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Older News | July 29, 2016

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Form 5500 Proposal: Deadline for Comments is Monday, August 1 (PDF)
Indiana Benefits
7/29/2016
"The 2016 IRS changes could affect your business in 3 ways -- all of which will cost YOU money and time: [1] Your client list will become available to anyone [2] You'll likely need to retool your processes, workflow ... for Form 5500 for 2016 [3] You'll have to retool again when the DOL changes are unleashed upon us for 2019.... [P]lease submit a comment letter.... [A] sample comment letter [is provided] ... OMB takes comments very seriously -- especially well -- crafted and reasoned ones. Their primary concern is BURDEN -- so if your message focuses on burden and cost/benefit it will probably resonate with them."
District Court Finds Forum Selection Clause Unenforceable in ERISA Action
Proskauer's ERISA Practice Center
7/29/2016
"ERISA provides that an action 'may be brought in the district where the plan is administered, where the breach took place, or where a defendant resides or may be found.' ... [The court] determined that the word 'may,' as used in this context, could be read as either allowing a plaintiff to file suit in multiple districts or 'as providing a right to ERISA plaintiffs to file their action in the most suitable of these locations.' The court ... identified ERISA's public policy of providing plaintiffs 'ready access to the Federal courts' as a guide for determining the enforceability of the forum section clause.... [T]he court held that ... the most persuasive interpretation protects plaintiffs' option of bringing suit in a convenient forum and determined that the forum selection clause was unenforceable." [Harris v. BP Corp. North America Inc., No. 15-10299 (N.D. Ill. July 8, 2016)]
Regulation of Health Plan Provider Networks
Health Affairs
7/29/2016
"Plans with limited networks are not new and are not confined to the Marketplaces. Yet there is reason to believe that they have grown in prevalence partly because of the ACA.... Limited network plans might offer value to consumers.... But these plans also pose risks.... Surveys show that many consumers are open to trading network breadth for a lower premium."
Fifth Circuit Focuses on Process in ESOP Valuations (PDF)
McDermott Will & Emery
7/29/2016
"[A recent] case stressed the importance of 'process' in valuation determinations being utilized for acquisitions of a corporation's stock by an ESOP.... [T]his article provides a detail of the process that should be followed to ensure consideration of the appropriate factors by fiduciaries in reviewing valuations for ESOP transactions. The article concludes with a discussion of guidance provided by the court ... that may be instructive as to best practices for ESOP fiduciaries charged with establishing the value to be used by an ESOP holding shares of stock of a private company." [Perez v. Bruister, No. 14-60811 (5th Cir. May 3, 2016)]
State-Run SHOPs: An Update Three Years Post-ACA Implementation
The Commonwealth Fund
7/29/2016
"There is limited public information about the cost of operating the SHOPs, as well as the number of small employers taking advantage of the federal small-business health insurance tax credit available through SHOP. The federal government has yet to release state enrollment data for the federally facilitated SHOP.... [S]tate-reported data show that enrollment in SHOP continues to lag expectations, following low enrollment trends in 2014 and 2015. At the high end, New York and California have each enrolled over 3,600 groups, with over 42,000 covered lives combined. However, a handful of states have each enrolled fewer than 200 employer groups to date."
Employment Cost Index, June 2016
U.S. Bureau of Labor Statistics [BLS]
7/29/2016
"The increase in the cost of benefits [for private industry workers] was 1.7 percent for the 12-month period ending in June 2016, and in June 2015 the increase was 1.4 percent.... Employer costs for health benefits increased 2.8 percent for the 12-month period ending in June 2016."
Text of IRS Proposed Regs: Information Reporting of Catastrophic Health Coverage and Other Issues Under Section 6055
Internal Revenue Service [IRS]
[Official Guidance]
7/29/2016
36 pages. "This document contains proposed regulations relating to information reporting of minimum essential coverage under section 6055 of the Internal Revenue Code. Health insurance issuers, certain employers, and others that provide minimum essential coverage to individuals must report to the IRS information about the type and period of coverage and furnish related statements to covered individuals.... These proposed regulations provide guidance under section 6055 only, which relates to Form 1095-B and Form 1095-C, Part III. These proposed regulations do not affect information reporting under section 6056 on Form 1095-C, Parts I and II."
