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Benefits in the News

Older News | February 27, 2015


arrow icon IRS Employee Plans News 2015-2, February 27, 2015 (PDF)
Internal Revenue Service [IRS]
2/27/2015 [Guidance Overview]

Topics include: [1] Correction options for 457(b) plans -- EP Voluntary Compliance is not available for form errors; [2] March webinars: [a] Highlights of the Second Cycle E Determination Letter Application Process -- March 5, 2015; and [b] Retirement Plan Loans to Participants -- March 26, 2015; [3] my Social Security account -- to get a replacement SSA-1099 or SSA-1042S online; [4] updates to: [a] PBGC Insights page; [b] Publication 4484, Choose a Retirement Plan for Employees of Tax Exempt and Government Entities; and [c] Form 8955-SSA, Annual Registration Statement Identifying Separated Participants With Deferred Vested Benefit (Instructions).
arrow icon ADA, FMLA and Medical Marijuana: How Do They Mix?
Seyfarth Shaw LLP
2/27/2015

"The fact that I might be using medical marijuana during my FMLA time off is irrelevant. Indeed, if my condition requires me to take time off from work to use medical marijuana, that time off would also be covered by the FMLA.... What if the employer has a 'zero tolerance' drug free workplace policy? Does the employer have to take the employee back when he/she tests positive for marijuana use after an FMLA covered absence to smoke marijuana as a medical treatment?"
arrow icon What ERISA Plan Fiduciaries Can Learn from Tibble v. Edison International
Mayer Brown
2/27/2015

"Pending the Court's decision, the takeaway for plan sponsors and fiduciaries is that there has never been a more important time to revisit investment monitoring practices and procedures.... [To] minimize the risk of potential litigation, fiduciary committees should expand their analyses to make sure that each investment continues to meet the objectives of the plan's investment policy statement, that it makes sense when viewed as part of the plan's entire portfolio and that it remains an appropriate choice among others in its asset class." [Tibble v. Edison International, No. 13-550 (9th Cir. Aug. 1, 2013; cert pet. granted Oct. 2, 2014, argued Feb. 24, 2015)]
arrow icon Special Enrollment Periods in 2014: A Study of Select States
Urban Institute
2/27/2015

"[As] the second open enrollment period ends -- and as open enrollment periods shorten in future years -- special enrollment periods (SEPs) will warrant increasing attention. This paper analyzes the legal framework, limited enrollment data, and first year special enrollment experiences in five State-Based Marketplaces (SBMs) and finds that Marketplace systems and consumer outreach and enrollment efforts did not yet match the significant potential for SEP enrollment."
arrow icon High Rate of Shopping and Switching in Obamacare Plans Is a Good Sign
The New York Times; subscription may be required
2/27/2015

"More than half of people who bought insurance on HealthCare.gov last year explored their options before choosing a 2015 plan ... Of those 2.2 million who shopped, more than half switched to a new health plan. Those high rates of shopping and switching are unusual in public health insurance marketplaces."
arrow icon Britain's Top Doctor Says National Health Service May Be Forced to Abandon Free Healthcare for All
Daily Mail
2/27/2015

"The NHS is 'not fit for the future' and unless it undergoes radical change it may be forced to abandon free healthcare for all, in the future, the service's top doctor has warned. Medical director of NHS England Professor Sir Bruce Keogh said the NHS must become far less reliant on hospitals and needed a 'complete transformation' of the way it operates.... 'This will open up a whole series of discussions about whether the NHS is fit for purpose, whether it's affordable, and whether the compact with the citizen of free healthcare for all is sustainable in the longer term.' "
arrow icon IRS Issues Initial 'Cadillac' Tax Guidance, Welcomes Comments on Various Aspects
Bloomberg BNA
2/27/2015 [Guidance Overview]

"A wide array of coverage is considered applicable coverage under Section 4980I, including health flexible spending accounts, Archer medical savings accounts, health savings accounts, governmental plans, coverage for on-site medical clinics, retiree coverage and multiemployer plans, the notice said.... The agencies expect to include employer contributions to HSAs and Archer MSAs in applicable coverage, and exclude employee after-tax contributions to HSAs and Archer MSAs. In addition, Treasury and the IRS said they anticipate future proposed rules will exclude on-site medical clinics 'that offer only de minimis medical care to employees' from applicable coverage."
arrow icon Sometimes a Government Employee's Benefits Could Be Governed by ERISA
Lane Powell PC
2/27/2015

