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Benefits in the News

Older News | November 28, 2015

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Happy Thanksgiving!

We at BenefitsLink would like to express to you our gratitude, and warmest wishes for the Thanksgiving holiday. The opportunity to be a part of your employee benefits career is truly an honor and a privilege. Thank you.
House Committee Leaders Press Administration on Status of Remaining $1 Billion in Obamacare CO-OPs
Energy & Commerce Committee, U.S. House of Representatives

"House Energy and Commerce Committee leaders are seeking answers from the Centers for Medicare and Medicaid Services (CMS) on the agency's plans for continued oversight of Obamacare's CO-OPs. To date, 12 of the original 23 CO-OPs have closed, bringing the total cost to taxpayers at more than $1.23 billion. The letter sent Tuesday follows up on a November 5th Oversight and Investigations Subcommittee hearing during which CMS Chief of Staff Mandy Cohen was unable to identify specific actions the agency would be taking to address problems the remaining 11 CO-OPs, which collectively received over $1 billion in federal loans, are facing."
As HMOs Dominate, Alternatives Become More Expensive
Kaiser Health News

"[An] analysis of costs in the three-dozen states selling policies through the federal website found a sharp difference in premium prices between plans that offer out-of-network care and those that do not. The analysis compared the monthly premiums for the least expensive silver-level plans -- the category that are the most popular purchases -- for a 40-year-old in each county. While the average premium for the least expensive closed network silver plan -- principally HMOs -- rose from $274 to $299, a 9 percent increase, the average premium for the least expensive PPO or other silver-level open access plan grew from $291 to $339, an 17 percent jump ... The cost variations hold true for any age."
Don't Blame Yourself -- Retirement Crisis Stems from Bad Policies, Not Bad Habits
11/25/2015 [Opinion]

"Americans have to increasingly save more on their own and protect their own savings from rising risks, all while labor-market turmoil has made saving more difficult and financial-market volatility has made protecting savings more onerous. The combination of growing risks and rising risk exposure has made a bad situation much worse because of policy's inattention to what people really need to achieve a secure retirement."
Hybrid Plan Rules Leave Those Using Whipsaw in Tight Spot
Bloomberg BNA

"While the IRS and Treasury had given plans time to eliminate whipsaw calculations in the past, it was never made explicitly clear that they were required to do so, [said] Richard Shea [of Covington & Burling LLP] ... 'Sponsors in this situation are really, really angry. Their view is for a period of almost 20 years they were told, if your interest crediting rate isn't one of the rates in Notice 96-8, you must do whipsaw and if you don't, your plan is bad,' Shea said. But now, they're being told that if they use whipsaw, they have a problem. To say that and 'then not to provide transition relief when it's actually needed adds insult to injury.' "
Anger Turns to Resignation in Face of DOL Rule

"When the U.S. Department of Labor came out with its long-awaited conflict-of-interest rule in April, some advisors, agents and broker-dealers feared the worst. Why us, they asked? What is it about what we do that regulators want to change the way we go about our professional lives? Months and many public hearings later, during which industry representatives have had the opportunity to vent their spleen, anger has mellowed into grudging resignation. That appears to be giving way to the new reality: those non-fiduciaries who sell financial products into retirement plans are simply going to have to adapt."
End of Year Disclosure Reports for DB Plans (PDF)
Markley Actuarial

"A critical element used to determine the liability is the discount rate. The process of determining the discount rate has become more sophisticated in recent years. Each Plan has its own unique discount rate based on the expected future benefit payment flow from the Plan. The discount rate is intended to reflect the rate for high quality corporate bonds of similar benefit payment flow as the Defined Benefit Plan."
City of Chattanooga Wins COLA Lawsuit Brought by Retired Police Officers, Firefighters
Chattanooga Times Free Press

"In 2014, the City Council voted to reduce the cost-of-living adjustment, or COLA, for retired police officers and firefighters from a guaranteed annual 3 percent rate to an average of 1.5 percent, depending on the level of benefits a retiree was receiving. Reducing the cost-of-living adjustment level was part of a package of reforms ... to reduce the city's $150 million unfunded pension liability ... The reform also increased employees' pension contributions by nearly 40 percent, while saving the city more than $227 million over the next 24 years, the mayor's office said."
DOL's Retirement Advice Rule: Helping or Harming Sound Retirement Planning? (PDF)
American Council for Capital Formation

15 pages. "According to research, including prior analysis issued by the DOL, the value of financial advisers could be more than the cost of conflicted advice envisioned by both the [Council on Economic Advisors] and DOL. Other widely cited potential consequences of the re-proposed rule include: [1] Cost increases and decreased access to financial advice especially for low and moderate income individuals; [2] Increased leakage of assets during job changes; [3] Decreased access to workplace retirement for small businesses; [4] Limits to investment education. When these potential consequences are quantified, one analysis shows that the re-proposed rule could decrease retirement savings between $68 and $80 billion each year."
Will the SEC Finally Provide Some Relief from the Nearly Incomprehensible Proxy Statement Requirement for a New Plan Benefits Table?
Cooley LLP via Lexology