Overcoming Challenges in the 403(b) Tax Exempt Market (PDF)
Rocaton Investment Advisors, LLC
7/29/2016
"Plan fiduciaries should be diligent in fulfilling their fiduciary duties, documenting processes, meeting regularly, and adhering to plan documents, particularly given the uptick in litigation in the 401(k) segment of the market.... The presence of individual annuity contracts continues to challenge plan sponsors from making further improvements. The use of multiple recordkeepers, while less prevalent and much improved, continues to present challenges ... For plans that haven't yet embarked on fund and provider consolidation, there remain opportunities to build participant friendly and cost-effective designs."
Action Steps for Eligible Tax-Exempt and Governmental Employers Under the New Proposed Deferred Comp Requirements
Bond, Schoeneck & King
[Guidance Overview]
7/29/2016
"[T]he lack of guidance that existed prior to the issuance of the Proposed Regulations may have resulted in certain assumptions being made when deciding how to structure an agreement, plan, or program subject to the Deferred Compensation Requirements, and it may be appropriate to revise those assumptions in light of the new guidance ... [T]he Proposed Regulations provide new planning opportunities ... that were not clearly available before the issuance of the Proposed Regulations[.]"
Fidelity Prevails in ERISA Float Litigation
Proskauer's ERISA Practice Center
7/29/2016
"Plaintiffs did not claim a personal stake in the float; indeed the Court noted that plaintiffs were not 'short so much as a penny' and had 'no direct stake in the plan assets.' Rather, plaintiffs alleged that by returning the float, which they claim was a plan asset, to the mutual fund and not to the 401(k) plan, Fidelity breached its ERISA fiduciary duties.... The Court held that because the cash payout from the redemption does not go to, and was never intended to, the plan it did not become an asset of the plan upon the exchange." [Kelley v. Fidelity Management Trust Co., No. 15-1445 (1st Cir. July 13, 2016)]
IRS Proposes Rules for 'Closed' Defined Benefit Plans
Thompson Coburn
[Guidance Overview]
7/29/2016
"The proposed regulations add a new exception to the requirement that when a defined benefit plan is aggregated with a defined contribution plan for testing purposes, it must satisfy a minimum aggregate allocation gateway ... The exception applies for plan years that begin on or after the fifth anniversary of the closure date (so there is no immediate relief from the gateway requirement)."
Medicare-Enrolled Employees' Impact on the ACA Employer Mandate Penalty
The Wagner Law Group
[Guidance Overview]
7/29/2016
"[E]mployers with 50 or more full-time equivalent employees are subject to one of two penalties if they fail to comply with the ACA's employer shared responsibility provisions.... The IRS confirmed that for purposes of determining whether an employer is liable for the first penalty all full-time employees are counted, regardless of whether they are enrolled in Medicare or another type of coverage. Conversely, the IRS noted that an employer is liable for the second penalty only for employees who enroll in Marketplace coverage and receive a premium tax credit subsidy."
This $25 Trillion Mistake Could Change the Face of Retirement
Madison.com
7/29/2016
"On a global level, pension-related longevity risk exposure is as high as $25 trillion. In other words, if all the companies out there that issued pensions were to actually make good on their promises, they'd risk coming up $25 trillion short. To combat this problem, many companies with pensions already in place have stopped offering them to new employees. Some have halted accruals on existing plans to minimize their risk. Most, however, are skirting the issue by not offering defined benefit plans in the first place."
Uncertain Times Ahead for the Retirement Industry
PenChecks
[Opinion]
7/29/2016
"10 years from now our industry will look very different than it does today. In fact, the main staple of the private retirement industry -- 401k plans -- probably won't exist in the same shape and form that we know today. Instead, we're likely to see government-run 401ks with some guaranteed return... or new types of programs that encourage people to save more. We're also likely to see added refinement to the new fiduciary rules that will more than likely create greater complexity and displacement. As a result, we may need to reinvent the way we currently deal with retirement funds and most definitely how we advise people who want their money managed."
Health Plans and Other HIPAA Entities Should Learn From $2.75M UMMC HIPAA Settlement
Solutions Law Press
7/29/2016
"UMMC's breach notification disclosed that UMMC's privacy officer had discovered a password-protected laptop containing ePHI of thousands of UMMC patients missing from UMMC's Medical Intensive Care Unit (MICU). UMMC additionally reported that based on its investigation, UMMC believed that the missing laptop likely was stolen by a visitor to the MICU who had inquired about borrowing one of the laptops."