"[E]mployee benefit plans established by governmental entities are exempt from ERISA. But ERISA might apply if the employee benefit for the government employee is established through an association. Moreover, you need to make sure the 'governmental entity' is actually a 'governmental entity' under ERISA. For example, plans that involve both public and private employers may result in ERISA application." [Raible v. Union Security Insurance Co., No. 2:14-cv-1307 (W.D. Pa. Feb. 20, 2015)]
arrow icon How One Employer Drove Adoption of an HSA-Eligible Heath Plan to 50%
Fidelity Investments
2/27/2015

"With a technical workforce of over 3,800 employees in the United States, the Synopsys benefits team learned that engineers tend to think about health care spending in terms of cash management. Employees ask how much money needs to be allocated up front vs. monthly. When employees did the math, they understood that monies remaining in their HSA belong to them -- not the company -- and that they could build up their health savings over time."
arrow icon Institutional Investor Expectations, Manager Performance, and Fund Flows
Howard Jones and Jose Vicente Martinez, via SSRN
2/27/2015

"[The authors] analyze institutional investors' expectations about the future performance of fund managers and the impact of those expectations on asset allocation decisions. [They] find that institutional investors allocate funds mainly on the basis of fund managers' past performance and of investment consultants' recommendations, but not because they extrapolate their expectations from these."
arrow icon Will the Unemployed Soon Be Able to Tap Retirement Accounts?
NBCNews.com
2/27/2015

"[They could, if] a little-known provision buried deep within President Barack Obama's proposed 2016 budget becomes law. The provision would allow those who've received unemployment compensation for more than 26 weeks to withdraw up to $50,000 per year from their IRAs and employer-sponsored retirement plans. And while experts said the budget is unlikely to pass in its current form, there appears to be bipartisan support for the exemption."
arrow icon Tibble Supreme Court Argument: Fiduciaries Must Monitor Investments
McGuireWoods LLP
2/27/2015

"During the argument, the justices, the parties to the suit, and the [DOL] all seemed to agree on the following points: [1] There is no 'continuing violation' as to a fiduciary decision to offer an imprudent investment as an investment option. [2] The ERISA statute of limitations begins to run from the date of the alleged fiduciary breach in making that decision. [3] There is an ongoing fiduciary duty to monitor investment options prudently. [4] The process of 'monitoring' investments is less intensive and rigorous than the process of initial selection of investment options." [Tibble v. Edison International, No. 13-550 (9th Cir. Aug. 1, 2013; cert pet. granted Oct. 2, 2014, argued Feb. 24, 2015)]
arrow icon Federal Employees Health Benefits (FEHB) Program: An Overview (PDF)
Congressional Research Service [CRS]
2/27/2015

"The Federal Employees Health Benefits (FEHB) Program provides health insurance to federal employees, retirees, and their dependents. This report provides a general overview of FEHB. It describes the structure of FEHB, including eligibility for the program and coverage options available to enrollees, as well as premiums, benefits and cost sharing, and general financing of FEHB. The report also describes the role of the Office of Personnel Management (OPM) in administering the program." [CRS Report R43922, Feb. 25, 2015]
arrow icon Anthem Data Breach: How Safe Is Health Information Under HIPAA? (PDF)
Congressional Research Service [CRS]
2/27/2015

"Payers and providers of health care have considerable discretion in how they implement the HIPAA security standards. Each standard is accompanied by one or more implementation specifications. Some implementation specifications are required ... Other implementation specifications are 'addressable.' ... Encryption is one of the addressable measures. Entities that choose not to use encryption must document the reasons and implement an 'equivalent alternative measure if reasonable and appropriate.' The Anthem breach calls into question whether health care payers and providers should be permitted such latitude in implementing the HIPAA security standards versus a more prescriptive, mandatory approach." [CMS Insights IN10235, Feb. 24, 2015]
arrow icon Text of IRS Rev. Proc. 2015-22: User Fees and Change of Address for Submission of Applications for Approval of Section 403(b) Pre-Approved Plans (PDF)
Internal Revenue Service [IRS]
2/27/2015 [Official Guidance]

"This revenue procedure contains a modification to Revenue Procedure 2013-22, as modified by Revenue Procedure 2014-28, and modifications to Revenue Procedure 2015-8. In particular, this revenue procedure changes the addresses to which applications for opinion and advisory letters for Section 403(b) pre-approved plans should be submitted and inserts a user fee that was omitted from Rev. Proc. 2015-8."
arrow icon Text of IRS Publication 5196: Getting Ready -- Monthly Tracking (PDF)
Internal Revenue Service [IRS]
2/26/2015 [Guidance Overview]