"Keith Higgins, Director of Corp Fin, hinted that he might be giving us a welcome gift in the future: a revision of Item 10 of Schedule 14A, the proxy statement ... [which is] a component of the disclosure rules that has too long been ignored and requires serious rethinking and rationalizing.... Corp Fin is currently working on the Disclosure Effectiveness Project, which focuses initially on Regs S-K and S-X, but after that, Higgins advises, the staff will then turn to the executive compensation and corporate governance information in the proxy statement.... Among the areas in the proxy statement that the staff will consider are these: [1] Item 10 of Schedule 14A ... [2] Regulation S-K Disclosure Requirements ... [3] CD&A ... [4] Compensation Tables ... [5] Compensation Committee Report ... [6] Form S-8."
ACA Proposal Addresses Balance Billing and Narrow Networks
Thompson SmartHR Manager
11/25/2015 [Guidance Overview]

"Employers that purchase small group coverage that is federally regulated under the Affordable Care Act will have additional assurances that their plan members will not be balance billed in certain situations, under proposed rules issued in pre-publication form on Nov. 22. The rule also plans for the adoption of network adequacy provisions to compensate for narrower networks that are proliferating to control cost growth some observers say is being exacerbated by the health care reform law."
Mobile Offerings for Retirement Plan Participants Increasing

"Additional features, such as message centers and document sending capabilities, are slowly appearing on mobile platforms. Sending documents, a feature added by one firm, allows participants to use a phone's or a tablet's camera to upload documents, similar to depositing a check on a mobile banking app."
New Jersey to Disclose 5-Year History of Fees, Performance Data
Pensions & Investments

"New Jersey State Investment Council, which oversees the policies governing the $79 billion New Jersey Pension Fund, has voted to report a five-year history of fees and performance data for the pension fund's investments.... The new fee information will apply to both externally managed investments and internally managed ones ... For fiscal year 2014, 74% of pension fund assets were managed internally ... The division uses external managers only for alternative investments and for global diversified credit funds[.]"
The EEOC and Wellness Programs: The Other Shoe Drops (But It's Not That Bad)
Constangy, Brooks, Smith & Prophete, LLP
11/25/2015 [Guidance Overview]

"The GINA statute and the 2010 regulations have a broad definition of 'genetic information' that includes, not only 'true' genetic information like genotypes and DNA tests, but also medical history or examinations of the employee's family members.... It appears that the EEOC is now distinguishing 'true' genetic information (for example, genotypes and DNA tests) from medical history and medical examinations. Very strict rules apply to the former, but the rules relating to the latter are not as strict."
Drug Makers and Insurance Plans Eye Alliance on Drug Prices

"After years of relentlessly attacking one another, leaders of the pharmaceutical industry and the health insurance lobby are considering -- warily -- cooperating to shape any federal legislation that emerges from the public outrage at the high cost of medications. The two powerful lobbies remain fundamentally at odds in their agendas: In the most basic terms, drug makers want to make as much money as they can for their medicines, and insurance companies want to pay as little as possible."
On the Human Element in Plan Governance, Officiating and other Human Endeavors
Stephen Rosenberg, The Wagner Law Group
11/25/2015 [Opinion]

"[At] the end of the day, the central element of all of these (and many other) issues with regard to ERISA plans is that we are dealing with humans here, not robo-advisors or whatever else (like target date funds, for instance) that people want to think can take the messiness out of plan governance, pension investing, 401(k) decisions and the like.... [P]lan governance cannot help but have human error baked in, which is why, if you get to the heart of it, ERISA litigation doesn't focus on the outcome of plan governance but instead on the process of how the outcome came about: was there too much human error, or was enough effort and thought put into the process that brought about the outcome?"
Health Insurance and Mobile Engagement: What's Working, What's New and What's Next

"Companies seeking to improve consumer engagement have one major ally: The rise of mobile technology. Phone and tablet-based applications allow insurers to reach consumers on the devices they use every day, providing services for their members with the simplicity of a tap or click.... [This report] examines the myriad ways insurers and other organizations engage consumers through mobile technology, assessing the benefits and challenges -- as well as what lies ahead."
Clarity Sought as HHS Prepares for Innovation Waivers
Bloomberg BNA

"States can apply for the five-year renewable waivers that will begin Jan. 1, 2017. The waivers are an opportunity for states to waive major coverage provisions of the ACA in order to come up with their own innovative ways to expand coverage. The states can request waivers from provisions, including those related to benefits and subsidies, the exchanges and the individual and employer mandates. But states say they need specifics."
Labor Department Rule May Not Be in Consumers' Best Interest
Pinar Cebi Wilber, via The Hill
11/25/2015 [Opinion]

"[T]he DOL rule could inhibit communication between licensed representatives like broker-dealers and employees ... [which] will increase the likelihood that terminating employees will cash out their crucial retirement savings.... [A] lack of educational communications to transitioning employees could result in an additional $20 to $32 billion of cash outs annually, decreasing the retirement savings of affected individuals by 20 to 40 percent.... Many experts think that the lack of a clear seller's exception will limit or discourage many small businesses from starting their own plans, negatively impacting the public policy goal of increasing access to retirement plans."
CalPERS Reports It Paid $3.4 Billion to Private-Equity Firms

"Private-equity firms reaped $3.4 billion in profit sharing for investing on behalf of [CalPERS] since 1990, the sort of gains that have led to debate over why Wall Street pays lower taxes than most American workers. The $295 billion pension fund Tuesday disclosed for the first time data on carried interest earned from buying and selling companies."
Chicago Pension Ruling Seen as a Loss for Investors