DOJ's Challenge to Anthem/Cigna and Aetna/Humana (PDF)
Squire Patton Boggs
7/29/2016
"In challenging the proposed Aetna/Humana transaction, DOJ focused principally on the Medicare Advantage (MA) space, alleging that the merger would combine two of the largest MA payers in the country.... In MA, DOJ alleged that the transaction would result in a loss of competition in at least 364 counties across the country, and would create a 'merger to monopoly' in at least 70 of those counties."
Pet Project Campaign Boosts Retirement Savings by Connecting with Furry Friends
MassMutual
7/29/2016
"In addition to posting photos of pets, RetireSmartPets.com provides tips on saving for retirement. 'Just like a pet, your retirement plan needs care, nurturing and your attention,' the site explains... The pet campaign is connecting particularly well with Millennials and the 55-plus age group: Savers ages 18-34 had the highest response rate; retirement savers age 55 and older had the highest increase in salary contributions. The increase was attributable to both men and women."
Employer-Provided Retirement Education a Win-Win for Employers and Employees
Dave Ramsey
7/29/2016
"40% of workers say their employers do not provide any type of retirement or financial education. And that gap leaves them feeling stressed -- those same workers rank anxiety as the number-one emotion they associate with retirement.... Half of Baby Boomers say their employers do not offer any educational resources on retirement, compared to 39% of Gen Xers and 33% of Millennials.... Nearly half (47%) of those who've saved [between] $250,000 and $999,999 say their employers are a source of retirement education -- second only to financial advisors. The same number (47%) of Americans with zero retirement savings list family/friends as their main source of retirement education."
House Republican Health Plan Could Disrupt Employer-Based Coverage
Center on Budget and Policy Priorities
[Opinion]
7/29/2016
"The plan's supporters argue that by repealing health reform's 'Cadillac tax' and replacing it with a cap on the amount of employer premium contributions that can be excluded from workers' taxable income, the plan would be better for employer-sponsored insurance than health reform. In fact, both similarly discourage employers from offering costly, overly generous plans. Moreover, two other key features of the House Republican plan could prompt many employers that now offer health coverage to their workers to drop it."
First, Do No Digital Harm: Regulating Telemedicine
National Center for Policy Analysis Health Policy Blog
[Opinion]
7/29/2016
"Seeking to encourage faster uptake of telemedicine, many well-intentioned parties are prodding Congress to take actions which will likely have harmful unintended consequences.... Two of the most important areas of risk are federal interference in the practice of medicine and how Medicare pays for telemedicine."
OCR Releases Guidance Documents for Phase 2 Audits
Ice Miller LLP
[Guidance Overview]
7/28/2016
"To ... help regulated entities prepare for future audits and improve their overall compliance programs, OCR released three targeted guidance documents to further clarify the Phase 2 Audit process: [1] a comprehensive question-and-answer set addressing questions from auditees; [2] a chart placing OCR's desk audit document requests in context with HIPAA requirements, associated protocol audit inquiries, and questions from auditees; and [3] slides used in OCR's July 13, 2016 webinar for the selected auditees. These documents supplement the Phase 2 audit protocol released earlier this year."
District Court Says Trustee, Legal Counsel Retaliated Against DOL Whistle-Blower
Bloomberg BNA
7/28/2016
"In assessing whether [a trustee and legal counsel] had retaliated against [the trust fund's employee], the court noted that neither the U.S. Supreme Court nor the U.S. Court of Appeals for the Ninth Circuit had addressed which causation test should apply in an ERISA retaliation case -- the more lenient 'motivating factor' or the 'but for' test. The court applied the 'but for' test. In doing so, the court concluded that Robbins was placed on administrative leave because of her protected activity. [The trustee and legal counsel] 'set in motion' the trustees' decision to put Robbins on leave, the court said." [Perez v. Brain, No. 14-03911, (C.D. Cal. July 25, 2016)]
Text of FASB Proposed ASU: Employee Benefit Plan Master Trust Reporting
Financial Accounting Standards Board [FASB]
[Official Guidance]
7/28/2016
25 pages; covers Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965). "This proposed Update relates primarily to the reporting by an employee benefit plan for its interest in a master trust. A master trust is a trust for which a regulated financial institution ... serves as a trustee or custodian and in which assets of more than one plan sponsored by a single employer or by a group of employers under common control are held.... The amendments in this proposed Update would clarify presentation requirements for a plan's interest in a master trust and require more detailed disclosures of the plan's interest in the master trust. The proposed amendments also would eliminate a redundancy relating to 401(h) account disclosures."