2 pages; dated Feb. 2015. "To prepare for 2016, applicable large employers need to track information each month in 2015, including: [1] Whether you offered full-time employees and their dependents minimum essential coverage that meets the minimum value requirements and is affordable. [2] Whether your employees enrolled in the self-insured minimum essential coverage you offered.... All applicable large employers are required to report health coverage information for the first time in early 2016 for calendar year 2015. To be prepared to report this information to the IRS and issue the new Form 1095-C to employees, you'll need to: [1] Determine if your organization is an applicable large employer. [2] Determine the kind of health insurance coverage you offered to full-time employees and their dependents, if any. [3] Identify who your full- time employees are for each month and track health coverage information in 2015 to help complete new IRS forms."
arrow icon IRS Rules Further Define Payment of ACA Insurer Fees
Thompson SmartHR Manager
2/26/2015 [Guidance Overview]

"The rules exist to help insurers decide the extent to which they have to pay taxes on premiums collected, particularly by their subsidiaries, some of which may have qualified for exclusions.... The fee will be based on the ratio of the covered entity's net premiums written for health insurance for U.S. health risks that are taken into account for the calendar year immediately before the fee year (data year) to the aggregate net premiums written for health insurance of U.S. health risks of all covered entities that are taken into account during the data year. Covered entities include: [1] health insurers; [2] HMOs; [3] Medicare Advantage, Part D and Medicaid insurers; and [4] non-fully insured multi-employer welfare arrangements."
arrow icon CEO Pay Three Times That of Other Named Executive Officers
Steven Hall & Partners
2/26/2015

"CEO pay is 2.93 times that of the other named executive officers at companies in the S&P 500. Median multiples of CEO to named executive officer (NEO) pay ranged from 2.61 to 3.65 at information technology and materials companies, respectively ... Unlike the CEO to median employee ratio, the CEO to NEO ratio can provide insight on the executive team in charge of the company, including talent development, succession planning and retention."
arrow icon Text of GAO Report on Private Pensions: Participants Need Better Information When Offered Lump Sums That Replace Their Lifetime Benefits
U.S. Government Accountability Office [GAO]
2/26/2015

"This report focuses on [1] the prevalence of lump sum offers and sponsors' incentives to use them, [2] the implications for participants, and [3] the extent to which selected lump sum materials provided to participants include key information.... GAO recommends that DOL improve oversight by requiring plan sponsors to notify the agency when they implement lump sum windows, and coordinate with Treasury to clarify guidance on the information sponsors provide to participants. Further, Treasury should reassess regulations governing relative value statements, as well as the interest rates and mortality tables used in calculating lump sums. Agencies generally agreed with GAO's recommendations." [Published: Jan 27, 2015. Publicly released: Feb. 26, 2015]
arrow icon Self-Purchasers Are Confident, But Feel Unprepared for High Medical Costs
Wolters Kluwer Law & Business
2/26/2015

"Seventy percent of the [consumers who purchased their own health insurance] surveyed reported feeling financially secure, compared to 66% of the general population, and 74% of [such] self-purchasers expect their financial situation to improve in the next 12 months, compared to 69% of the general population. Furthermore, 93% of self-purchasers said they think more about the cost of their health insurance than they do about the cost of cable television, compared to 63% of the general population."
arrow icon An Increasing Number of Americans Are Unfamiliar with Investment Options in Their Retirement Plans
TIAA-CREF
2/26/2015

"[N]early half of Americans (46 percent) are concerned about running out of money in retirement. Some of this concern may be justified by the fact that 39 percent of Americans say they are not familiar with their retirement plan investment options -- an increase from 33 percent in 2014.... [D]espite the number of people who are unfamiliar with the investment options in their retirement plan, the vast majority of respondents (85 percent) say they feel comfortable with the choices they have made. This gap highlights individuals' need for advice and education on how to save enough to create a steady stream of income in retirement."
arrow icon New Jersey Assembly Tightens Pay-to-Play Laws for State Pension Investments
Philadelphia Inquirer
2/26/2015

"New Jersey lawmakers sent a bill to Gov. Christie on Monday that would expand restrictions on investments of state pension funds with outside money managers who donate to national political committees. The legislation also would require the state Treasury Department to regularly publish reports disclosing fees paid to private managers who invest state pension funds."
arrow icon Employer All But Concedes in Supreme Court Dispute Over ERISA Monitoring
SCOTUSblog
2/26/2015

"The major point on which debate focused was whether a periodic duty exists in general -- such monitoring as a 'prudent' trustee would do -- or instead is predicated on some showing that circumstances have changed enough to justify reinvestigation of the assets in the portfolio.... [The attorney for the defendant, Edison International,] tried to insist that the record demonstrated that the employees simply had not made the case that the employer had failed to engage in proper monitoring."
arrow icon If You Like Your Annuity, You Can Keep Your Annuity!
InsuranceNewsNet.com
2/26/2015 [Opinion]