"As Chicago awaits the ruling on whether Mayor Rahm Emanuel's plan to save its retirement funds from insolvency is dead or alive, investors are already marking the fight down as a loss that will strain city coffers and boost pension costs by billions.... Moody's Investors Service said Nov. 10 that rejecting the pension fix could pressure Chicago's credit quality, but has factored such a decision into its speculative-grade rating on the city that has a $20 billion pension shortfall."
National Association of Insurance Commissioners to Review Pharmacy Benefit Management in 2016
National Community Pharmacists Association [NCPA]

"[T]he National Association of Insurance Commissioners (NAIC) ... 2016 work plan for its Health Insurance and Managed Care (B) Committee ... [includes] among other things, 'review and, if necessary, consider revisions to the Health Carrier Prescription Drug Benefit Management Model Act (#22) -- adopted in 2003 -- to address issues related to: [1] transparency, accuracy and disclosure regarding prescription drug formularies and formulary changes during a policy year; [2] accessibility of prescription drug benefits using a variety of pharmacy options; and [3] tiered prescription drug formularies and discriminatory benefit design.' ... [C]ommittee members indicated support for soliciting initial public comments from interested stakeholders in January, and to begin periodic conference calls in February to consider changes to the model."
Company at Center of Drug Pricing Storm Cuts Cost of Medicine

"Privately-held Turing and its Chief Executive Martin Shkreli sparked outrage in September after it acquired the rights to a 62-year-old drug, Daraprim, and raised the price more than 5,000 percent to $750 a pill from $13.50. The company said it will offer reductions of up to 50 percent off its previously announced price for hospitals, which handle about 80 percent of cases of toxoplasmosis encephalitis, the dangerous infection that Daraprim is used to treat."
2014 Annual Statistical Report on the Social Security Disability Insurance Program (PDF)
U.S. Social Security Administration [SSA]

194 pages. "Disability benefits were paid to just over 10.2 million people. Awards to disabled workers (778,796) accounted for 90 percent of awards to all disabled beneficiaries (869,371). In December, payments to disabled beneficiaries totaled more than $11.4 billion. Benefits were terminated for 779,229 disabled workers.... Workers accounted for the largest share of disabled beneficiaries (87.2 percent). Average age was 53. Men represented less than 52 percent." [Data tables are online in Microsoft Excel format.]
What Happens If the ACA's Tax Credits Are Replaced with Premium Support?
The Commonwealth Fund

"As policymakers consider alternatives to reduce the federal government's financial burden from providing subsidies under the ACA, they should consider the consequences for enrollees.... [A]lthough existing premium-support models yield considerable savings for the federal government, they could create age and income disparities in coverage. Refinements to premium-support approaches, such as increasing the amount of the tax credit with age and allowing individuals with incomes up to 400 percent of the federal poverty level to receive tax credits, could moderate some of these concerns."
IRS Health Care Tax Tip 2015-77: Understanding the Different Types of 2015 Transition Relief under the Employer Shared Responsibility Provisions
Internal Revenue Service [IRS]
11/24/2015 [Guidance Overview]

"The employer shared responsibility provisions were first effective on January 1, 2015, but transition relief from certain requirements is available for 2015 ... ALEs with fewer than 100 full-time employees, including full-time equivalent employees, won't be assessed an employer shared responsibility payment for 2015 ... ALEs are not required to offer coverage to full-time employees' dependents for the 2015 plan year, provided that they meet certain conditions ... [If] an ALE does not offer minimum essential coverage to at least 95 percent of its full-time employees and their dependents, it may owe an employer shared responsibility payment ... For 2015, 70 percent is substituted for 95 percent."
Defined Contribution Plan Participants' Activities, First Half 2015 (PDF)
Investment Company Institute [ICI]

12 pages. "The vast majority of DC plan participants continued contributing to their plans in 2015:H1. In 2015:H1, 1.8 percent of DC plan participants stopped contributing, compared with 2.1 percent in 2014:H1.... Most DC plan participants stayed the course with their asset allocations as stock values only edged up a bit during the first six months of the year.... DC plan participants' loan activity was essentially flat at the end of June 2015, despite a seasonal pattern observed over the past several years."
State-Run Open MEPs Ready to Bloom, But with Challenges
Bloomberg BNA

"Challenges to state-backed open MEPs may come from two angles: industry opposition and the need for implementation guidance.... [O]pen MEPs can also be formed across state borders depending on whether the individual states have the extraterritorial authority to do so.... The open MEP approach is 'much more valuable in importance than' the payroll-deduction IRAs because MEPs have the advantages that ERISA brings.... In addition to addressing cross-border authority, guidance is also needed for instances in which a group of states try to bring in employees from nonparticipating states[.]"
DOL 'Clearing the Way' for State-Based Retirement Plans
Benefits Bryan Cave
11/24/2015 [Guidance Overview]

"The Department's described reasoning for finding that these three approaches will not be swept up by ERISA's preemptive principles is that these approaches, and the involved state activity, do not 'undermine' ERISA's exclusive federal regulation of covered employee benefit plans. These approaches do not mandate employers to adopt or participate in ERISA plans, nor do they mandate any particular benefit structure. The key for the Department is that these programs will remain fully subject to ERISA's regulations, obligations, and remedies."
Second Circuit Says Healthcare Providers Must Seek Relief from Insurance Companies Under Their Own Contracts, Not the Insureds' Contracts
Wilson Elser