U.S. Employers Slowly Embracing Lifetime Income Solutions
Willis Towers Watson
7/28/2016
"The most prevalent lifetime income solutions are systematic withdrawals during retirement (73%), followed by income planning tools (64%) and education (60%).... [L]ess than one-fifth (19%) offer out-of-plan annuities at the time of retirement, although 21% are considering these options for 2017.... Less than one in 10 offer an in-plan deferred annuity investment option."
Is Using Active Investment Management a Fiduciary Breach?
Fiduciary Plan Governance, LLC
7/28/2016
"Despite a strongly held (and, at times, vigorously asserted) belief among investors -- as well as most of the financial services industry -- despite its disclaimer -- that past excess returns do imply a likelihood of a repeat in the future, our research and experience indicates the opposite: The most appropriate method of selecting active investment managers is defensive. That is, a risk minimization approach."
IRS Proposes Additional Guidance for Nonqualified Deferred Compensation Under 409A (PDF)
Milliman
[Guidance Overview]
7/28/2016
"This [article] focuses on four key areas that may have the broadest application to NDCP sponsors.... [1] Employee vs. independent contractor separation from service... [2] Payments following the death of a participant or beneficiary... [3] Accelerated payments to beneficiaries... [4] Plan terminations and accelerated payments."
Section 409A: Top 10 Rules for Compliant Nonqualified Deferred Compensation
Thompson Coburn
[Guidance Overview]
7/28/2016
"[1] Broad impact on executive compensation arrangements.... [2] Elections of time and form of payment.... [3] Limited distribution events.... [4] Acceleration of NQDC is generally prohibited.... [5] Section 409A has unique definitions for common terms.... [6] Plans of the same type are treated as a single plan.... [7] Short-term deferrals.... [8] Separation pay.... [9] Six-month delay for publicly traded companies.... [10] Substitutions will be scrutinized."
Fewer Small Employers Offering Health Coverage; Large Employers Holding Steady
Employee Benefit Research Institute [EBRI]
7/28/2016
"Among larger employers, health insurance offer rates -- the percentage of employers offering health coverage to their workers -- have been steady: (a) for employers with 1,000 or more employees, around 99 percent, and (b) for employers with 100-999 employees, in the 92.5 percent to 95.1 percent range. Offer rates among smaller employers have been falling since 2009: (a) for employers with fewer than 10 employees, from 35.6 percent in 2008 to 22.7 percent in 2015 (a 36 percent decrease), (b) for employers with 10-24 employees, from 66.1 percent in 2008 to 48.9 percent in 2015 (a 26 percent decline), and (c) for employers with 25-99 employees, from 81.3 percent in 2008 to 73.5 percent in 2015 (a 10 percent decline)."
15 Tactics to Prevent FMLA Abuse
HR Daily Advisor
7/28/2016
"[1] Train your managers.... [2] Use the rolling method for tracking leave.... [3] Require concurrent leaves.... [4] Treat people consistently.... [5] Require annual certification.... [6] Request more information ... [7] Watch for patterns.... [and eight more]."
Anthem Projecting Losses on ACA Plans This Year
The Wall Street Journal; subscription may be required
7/28/2016
"Anthem said it now believed it would see a 'mid-single-digit' operating margin loss on its ACA plans in 2016, due to higher-than-expected medical costs. It expects better results next year, because it is seeking substantial premium increases. Anthem's financial performance on ACA plans had previously been a relative bright spot among major insurers, many of which continue to struggle. The second-largest insurer's worsening results on that business highlight continued instability in the marketplaces that are at the heart of the Obama administration's signature health law."
A Roth 401(k) Could Make a Difference in Retirement
Consumer Reports
7/28/2016
"The Roth version of the 401(k), introduced 10 years ago, has yet to go viral. More than six in 10 plans offer a Roth option but fewer than 20 percent or so of employees with the option of saving in a Roth 401(k) use it. Those that do use the Roth tend to be younger workers."
DOL Increases Penalties for Health Plan Violations (PDF)
EPIC
[Guidance Overview]
7/28/2016
"The Rule increases numerous civil penalty amounts relating to ERISA disclosure and reporting requirements, including: [1] failing to file an annual Form 5500; [2] failing to provide the annual notice regarding premium assistance under the Children's Health Insurance Program (CHIP); and [3] failing to provide the Summary of Benefits and Coverage (SBC)[.]"