"Does that headline sound familiar? It should because more than likely it will be the next response to opposition of a soon-to-be-introduced Fiduciary Rule from the Department of Labor. Make no mistake, this not about protecting consumers, modernizing public policy or anything else. This is about federal regulation of annuities sold in 401(k) plans and other employer-sponsored retirement plans. While there are other financial products used inside these plans, annuities are specifically being targeted."
arrow icon Obamacare Defense Is Tailored for Key Supreme Court Justices
Los Angeles Times
2/26/2015

"Supporters of the law say that even if Congress meant to restrict subsidies to marketplaces created by the state, no one warned state officials that relying on the federal version would deprive their residents of millions of dollars in insurance subsidies.... Late last month, lawyers for 22 states... told the justices they were blindsided by the claim that federal subsidies might be cut off because they failed to establish state marketplaces.'Surprising states with a dramatic hidden consequence' violates a basic principle of fair dealing between Washington and the states, the state lawyers said in the court brief. Congress 'does not hide elephants in mouse holes,' they added, quoting a comment by Justice Antonin Scalia in a previous case."
arrow icon The Two Faces of a Fiduciary Standard: Positive and Punitive
Donald B. Trone, via 401kHelpCenter.com
2/26/2015 [Opinion]

"The purpose for defining a Positive fiduciary standard is to provide the details on how the advisor can improve their investment decision-making process.... The purpose for defining a Punitive fiduciary standard is to define rules which will restrict or prohibit all advisors from certain activities.... Most of the fiduciary advocacy we have seen since the Dodd-Frank Act was signed in 2010 is Punitive.... We've lost our way in defining a Positive fiduciary standard."
arrow icon Is the Illinois Secure Choice Savings Program Act Really Exempt from ERISA?
Bloomberg BNA
2/26/2015

"There are several factors that indicate that the ISCSP could be deemed an employee pension benefit plan subject to ERISA. While employees can opt-out of making contributions under the ISCSP, there is still an involuntary element present where an employee fails to take action and automatically must make contributions equal to 3% of wages.... The Act could be interpreted to only require employers to enroll employees, collect and remit contributions and put participants on notice of the program. Such minimal involvement, arguably, could land the program within the ERISA safe harbor."
arrow icon How to Create a Retirement Spending Plan That Lasts
Charles Schwab
2/26/2015

"When shifting from saving to spending your retirement funds, use multiple building blocks to help generate cash flow. While interest and dividends can be one source of income, don't let them drive your retirement spending. After non-portfolio income sources such as Social Security, part-time work, a pension or an annuity, we suggest using cash and short-term investments, interest and dividends, and capital gains to help fund your spending needs."
arrow icon Jonathan Gruber Fired from Massachusetts Health Insurance Exchange Board
Washington Examiner
2/26/2015

"Massachusetts' governor has fired Obamacare architect Jonathan Gruber from a board that oversees the state's health insurance exchange ... Gruber ignited a controversy last December when a series of videos surfaced where the [MIT] professor discussed the 'stupidity of the American voter' was vital to passing the [ACA].... An immediate reason for the firing was not clear[.]"
arrow icon Why Does the U.S. Chamber of Commerce Oppose the DOL Fiduciary Rule?
Ron Rhoades
2/26/2015 [Opinion]

"The fact of the matter is that the DOL/EBSA re-proposal of the 'fiduciary' definition is critical to all businesses, and their owners, that sponsor a qualified retirement plan. Far too often, plan sponsors have been sued for 'relying' upon the advice of non-fiduciary 'retirement consultants.' Yet, these 'consultants' escape liability as they hide behind the low 'suitability' standard for the 'recommendations' they provided.... [T]he plan sponsor has great difficulty holding the 'retirement plan consultant' to account, given the low standard of conduct applicable to measure the potential liability of a non-fiduciary consultant. The plan sponsor is the victim of poor (and non-fiduciary) advice, in such cases, and has no effective remedy for the conflict-ridden recommendations it received. And most business owners don't even realize that they cannot rely upon such non-fiduciary advisors."
arrow icon Health Care Spending Rises, But Trend in Prices Is Moderate
Robert Wood Johnson Foundation
2/26/2015

"[T]he pace of health care spending accelerated in 2014, growing at an annual rate of 5.0 percent through the first three quarters of 2014, considerably higher than the 3.6 percent growth rate for the same period in 2013. The main drivers are prescription drug spending, which was important throughout the year, and health care services, which has accelerated largely in the third quarter."
arrow icon 2015 ACA Reporting Requirements: A Summary for Employers
Bond Beebe Accountants & Advisors
2/26/2015