"The fact that Cigna provided for the possibility of direct reimbursement of medical providers under the Benefit Plan did not make the providers beneficiaries ... This conclusion was supported by the assignments signed by Rojas patients because if Rojas had a right to direct payment, the assignments would not have been necessary.... The assignments only gave Rojas the right to pursue the patients' claims for payment, but did not include the right to pursue any other category of ERISA claims. Therefore, the patients did not assign a right to sue under ERISA's anti-retaliation provision ... under which Rojas sought relief." [Rojas v. Cigna Health and Life Ins. Co., No. 14-3455 (2d Cir. Jul. 15, 2015]
What Men Can Learn From Women About Saving for Retirement
NBC News

"Women were 14 percent more likely to participate in 401(k)s and other defined contribution plans than men. Women were also less likely to trade frequently, a practice that can erode returns. And despite having a reputation for being risk averse, women were just as likely as men to own equities[.]"
Technology Outsourcing on the Rise Among Health Insurers

"The healthcare payer IT outsourcing market is expected to grow more than 40 percent in the next two years ... That's because better software solutions have accelerated expenses faster than originally anticipated, and there has not been any corresponding increase in revenue for many health plans. Still, less than 10 percent of health executives surveyed have considered solutions that lie outside of the U.S., because of 'concerns over hostile offshore locations and escalating health data security and privacy issues.' "
DOL's Audit Quality Outreach Continues
Morgan Lewis

"[T]he DOL's recent outreach letter highlights that substandard audit work jeopardizes plan assets and can result in significant civil penalties. It also explains that a quality audit can help to protect plan assets and make sure that the plan is compliant with applicable law.... While it does not appear that the recent letters from the DOL are targeting specific plans for investigation or enforcement, the letters serve as an important reminder to plan fiduciaries to exercise appropriate care in the selection and retention of a plan's auditors."
2015 IRA Distribution Being Rolled Over in 2016? Facts You Must Know
Slott Report

"Nothing prevents you from taking an IRA distribution in December of 2015 and rolling it over in January of 2016 as long as you follow the rollover rules that always apply. You will want to be especially careful of the 60-day rule for rollovers during this busy time of year.... Report the rollover for 2015.... Apply the one rollover-per-year rule correctly.... Add in the rollover when calculating your 2016 RMD."
FSA Rollover to Retirement Plan Proposal Introduced
Business Insurance; free registration required

"Under the measure, H.R. 4067, introduced by Rep. Ron Kind, D-Wis., employees could shift unused FSA funds -- $250 or the account balance, whichever is less -- to a retirement plan."
District of Columbia Employers Must Provide Transportation Benefit Programs by the New Year
11/24/2015 [Guidance Overview]

"All covered employers must provide at least one of the following transportation benefit programs to employees: [1] A benefit program that allows employees to make a monthly pre-tax election to pay for commuter highway vehicle, transit, or bicycling benefits ... [2] An employer-paid benefit program whereby the employer supplies, at the election of the employee, a transit pass for the public transit system requested by each employee or reimbursement of vanpooling or bicycling costs ... or [3] Employer-provided transportation at no cost to the covered employee in a vanpool or bus operated by or for the employer."
A Flurry of Important Information from ISS
Winston & Strawn LLP

"ISS announced or released four items important to public companies for the upcoming proxy season: [1] Executive Summary of 2016 Proxy Voting Guidelines Updates; [2] Updated FAQs for application of the Equity Plan Scorecard (EPSC); [3] Opening of the window for companies to update their executive compensation benchmarking peers; and [4] Opening an Equity Plan Data Verification portal for U.S. companies receiving a proxy recommendation."
DOL Guidance Provides a Big Step Forward for State-Based Initiatives
Pension Rights Center
11/24/2015 [Opinion]

"Since DOL has created a safe harbor to allow these plans to avoid preemption by the federal private pension law, ERISA, it is critical that the states themselves create strong protections equivalent to those in ERISA.... [The Pension Rights Center] will soon be proposing specific legislative language that states should adopt on disclosures, dispute resolution, spousal protections, and critical fiduciary protections to ensure that the money is invested solely in the interests of participant and to ensure that employee contributions are forwarded to the state program."
DOL Provides Guidance on ERISA Coverage of State-Run Retirement Programs for Private Sector Employees
Sutherland Asbill & Brennan LLP
11/24/2015 [Guidance Overview]

"The guidance admittedly is not determinative about whether any specific state program would be preempted by ERISA, particularly if the program, when combined with state sovereign immunity laws, would leave state-run plan participants without a remedy.... [By] participating in such programs, an employer would be establishing an employee benefit plan subject to ERISA. Conditions limiting the extent of the employer's involvement in the program, similar to the condition in the current payroll-deduction IRA safe harbor, also must be followed."
National Health Care Spending 1960-2013
Health Affairs

"[This article] discusses some of the major factors that have influenced health spending over the last five decades. Variations in health care prices, in the utilization of goods and services, and in the programs and resources that pay for care have had a substantial impact on national health expenditure trends. Going forward, these factors are anticipated to continue to affect health care spending."
'Growth Clouds' on the Horizon for Health Spending?
Health Affairs
11/24/2015 [Opinion]

