit Trusts Failed to Provide Sufficient Proof of 'Bona Fide Association' Status
Thomson Reuters / EBIA
8/31/2015

"The court's application of the 'commonality' test in this case illustrates the difficulty in satisfying the standard, especially for employer groups or associations that appear to be mere marketing organizations or interest group forums. But even for legitimate associations, this court imposes a demanding standard, requiring a showing of how employers participate in activities of the association beyond provision of benefits to employees." [Associated Industries Mgmt. Serv. v. Moda Health Plan, Inc., No. No. 3:14-cv-01711 (D. Or. July 16, 2015)]
IRS Private Letter Ruling Confirms Tax Treatment of Employer-Provided Annual Transit Passes
Thomson Reuters / EBIA
8/31/2015 [Guidance Overview]

"The employer (in this case, a city government) represented that it purchases annual Smart Cards from the local transit authority for each of its employees. Each card, which may be used during the calendar year for transportation on the transit authority's bus and rapid transit systems and cannot be used for any other purpose, includes a photo of the employee and cannot be transferred to another individual. The card is deactivated upon an employee's termination of employment.... [T]he IRS ruled that the Smart Cards are considered transit passes within the meaning of Code Section 132(f) and that employees may exclude the card's monthly fair market value from income, up to the statutory monthly limit."
Third Circuit Requires Benefit Denial Letters to Contain Plan Limitations Period
Seyfarth Shaw LLP
8/31/2015

"As a possible silver lining, the Third Circuit stopped short of requiring the inclusion of the limitations period for the most analogous state law claim. It noted that, while the issue was not before the court, such a requirement would require legal research into various state law for each claim and would potentially result in the administrator providing legal advice to claimants." [Mirza v. Ins. Admin. of America, Inc., No. 13-3535 (3d Cir. Aug. 26, 2015)]
IRS Private Letter Rulings Address Handling of VEBA Assets by Employers
Thomson Reuters / EBIA
8/31/2015 [Guidance Overview]

"An employer sought to amend its VEBA trust agreement -- under which assets could be used exclusively to fund retiree health plan benefits -- to provide that a portion of the assets would be segregated to fund benefits under the employer's active employee health plan.... The IRS reasoned that because Section 501(c)(9) permits VEBAs to pay active employee health benefits, the proposed amendment would not be an impermissible inurement."
EPCU Projects Are a Kinder, Gentler Way to Ensure Retirement Plans Comply with Tax Qualification Requirements
PLANSPONSOR
8/31/2015

"ideas for compliance check projects can come from other sources than tax filings, such as retirement plan practitioners' suggestions or questions for agents.... When [a] project is started, the EPCU prepares a prospectus that details its scope and actions, develops an information request, and prepares a Web page for plan sponsors that get a contact letter to learn more about the project.... During the compliance check, the EPCU tries to resolve any plan sponsor errors found by asking the plan sponsor to go through the Voluntary Correction Program or other EPCRS programs. Some cases may be referred for audit."
Open Government at PBGC
Pension Benefit Guaranty Corporation [PBGC]
8/31/2015

"PBGC's Open Government webpage highlights our commitment to increase transparency, participation and collaboration with our stakeholders. The page includes important PBGC data sets that are used to increase our accountability to the public, and to improve the public's awareness of our operations and how we carry out our mission."

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