Outline describes "Who must report?", "What must be reported?" and "When and Where to Report?" for [1] W-2 Reporting of health care premiums paid by employers; [2] Section 6056 Reporting -- Applicable large employer health coverage reporting; and [3] Section 6055 Reporting -- Reporting of health coverage by health insurance issuers and sponsors of self-insured plans. Appendix outlines steps for "Calculating Full-Time Equivalents."
arrow icon Key Executive Comp Issues to Address in M&A Due Diligence
Towers Watson
2/26/2015

"[1] Severance plans and individual executive severance agreements.... [2] Executive ownership levels at the target company.... [3] Guaranteed compensation in employment agreements.... [4] Retention plans.... [5] Noncompete and nonsolicitation agreements.... [6] Public company disclosures."
arrow icon Tibble Goes to the Supreme Court
The Wagner Law Group
2/25/2015

"The justices appeared to be uncomfortable with the Ninth Circuit's change of circumstances test that, in the words of Justices Sotomayor and Scalia, was tantamount to selecting a new fund. As a result, it is unlikely that the defendant will get the dismissal it seeks. In all probability, the Court will confirm that the monitoring function is ongoing for all plan investments and either craft a new standard for how an investment is to be monitored or remand to the lower courts to develop a such a test. This, in turn, will determine whether the plaintiffs are allowed to take the matter of the 1999 funds to trial." [Tibble v. Edison International, No. 13-550 (9th Cir. Aug. 1, 2013; cert pet. granted Oct. 2, 2014, argued Feb. 24, 2015)]
arrow icon Philadelphia Adopts Paid Sick Leave Law (PDF)
Buck Consultants at Xerox
2/25/2015 [Guidance Overview]

"Although paid sick leave laws in other cities (such as New York City) require an employee's previously accrued, unused sick time to be reinstated upon rehire within a stipulated timeframe, Philadelphia's ordinance has no such requirement."
arrow icon 2014 Survey of GASB Accounting Measures for Public Pension Plans (PDF)
Gabriel Roeder Smith & Company
2/25/2015

"For public pension plans, the new measures under GASB Statement No. 67 are effective for plan fiscal years beginning after June 15, 2013. As a result, the new measures are available in the financial reports of state and local government pension plans for fiscal years ending on June 30, 2014 and thereafter. To obtain a better sense of the new measures and what they mean, this research report surveys the June 30, 2014 financial reports of 44 large public pension plans covering general employees and teachers."
arrow icon Potential Pitfalls for Private Equity under the ACA
McKenna Long & Aldridge LLP
2/25/2015 [Guidance Overview]

"Private equity firms should take note that the 'controlled group' rules used in determining the employer for ACA purposes could potentially combine their fund and their portfolio companies, or combine multiple portfolio companies, as one single employer group. To protect against the risk of ACA employer mandate liabilities, private equity firms (and buyers in general) should review their current structures and update their acquisition diligence and procedures."
arrow icon The Blindsided Fiduciary: Ignorance is Not Bliss
Osler, Hoskin & Harcourt LLP
2/25/2015

"Alliance Bernstein recently released the shocking result of a survey it had taken of plan sponsors: a whopping 37% of those fiduciaries surveyed didn't know that they were fiduciaries. Obviously, it is unlikely that these individuals are fulfilling their fiduciary responsibilities if they are unaware of their status.... ERISA has a functional definition of fiduciary, which means that you become a fiduciary based on what you do.... Another form of ignorance can complicate this problem, because it is also possible to believe that your plan service providers are fiduciaries when they are not."
arrow icon Five Health Care Developments Important to Employers
Epstein Becker Green
2/25/2015 [Guidance Overview]

"This [article addresses] these important health care issues confronting employers: [1] Potential ACA Changes Impacting Health Care Employers Under the New Congress; [2] Pending Supreme Court Cases Involving the Affordable Care Act; [3] Telemedicine and Employers: The New Frontier; [4] Wellness Programs Under EEOC Attack -- What to Do Now; and [5] Employer-Sponsored, On-Site Health Care."
arrow icon Improving Retirement Security for Marylanders (PDF)
Governor's Task Force to Ensure Retirement Security for All Marylanders
2/25/2015