"Increasing incomes and new medical technology have historically been the largest factors contributing to rapid health care cost growth. This trend is likely to continue and to cause higher growth rates than we have seen in the 2008-2013 period. More prudent adoption of new technology in the future, focusing on outcomes, comparative value, and cost-effectiveness, would help moderate growth rates, but it is unlikely to cure the problem of health care cost growth that exceeds economic growth."
Massachusetts Considers Retirement Plan for Workers in Private Sector
The Boston Globe

"Under [a plan proposed by Secretary of State William F. Galvin], private investment firms would bid to manage the money of participants. That's different from a competing proposal suggesting the assets should go into the state pension fund, as is being considered in California. Galvin's plan would apply to companies with 25 workers or more. As currently envisioned, it would require those employers who do not offer a 401(k) plan to make the state plan available to employees. They would not be required to offer matching funds."
Is myRA myRedundant?
Fiduciary News
11/24/2015 [Opinion]

"Given the stated reasons for creating myRAs, they do seem to offer some apparent advantages.... The problem is that you can't build wealth for retirement by investing in assets that simply keep pace with inflation.... The inappropriateness of the single investment option calls into question whether myRA is violating a fiduciary duty to the target investors.... Proponents of myRA claim it offers a savings vehicle not currently being offered in the free market. But is that true? ... This calls into question the sustainability of the myRA."
Changes in Medicare Spending Per Beneficiary by Age, 1999-2012 (PDF)
Congressional Budget Office [CBO]

47 pages. "Over the entire period, the average annual growth rate of Medicare spending per beneficiary for people ages 65 to 74 was about half of that for those ages 85 to 94. Faster decline in the use of acute inpatient hospital care among younger beneficiaries than among older beneficiaries contributed to the slower growth of spending per beneficiary for the 65- to 74-year-old age group. More rapid growth in spending on care provided in skilled nursing facilities and hospice care ... than in spending on other Medicare services contributed to the faster growth in spending per beneficiary among the older groups; that growth also accounted for the increase in the age for which Medicare spending per beneficiary was highest." [CBO Working Paper 2015-08.]
The 'Bundled Payments for Care Improvement' Initiative: Results to Date
Robert Wood Johnson Foundation

"The Bundled Payments for Care Improvement (BPCI) initiative tests four different models based on episodes of care that involve an inpatient hospital stay.... To encourage providers to furnish care in a more efficient and coordinated manner, CMS is expanding the number and scope of services bundled together for payment.... CMS is also experimenting with payment bundles that include care furnished by different providers during a single episode of care.... The ultimate aim of the BPCI initiative is to not just change how Medicare pays for services but to prompt changes in how health care is delivered in the United States."
Proposed Benefits and Payment Rule Includes Standardized Plans, New Network Adequacy Standards
Timothy Jost, in Health Affairs
11/23/2015 [Guidance Overview]

"The proposed rule would create six standard option plans ... at the 73 percent, 87 percent, and 94 percent actuarial-value levels -- available for individuals eligible for cost sharing reduction payments.... [S]tates in which the FFM is operating would be asked to select from a set of network adequacy metrics ... [I]nsurers offering QHPs in any marketplace would have to provide enrollees at least 10 days' notice prior to a procedure in an in-network facility if the enrollee might receive out-of-network services, for example from an out-of-network anesthesiologist or pathologist.... For 2017, the [premium adjustment] percentage would increase 5.1 percent over 2016, 13.3 percent over 2014. The annual maximum out-of-pocket limit would increase from $6,350 in 2014 to $7,150 for an individual for 2017." [A related article by the author addresses the proposed rule in more detail.]
Uncertainty Denial: How Well Can Anyone Predict Long-Term Investment Returns?
The Retirement Cafe

"[T]here isn't a single spending rate, savings rate, asset allocation and floor allocation that are optimal across the broad range of possible returns suggested by such a mean and standard deviation.... A small change in a plan's market return assumption can make a large difference in what we calculate as optimal spending rates and asset allocations. The error in our estimate of future market returns gets magnified.... There are ways to manage this financial risk but even if we do the best job possible there will still be much uncertainty."
All Quiet on the Pension Front at the $20 Billion Club
Russell Investments

"Compared to the past few years ... 2015 has been fairly quiet.... Overall, funded status has probably not moved a great deal for most plans.... It is too soon to gauge the impact of recent news of further increases to PBGC premiums.... Federal Express is becoming the fifth of the twenty members of the club to adopt mark-to-market pension cost accounting.... Contributions have in many cases fallen off a little from the level of recent years, as more corporations are taking advantage of the current flexibility in funding rules."
Interim No More, ACA Insurance Reforms Promoted
Wolters Kluwer Law & Business
11/23/2015 [Guidance Overview]

"[D]etermination of grandfather status applies separately with respect to each benefit package ... [T]he prohibition [on lifetime limits on coverage and annual limits on coverage for essential health benefits (EHB)] does not bar a plan or insurer from excluding all benefits for a condition if it does so regardless of when the condition arose, although other provisions of the ACA like the essential health benefits requirements may preclude such exclusion.... The Final rule allows plans and insurers not subject to EHB requirements to pick among any of the EHB benchmarks that apply in any of the 50 states or the District of Columbia or the three largest federal employee health benefit program plans available nationally."
2015 Year End 'To Do' List for Sponsors of Health & Welfare Plans
Snell & Wilmer
11/23/2015 [Guidance Overview]