Cook County Pension Liability Skyrockets from $6 to $15 Billion
Breitbart
7/28/2016
"Cook County, Illinois -- which includes Chicago -- was just forced by its actuaries to restate its unfunded pension liability from $6 billion to $15.3 billion.... To put the importance of this stunning change of financial solvency in perspective, the entire annual payroll for all 22,000 Cook County employees is about $1.5 billion. That means that the pension plan's shortfall is ten times the annual payroll."
The Unusual Matter of 403(b) Ethics
Business of Benefits
7/28/2016
"[T]here is a fundamental problem with attempting to regulate 403(b) arrangements as employer plans: they are functionally designed under the Tax Code as individual retirement plans, much as the manner in which IRAs are designed.... So it really isn't a surprise that particularly sensitive conundrums, unique to the nature of the 403(b) space, arise when attempting to apply professional ethics rules to often unresolvable 403(b) issues, with occasionally the result of exposing small, charitable organizations to all manner of liabilities."
Protecting Plan Sponsors and Plan Participants Under the BICE Exemption
The Prudent Investment Adviser Rules
7/28/2016
"[W]hy would a plan participant agree to such an agreement that allows a financial [adviser] to potentially engage in the same sort of abuse marketing and sales tactics that was the motivating factor behind the DOL's new fiduciary standard? Why would a plan sponsor not protect their plan participants ... [by] making the prohibition of soliciting such BICE agreements an express condition for any and contracts with third-party service providers? It is the second question that may form the basis for new allegations of a plan sponsor's breach of [its] ERISA fiduciary duties of loyalty and prudence."
Federal Circuit Court of Appeals Addresses Tax Effect of Compensation Clawback
Winston & Strawn LLP
7/28/2016
"The majority of future clawback cases are not likely to involve a determination of willful criminal conduct by the executive. However, the IRS could attempt to apply the broad reasoning of the Federal Circuit's decision to more routine compensation clawback cases, which would make a bad situation worse." [Nacchio v. U.S., Nos. 2015-5114, 2015-5115 (Fed. Cir. June 10, 2016)]
The Partisan Divide on Health Care
JAMA Forum
7/28/2016
"Now that the party platforms for the 2016 campaign are written and posted online, we can see that Republicans and Democrats are as far apart on health care as they have been for quite some time. Platforms are never implemented as written, and not all candidates endorse every plank in them. However, they signal which issues are important to the parties and, broadly speaking, what candidates aim to do about them."
What Behavioral Science Solutions Overlook
Nevin Adams, J.D., for National Association of Plan Advisors [NAPA]
[Opinion]
7/28/2016
"[W]hen it comes to implementing behavioral finance-focused alternatives, it's ironic while we readily acknowledge the importance of those considerations in thoughtful plan designs -- but almost never acknowledge their impact on those who make the complex financial decisions that affect the implementation of the designs that influence those participant decisions."
District Court: Internal Quality Assurance Discussion About Plan Interpretation Error Is Not Evidence of Conflict
Begos Brown & Green LLP
7/28/2016
"Though obviously it makes sense to have an internal procedure to prohibit internal reversals of appeals analysts, it also makes sense to try to catch mistakes and instruct employees. But it is important that a mistake in the file, and the correction, is well-documented in the administrative record." [Curran v. Aetna Life Ins. Co., No. 13-cv-289 (S.D.N.Y. July 11, 2016)]
CMS Starts Implementing ACA Transparency Requirements
Faegre Baker Daniels LLP
[Guidance Overview]
7/28/2016
"Health insurance issuers will need to submit data on coverage denials, appeals and grievances, and plan decisions overturned by an external reviewer. They will also have to provide links to the member information they provide on several important topics: out-of-network liability, grace periods, medical necessity and prior authorization, and drug formulary exceptions.... While CMS has not yet mentioned its intentions for the transparency data, it is probable that the agency will use this data to inform its oversight activities at some point."
The Investment Policy Statement Tightrope
Russell Investments
7/28/2016
"A well-crafted investment policy statement can be one of your most effective governance tools.... [An] investment policy statement could hinder your ability to oversee your investment program and, at the extreme, land you in court.... Investment policy statements are important in providing meaningful guidance to fiduciaries, but this guidance could take the form of a more principle based approach -- leaving actual decisions to judgment -- rather than imposing directives."