"Every Marylander should have access to an automatic payroll deduction retirement savings plan through their employer. People who are self-employed or unemployed should be able to make contributions at the same time that they pay their State taxes... They must be able to keep their retirement savings plan when they change jobs.... Consumer protection, disclosure, and other protections are essential, but these and other regulatory responsibilities should be undertaken by the program itself and not imposed on businesses."
arrow icon Insurance Markets in a Post-King v. Burwell World
Henry J. Kaiser Family Foundation
2/25/2015

"Insurers in the affected states would immediately find themselves in a situation where premiums revenues were insufficient to cover the health care expenses of the remaining enrollees, who would be far sicker on average than what insurers assumed when they set their premiums for 2015. This would trigger a classic adverse selection 'death spiral,' where insurers would seek very large premium increases, which in turn would cause the healthier of the remaining enrollees to drop coverage."
arrow icon OPM Finalizes Changes to ACA Multi-state Plan Program
Practical Law Company
2/25/2015 [Guidance Overview]

"Among other changes (some of which are non-substantive and technical), the final regulations address benefits provided under the MSPP, the phased-in approach to coverage, application and contracting procedures, and compliance actions."
arrow icon Investor Seeks to Link Exec Pay to Worker Engagement
CFO
2/25/2015

"Connecticut's state pension fund leader has proposed linking a portion of Wal-Mart Stores' executive compensation to a measure of 'employee engagement,' ... [The proposal] defines engagement as the extent to which workers are motivated to 'apply discretionary effort to accomplish organizational goals' and calls on Wal-Mart's compensation committee to work with outside experts to measure engagement, which would complement financial metrics in determining pay. 'Essentially, the idea is to tie executive pay to how happy and productive the company's low-wage workers are,' ThinkProgress reported[.]"
arrow icon Humana to Integrate Weight Watchers Programs Into Employer-Sponsored Health Plans
FierceHealthPayer
2/25/2015

"Humana aims to help lower obesity rates by partnering with Weight Watchers, giving its members with employer-sponsored plans access to Weight Watchers weight loss programs that are integrated within Humana's own wellness program. The insurer called the partnership a 'first-of-its-kind program' that connects its members to either Weight Watchers' online or in-person weight loss programs for free for six months and then at a 'significant discount' afterward[.]"
arrow icon Cracks Starting to Appear in Public Pensions' Armor
The New York Times; subscription may be required
2/25/2015

"The states have long argued that because they are legal sovereigns, federal pension law does not apply to them. When states, cities and other local governments try to rein in pension costs, they often create new 'tiers' of much smaller benefits for workers they expect to hire in the future, and call it a reform. But there is no freeze for existing workers, who keep accruing the same benefits as before. In some places, it is increasingly clear that reducing benefits only for future hires does not save enough money to preserve overstretched pension plans, especially in places where retirees outnumber current workers."
arrow icon Another Site Vies in the Consumer Health Transparency Space
Healthcare Payer News
2/25/2015

"The nonprofit Health Care Cost Institute is out with a new website called Guroo.com aimed at bringing Americans national, state and local price information for 78 common medical conditions, tests and services, based on claims from insurers covering some 40 million people. These are 'numbers that no one else has,' the organization said. The website currently covers 300 cities, 41 states, coastal California and Washington D.C. based on information from Aetna, Humana, UnitedHealthcare and Assurant Health. No Blue Cross insurers are contributing to the database, but could in the future. It's open to all payers, the organization said."
arrow icon Pivotal 401(k) Fee Lawsuit in Front of Supreme Court Means Big Changes for Plan Advisers
InvestmentNews
2/25/2015

"In a practical sense, this case reinforces to advisers and plan fiduciaries that funds aren't merely selected and forgotten. 'Fiduciaries need to monitor and look at the investments each year to see if there are changes and are they appropriate for the plan,' said [Fred Reish, partner at Drinker Biddle Reath]. That review should be expanded to include grandfathered options that predate the fiduciary who is now overseeing the plan. Don't wait for the case to resolve. Go and review that lineup." [Tibble v. Edison International, No. 13-550 (9th Cir. Aug. 1, 2013; cert pet. granted Oct. 2, 2014, argued Feb. 24, 2015)]
arrow icon 2015 ERISA Advisory Council to Hold First Meeting March 20
Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]
2/25/2015

"Open to the public, the meeting will begin with the introduction of the new council chair and vice chair. An update on the activities of [EBSA] and a determination of topics to be addressed by the 2015 advisory council will follow."
arrow icon Letter from Sens. Hatch and Grassley to Treasury: Administration's Guidance on Cadillac Tax Caves to Unions
U.S. Senate Committee on Finance
2/25/2015 [Opinion]