"As 2015 comes to an end, [the authors] are pleased to present you with [their] traditional End of Year Plan Sponsor... 'To Do' List of items on which you may want to take action before the end of 2015 or in early 2016."
SEC Official Unveils Ambitious Executive Compensation Proxy Disclosure Review Project
HR Policy Association

"Keith Higgins, Director of the SEC's Division of Corporation Finance, announced ... that the Commission is expanding its comprehensive review of corporate disclosures to include an examination of the descriptions of executive compensation in the proxy and the accompanying tables.... The Project was started by the SEC two years ago and initially focused on a review of business and financial reporting of annual and quarterly reports. However, Mr. Higgins stated that the next priority would be executive compensation and governance information."
IRS Releases 2015 Form 8889 and Instructions for HSA Reporting
Thomson Reuters / EBIA
11/23/2015 [Guidance Overview]

"Although Form 8889 is filed by HSA holders as an attachment to Form 1040, employers and advisors working with HSAs should have a basic understanding of its scope. The similarity between this year's and last year's versions was expected, as the rules for HSAs have remained relatively stable since last year."
House Hearing Shines Some Light on Secretive PBM Practices But More Answers Needed
National Community Pharmacists Association [NCPA]
11/23/2015 [Opinion]

"This hearing was an important step in investigating important and sometimes troubling aspects of the relationship between PBM corporations and community pharmacies, and the impact this relationship has on patients and payers. However, several questions remain. For example, [Amy Bricker of Express Scripts, and Natalie Pons of CVS Health] alluded to robust audit rights their health plan clients have. But they did not address which party selects the auditor; what information do auditors have access to and what information does the PBM corporation deem proprietary; and how the information affects the outcome of the audit."
Health Plans Should Learn Rules Against Balance Billing
Thompson SmartHR Manager

"Regulators are especially concerned when balance billing occurs in connection with emergency services, because then patients are not in control of which providers are treating them and can't necessarily stay in-network ... Because of concerns with consumer protection, regulatory authorities at the federal and state level have responded with preventive rules."
How the SEC Got DB Plans All Wrong
Benefits and Compensation with John Lowell
11/23/2015 [Opinion]

"What the rules ask be disclosed as compensation with respect to a defined benefit plan (qualified or nonqualified) is the increase, if any, in the actuarial present value of accrued benefits from one measurement date to the next. That seems simple and reasonable enough on its face, but that is exactly where, how, and why the SEC went wrong.... [T]he SEC methodology puts an inappropriate burden on companies sponsoring DB plans. For some, this may signal a reason for them to exit that space ... for all the wrong reasons."
DOL Proposes New Regs for Disability Benefit Claims
DeBofsky & Associates, P.C.
11/23/2015 [Guidance Overview]

"One of the key additions to the regulations is a requirement giving the claimant the 'last word' in the appeal process.... The regulations require 'automatic' timely disclosure of the new evidence and an opportunity for the claimant to respond before the appeal decision deadline expires; and that if the response triggers another round of point/counterpoint, the claimant must be furnished with new evidence and given an opportunity to respond even if it means tolling the time to decide the appeal until the claimant responds."
IRS Issues Guidance on Applicability of Section 162(m) to CFO Compensation
Wilmer Hale
11/23/2015 [Guidance Overview]

"[A recent IRS Chief Council advice memorandum] leaves open several questions, including [1] whether a smaller reporting company need only be eligible to rely on the scaled-back disclosure rules or whether it must actually rely on them, in order for Section 162(m) to apply to compensation paid to the company's principal financial officer; [2] whether compensation paid to the principal financial officers of emerging growth companies, which are also eligible to rely on the same scaled-back disclosure rules, will also be subject to Section 162(m); and [3] how the IRS will treat deductions already claimed for compensation paid in excess of the $1 million limitation to CFOs of smaller reporting companies or emerging growth companies since 2008."
Florida Republicans Look at Closing Public DB System to New Members
Naples Daily News

"Florida Republicans once again are taking aim at the Florida Retirement System, arguing taxpayers can save billions of dollars by closing the huge public employee pension program to new members and offering them a 401k-style investment plan. The proposal, which is expected to be offered by House members in the coming legislative session, would preserve line-of-duty death benefits for law enforcement officers and firefighters, a move designed to appease lawmakers from both sides of the political aisle who have opposed the idea in the past."
A Guide for Employers: Setting Up a Retirement Plan Committee (PDF)
The Rosenbaum Law Firm, P.C.

"Why set up a retirement plan committee? ... Who should be on the committee? ... Setting up bylaws and responsibilities ... The Investment Review ... Fee Disclosure ... Conflict of Interest Policy ... Document everything."
DOL Issues Proposed Revisions to Disability Plan Claims Regulations
Seyfarth Shaw LLP
11/23/2015 [Guidance Overview]

"Failure to establish or follow claims procedures consistent with the new (and existing) requirements will result in the claimant being deemed to have exhausted the administrative remedies under the Plan and entitled to pursue any available remedies under ERISA Section 502(a), unless the violation is de minimis. The claim or appeal will be deemed to have been denied on review without the exercise of discretion by an appropriate fiduciary."
IRS Employee Plans News No. 2015-13, November 23, 2015
Internal Revenue Service [IRS]
11/23/2015 [Guidance Overview]