"The structure of this tax creates a draconian policy that will penalize countless Americans with a 40 percent excise tax, whether they are a shop foreman, a factory manager, or an office secretary. Now is not the time to divide workers against one another, creating different rules to protect favored constituencies from a poorly designed, drafted, and implemented law. Instead, we urge you to work with Congress to relieve all Americans from the burdens of the health care law."
arrow icon Letter from Sen. Orrin Hatch to CMS Requesting Information on Opt-Out for Insurers on Federal Exchanges
U.S. Senate Committee on Finance
2/25/2015

"While the Administration assures HealthCare.gov policyholders that 'nothing has changed,' it has been conveying a contradictory message to health insurance companies. Late last year, CMS altered the agreements to participate in the federal exchange, guaranteeing insurance companies the right to pull out of their contracts should federal subsidies ... come to an end -- in other words, if the Administration loses before the Supreme Court."
arrow icon The Wrong Way to Overhaul New Jersey's Pensions: Conversion to a Cash Balance Plan
Pension Pulse
2/25/2015 [Opinion]

"New Jersey isn't Wisconsin in any way, shape or form. State of Wisconsin Investment Board is one of the best state pensions in the United States because they got the governance right and are following Canadian funds in managing more of their assets in-house. By contrast, New Jersey's Division of Investment outsources most of their pension assets and doles out huge fees to private equity funds and hedge funds, one of which employs Gov. Christie's wife. Also, just like elsewhere, there's way too much political interference in their state pension, which virtually ensures mediocre performance over a long period (don't look at the last four years, a monkey could have outperformed in this environment just over-weighting equities)."
arrow icon Major Insurers Are Finally Revealing One of Healthcare's Greatest Mysteries
The Washington Post; subscription may be required
2/25/2015

"Some of the country's largest health insurers are coming together to reveal the prices they pay for dozens of medical services across the country in an effort to help consumers become savvier shoppers. All the information can be found at Guroo.com, a site ... that was built by a health-care nonprofit group with information from United Healthcare, Humana, Aetna and Assurant Health. The transparency effort is a nod to the growing trend of patients being asked to pay more out of their own pockets, as insurers try to manage their costs and steer customers toward preferred health-care providers."
arrow icon Make Sure Participants Know When Their Plan Benefits Have Been Transferred
Stinson Leonard Street
2/25/2015

"Southwestern and Martin agreed that Southwestern's pension plan would transfer to Martin's pension plan the assets and liabilities relating to employees who became employed by Martin. Although the pension transfer occurred, Southwestern plan participants were not notified of the transfer.... The federal district court said that the Southwestern plan (now the CEMEX plan) had to pay benefits to the employees. Because the employees had been participants in the Southwestern plan and had not received notice of the transfer, the transfer was void with respect to them. Thus, participants may receive double benefits for some of their service." [Anderson v. CEMEX, No. 2:12-00136 (D. Utah Dec. 29, 2014)]
arrow icon IRS to Forego Collecting Underpaid Taxes Arising from HHS Mistake
Politico
2/25/2015

"The Obama administration took a step on Tuesday toward containing the damage from sending the wrong Obamacare tax data to hundreds of thousands of taxpayers. The 50,000 taxpayers who filed returns based on inaccurate subsidy data they got from the government will not need to file amended returns and the IRS won't collect for any underpayment, the Treasury Department said.... Taxpayers who are owed a larger subsidy can file an amended return."
arrow icon FMLA Modified to Protect Same-Sex Spouses Regardless of Employees' State of Residence
McGuireWoods LLP
2/25/2015 [Guidance Overview]

"The revised law is expected to reduce the administrative burden on employers that operate in more than one state or have employees who move among states with different marriage-recognition rules. Employers will no longer need to consider the employee's state of residence to determine the employee's FMLA eligibility. Employers will simply need to know the marriage laws of the states or countries in which the marriages at issue were entered."
arrow icon IRS Raises Issues Regarding DC DROPs
Gabriel Roeder Smith & Company
2/25/2015

"[T]he IRS Cincinnati District Office (which is responsible for governmental plan determination letters) has raised questions as to how a DC [deferred retirement option plans (DROP)] would satisfy the IRC requirement that a plan be 'definitely determinable'. Moreover, the Cincinnati District Office is planning to request explanations from 75 governmental plans having pending determination letters as to how their DC DROPs would satisfy the definitely determinable rule."
arrow icon Text of ASPPA Comment Letter to IRS on Form 5500 (Including Form 5500-SUP) (PDF)
American Society of Pension Professionals & Actuaries [ASPPA]
2/25/2015 [Opinion]