Topics: [1] Notice of public hearing Dec. 18 on proposed regulations for the administration of a multiemployer plan participant vote on an approved suspension of benefits under the MPRA; [2] Taxpayers born before July 1, 1945 must receive payments from your IRAs and workplace retirement plans by Dec. 31; [3] Free webcast Dec. 8 about the latest activities in Employee Plans Examinations; [4] Form 2848 Instructions.
Midwest Employers Are Actually Spending Less on Health Benefits
Indianapolis Business Journal

"In the first two quarters of this year, Midwest employers reduced their spending on health benefits compared with the same two quarters in 2014 ... The reduction was modest -- just 0.8 percent from the second quarter of 2014 to the second-quarter of 2015. But that's the first time benefits spending has gone down since the BLS started tracking these data in 2004."
ISS and Glass Lewis Issue 2016 Policy Updates

"Glass Lewis now indicates that if it identifies egregious compensation practices, it may not only recommend against the Say-on-Pay vote but also recommend against the compensation committee based on the practices or actions of the committee during the year.... ISS will generally recommend against the Say-on-Pay proposal where there is an external management structure in place and there is insufficient detail in the company's disclosures for ISS to perform a comprehensive pay-for-performance analysis."
Paid Family Leave, Fathers' Leave-Taking, and Leave-Sharing in Dual-Earner Households
National Bureau of Economic Research [NBER]

"[The authors] study California's Paid Family Leave (CA-PFL) program, which is the first source of government-provided paid parental leave available to fathers in the United States.... [F]athers in California are 0.9 percentage points ... more likely to take leave in the first year of their children's lives when CA-PFL is available.... CA-PFL increases father-only leave-taking (i.e., father on leave while mother is at work) by 50 percent and joint leave-taking (i.e., both parents on leave at the same time) by 28 percent. These effects are much larger for fathers of sons than for fathers of daughters, and almost entirely driven by fathers of first-born children and fathers in occupations with a high share of female workers."
Annuity Payouts from DC Plans: The Debate Continues

"Committees often worry about the process for selecting and monitoring insurers. Do we have the expertise to do it ourselves, or should we hire a consultant? What's the nature of our liability? These questions dissuade many committees from moving ahead, especially since expected demand from participants is typically low.... For now, most employers' answer to the question 'annuity -- or not?' is simple: 'not in the plan, but in an IRA rollover.' And plan sponsors continue to work on other ways to make their plans more hospitable to retirees to create an attractive retirement destination for participants."
Reply Brief of Petitioner to Supreme Court Supporting Application of Vermont Health Care Database Law to TPA of Self-Insured ERISA Plan (PDF)
11/23/2015 [Opinion]

32 pages. "To do their jobs effectively, regulators and policymakers need accurate information about health care expenditures. Those critical health care spending data are necessarily held by a wide range of payers, including federal and state government programs, private insurers, and third-party administrators of ERISA plans. Vermont's collection of claims data from all payers through a generally applicable health care law does not intrude on the areas that ERISA reserves to federal law." [Gobeille v. Liberty Mutual Ins. Co. (2d Cir. Feb. 4, 2014, cert. pet. granted June 29, 2015, brief submitted Nov. 12, 2015)]
CMS Proposes Improvements for the 2017 Marketplace
Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS]
11/20/2015 [Guidance Overview]

A press release issued by CMS: "To protect consumer access to health care providers and delivery organizations, the proposal asks states to establish a provider network adequacy standard for health plans in the federal Marketplace.... CMS is proposing to give issuers the choice of offering plans with standardized options such as cost-sharing.... CMS is seeking comment on a requirement that health plans in the federal Marketplace count certain out-of-pocket expenses on unexpected out-of-network services towards a policy holder's annual out-of-pocket maximum, if the service was performed at an in-network facility and advance notice was not provided.... The proposed rule would also increase options for employees in the federal Small Business Health Options Program (SHOP) for plan years beginning in 2017 and beyond."
Text of CMS Draft 2017 Actuarial Value Calculator Methodology (PDF)
Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS]
11/20/2015 [Guidance Overview]

28 pages. "The first part of this document provides background that includes an overview of the regulation that allows HHS to make updates to the AV Calculator as well as the updates that are incorporated into the draft 2017 AV Calculator. For the second part of the document, we provide a detailed description of the development of the standard population and the AV Calculator methodology. The first section details the data and methods used in constructing the continuance tables that are used to calculate AV in combination with the user inputs. The second section describes the AV Calculator interface and the calculation of actuarial value based on the interface and the continuance tables. The draft 2017 AV Calculator is [available online as a Microsoft Excel spreadsheet]."
Text of HHS Notice of Benefit and Payment Parameters for 2017
Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS]
11/20/2015 [Official Guidance]

381 pages. "This proposed rule sets forth payment parameters and provisions related to the risk adjustment, reinsurance, and risk corridors programs; cost sharing parameters and cost-sharing reductions; and user fees for Federally-facilitated Exchanges. It also provides additional standards for the annual open enrollment period for the individual market for the 2017 benefit year; essential health benefits; cost-sharing requirements; qualified health plans; updated standards for Exchange consumer assistance programs; network adequacy; patient safety standards; the Small Business Health Options Program; stand-alone dental plans; acceptance of third-party payments by qualified health plans; the definitions of large employer and small employer; fair health insurance premiums; guaranteed availability; student health insurance coverage; the rate review program; the medical loss ratio program; eligibility and enrollment; exemptions and appeals; and other related topics....