"ASPPA recommends that the IRS delay by at least one year the implementation of the proposed changes and additional data collection for all plans to allow the time needed by service providers to accommodate the extensive data collection, programming, and other systems changes that will be required.... ASPPA recommends that the IRS simplify the line 6 inquiries relating to plan documents to ensure that filers prepare fact specific information in a uniform manner.... ASPPA recommends that the IRS provide more specific information regarding which filers are required to provide the SUP information electronically and the application of certain penalties and late filing remedies."
arrow icon Majority of Employers Spend 16 Percent or More of Health Care Budget on Pharmacy Benefits
Buck Consultants at Xerox
2/25/2015

"Seventy-seven percent of employers spend 16 percent or more of their total healthcare budget on pharmacy benefits for their employees, with nearly five percent of employers spending more than 30 percent on pharmacy ... These results are up from 71 percent and 2.3 percent respectively in 2013 and indicate how employers can look to spend their pharmacy dollars more effectively."
arrow icon The Problem with Naming a Trust as the Beneficiary of an Annuity, and Using a Beneficiary Designation with Restricted Payout Form as an Alternative
Michael Kitces in Nerd's Eye View
2/25/2015

"In the case of retirement accounts, the IRS and Treasury have created the 'see-through' trust rules that allow post-death required minimum distributions to occur based on the life expectancy of the underlying trust beneficiaries. However, in the case of annuities, no see-through trust rules exist, compelling trusts to instead liquidate inherited annuities over the far-less-favorable 5-year rule! As a result, consideration of whether to use a trust as the beneficiary of an annuity must weigh the adverse tax consequences against the favorable/desired non-tax provisions of the trust."
arrow icon Retirement Plan Form 5500 Is Done; Now What About Your Welfare Benefit Plan?
EisnerAmper
2/25/2015

"With the advent of the required U.S. Department of Labor's EFAST2 electronic filing of the Form 5500 return, the DOL has a comprehensive database to compile information on companies' retirement plans, an exercise that the DOL is pursuing vigorously. DOL's focus is on scrutinizing companies that file a Form 5500 for a large retirement plan that requires a financial statement audit (generally those with more than 100 participants) to determine whether the company is also filing a Form(s) 5500 for its welfare benefits."
arrow icon Defined Contribution Plans of Fortune 100 Companies in 2013
Towers Watson
2/25/2015

"Aggregate plan assets grew by over 20% in 2013 -- up considerably from 13% in 2012 -- with most of the growth attributable to investment income. Several of these employers introduced the non-matching contribution to the DC plan shortly after freezing or closing the DB plan. 48% of these Fortune 100 companies had automatic enrollment, and 58% provided for automatic increases in employee contributions over time."
arrow icon State Expectations: Setting The Record Straight In King v. Burwell
Christine Monahan, Kevin Lucia, and Sabrina Corlette, in Health Affairs
2/25/2015 [Opinion]

"The King petitioners allege that the Internal Revenue Service overstepped its authority by issuing regulations authorizing residents of states with federally run exchanges to access premium tax credits. The petitioners claim that Congress intentionally limited access to premium tax credits to residents of state-based exchanges as a way to encourage states to run their own exchanges. In support, some state officials claim that they interpreted the law in this manner and that it impacted their state's decision not to operate a state-run exchange. These assertions, like their analysis of the statutory language, fall flat under any serious scrutiny, however."
arrow icon King v. Burwell: What a Subsidy Shutdown Could Mean for Health Insurers
The Commonwealth Fund
2/25/2015

"Under the Affordable Care Act, health insurers have been big winners, enrolling record-high numbers and earning strong profits. Consumers, meanwhile, are benefiting from increased competition in the marketplaces -- with 25 percent more insurers participating in 2015 than 2014, with no increase in average nationwide premiums. A Subsidy Shutdown would reverse these dynamics. More than 7 million people in states with federally run marketplaces could lose their subsidies."
arrow icon Text of Tenth Circuit Ruling That SPDs Did Not Create Vested Right to Company-Paid Retiree Health Benefits (PDF)
U.S. Court of Appeals for the Tenth Circuit
2/25/2015

"Having reviewed the SPDs at issue in this matter, we conclude Plaintiffs cannot show that any plan contains clear and express language promising vested benefits.... Plaintiffs argue the SPDs in Group 1 are ambiguous because they contain conflicting provisions -- one promising lifetime benefits and the other reserving the right to alter or terminate the plan ... Read in context, no reasonable person in the position of a plan participant would have understood any of the language identified by Plaintiffs as a promise of lifetime health or life insurance benefits. That same reasonable person would have understood the Plans permitted the amendments made by Defendants." [Fulghum v. Embarq, No. 13-3230 (10th Cir. Feb. 24, 2015)]

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