"We propose to codify a new Exchange model -- the State-based Exchange on the Federal platform (SBE-FP). This model would enable State-based Exchanges (SBEs) to execute certain processes using the Federal eligibility and enrollment infrastructure.... We also propose a number of incremental amendments that we believe will improve the stability of the Exchanges while improving the choices available to consumers and supporting consumers' ability to make informed choices when purchasing health insurance. These include the introduction of 'standardized options' in the individual market, which will improve competition and consumer transparency....

"If any reinsurance contribution amounts remain after calculating reinsurance payments for the 2016 benefit year (including after HHS would increase the coinsurance rate to 100 percent for the 2016 benefit year), we propose to lower the 2016 attachment point of $90,000 to pay out any remaining contribution amounts for the 2016 benefit year. We also propose several changes to the risk corridors program for 2015 and 2016....

"For consumers purchasing coverage through the Small Business Health Options Program (SHOP), we propose a new 'vertical choice' model for Federally-facilitated SHOPs for plan years beginning on or after January 1, 2017, under which employers would be able to offer qualified employees a choice of all plans across all available levels of coverage from a single issuer."

Text of CMS Fact Sheet: Proposed HHS Notice of Benefit and Payment Parameters for 2017 (PDF)
Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS]
11/20/2015 [Guidance Overview]

5 pages. "Some of the policies in today's proposed rule include: ... Risk Adjustment Model Recalibration ... Small Issuer Rule for Default Risk Adjustment Charge ... Default Risk Adjustment Charge ... FFM User Fee for 2017 ... Premium Adjustment Percentage ... Annual Limitation on Cost Sharing ... Student Health Insurance Plans ... Rate Review ... Standardized Options ... Improving Product Value ... Network Adequacy (Minimum Threshold) ... SHOP ... Direct Enrollment Enhancements, Agent and Broker Enforcement, and Standards for HHS-Approved Vendors of FFM Training for Agents and Brokers."
IRS Regulatory Agenda, Fall 2015
Internal Revenue Service [IRS]
11/20/2015 [Guidance Overview]

IRS items in the Proposed Rule stage include: [1] Determination of Governmental Plan Status; [2] Deferred Compensation Plans of State and Local Governments and Tax-Exempt Entities; [3] Indian Tribal Governmental Plans; [4] Additional Rules Regarding Pension Plan Funding and Benefit Restrictions; [5] Requirements Relating to Pickup Arrangements Under Section 414(h)(2); [6] Eligible Combined Plan (under Code section 414(x) as added by the Pension Protection Act of 2006); [7] Section 280A Deduction Limitation Regulations; [8] Update to Minimum Present Value Requirements for Defined Benefit Plan Distributions; [9] Contributions of an Employer Under a Plan That Does Not Meet the Requirements of Section 401(a), including Application of Section 404(a)(5); [10] Guidance With Respect to FATCA Coordination; [11] Application of Section 409A to Nonqualified Deferred Compensation Plans; [12] Collectively Bargained Welfare Benefit Funds; [13] Guidance Under Section 125; [14] Spousal IRAs, SEPs and IRA Technical Changes; [15] Implementation of Windsor; [16] Reporting and Notice Requirements for Deferred Vested Benefits Under Section 6057; [17] Application of Normal Retirement Age Regulations to Governmental Plans; [18] Requirements for Employee Stock Ownership Plans; [19] Extension of Time to File Certain Information Returns; [20] Nondiscrimination Relief for Closed Defined Benefit Plans; [21] Election to Include in Income in Year of Transfer; [22] Updated Mortality Tables for Determining Present Value; [23] Minimum Value of Eligible Employer-Sponsored Health Plans; [24] Administration of Multiemployer Plan Participant Vote on an Approved Suspension of Benefits Under MPRA; and [25] Section 72(t) 10% Additional Tax Regulations.

IRS items in the Final Rule state include: [1] Accrual Rules for Defined Benefit Plans; [2] Determination of Minimum Required Pension Contributions; [3] Notice to Participants of Consequences of Failing to Defer Receipt of Qualified Retirement Plan Distributions, including Expansions of Applicable Election Period and Period for Notices; [4] Reporting and Notice Requirements for Deferred Vested Benefits Under Section 6057; [5] Modifications to Minimum Present Value Requirements for Defined Benefit Plan Distributions; [6] Regulations Explaining How to Compute Unrelated Business Taxable Income (UBTI) of Voluntary Employees' Beneficiary Associations (VEBAs); [7] Removal of Rollover Allocation Rule From Designated ROTH Regulations; [8] Minimum Value of Employer Sponsored Coverage; [9] Transition Rules Relating to the Market Rate of Return Requirements for Statutory Hybrid Plans; [10] Health Insurance Premium Tax Credit Additional Issues; [11] Health Insurance Provider's Fee; [12] Summary of Benefits and Coverage; [13] Suspensions of Benefits Under the Multiemployer Pension Reform Act of 2014; [14] Suspensions of Benefits Under the Multiemployer Pension Reform Act of 2014 (Temporary); and [15] Regulations Governing Organization of the Joint Board for the Enrollment of Actuaries.

An OCC item in the Proposed Rule stage is: "Incentive-Based Compensation Arrangements."

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