Private and Public Pensions and the State of Retirement Security
National Public Pension Coalition
[Opinion]
7/28/2016
"Pension funds were not alone in being harmed by the Great Recession, nor are they alone in struggling through the slow economic recovery since the crisis. The thing about pensions, though, is that they have time to recover.... Investment returns may be low one year -- or for several years -- but pension funds will still be there when the markets improve and returns increase. The worrying trend in the private sector is how quick companies were to abandon defined benefit pensions."
Text of CMS FAQ: Deadline for Submission of Medical Loss Ratio Reports and Risk Corridors Data for the 2015 Benefit Year (PDF)
Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS]
[Official Guidance]
7/27/2016
Unnumbered document, dated July 26, 2016. "[T]he MLR report for each reporting year must be submitted to HHS by July 31 of the year following the end of an MLR reporting year.... [A] Qualified Health Plan (QHP) issuer must submit risk corridors data by July 31 of the year following the benefit year. However, July 31, 2016 falls on a Sunday. Therefore, for the 2015 Reporting and Benefit Year, an issuer may submit its MLR and risk corridors data for the 2015 Benefit Year by 11:59 p.m. ET on Monday, August 1, 2016, which is the first business day following the July 31, 2016 regulatory deadline(s)."
Improving Retirement Security Through Innovation
U.S. Department of Labor [DOL] Blog
7/27/2016
"For workers in multiple employment relationships, the ability to take benefits from job to job can provide greater retirement security. The new program will award two to four grants of between $25,000 and $75,000 to help nonprofit organizations develop a portable retirement benefits program for their members, clients and constituents. Such activities must involve assessing the challenges and barriers unique to low-wage workers with little to no retirement savings, researching opportunities to expand or build new portable retirement vehicles, or identifying associated legal constraints that would need to be addressed before implementing these types of programs."
What Is the Maximum Equity Exposure Allowed in TDFs as QDIAs? (PDF)
Retirement Learning Center, LLC
[Guidance Overview]
7/27/2016
"[T]here must be a mix of equity and fixed income exposure. Therefore, an investment fund or product with zero fixed income (or, alternatively, zero equity) would not qualify as a QDIA.... [T]he QDIA regulations do not establish minimum fixed income or equity exposures ... [T]he DOL continues to believe that such a determination is best left to the discretion of the individuals or entities tasked with assessing the appropriateness of a particular QDIA for a plan."
Anthem Vows to Fight for Cigna Deal; Profit Beats Estimates
Reuters
7/27/2016
"Health insurer Anthem Inc ... said it was committed to its planned acquisition of Cigna Corp and again vowed to fight U.S. government efforts to block the deal, saying the merger will help lower costs for consumers.... Anthem said it expects the trial will likely begin in October and last about four months. Industry analysts have expressed serious doubts that the Cigna deal will go through."
Self-Insured Health Plans: Recent Trends by Firm Size, 1996-2015 (PDF)
Employee Benefit Research Institute [EBRI]
7/27/2016
"The percentage of private-sector establishments offering health plans at least one of which is self-insured has increased from 28.5 percent in 1996 to 39 percent in 2015 (a 36.8 percent increase). Between 2013 and 2015, the percentages of establishments offering health plans with at least one self-insured plan has increased for midsized establishments from 25.3 percent to 30.1 percent (a 19 percent increase) ... Similarly, the percentage of health-plan-covered workers enrolled in self-insured health plans has increased from 58.2 percent to 60 percent (a 3 percent increase) from 2013 to 2015."
401(k) Enrollment: Is a Meeting or E-Delivery Best For Your Small Business?
Employee Fiduciary
7/27/2016
"A growing number of small businesses are delivering 401k investment education to employees online or by e-mail (i.e., e-delivery). Why the change? Today's technology and investment products make 401k investing decisions easier than ever for employees. Most, if not all, 401k providers offer online tools to keep retirement savings on track while new 401k investment products can make 401k investing decisions simple for even the most inexperienced investor. An e-delivery approach is often less costly too."
Are Rollover IRAs on the Way Out?
PenChecks
7/27/2016
"Keeping more assets in the plan does have its advantages. However, [there are] several important issues related to the stay-over strategy. These include increased costs and fiduciary responsibilities to the plan sponsor for keeping former employees in the plan, as well as additional administrative time and costs.... [P]lan sponsors will need to maintain close contact with retirees still in the plan, keeping on top of address changes, monitoring death notices, and communicating with retirees (or their successors) when making changes to plan provisions or investments. Plan sponsors will also need to establish a process for communicating information conveyed at investment meetings to retirees who are unable to attend."
Department of Commerce Issues Final Rule on Access to Death Master File
Drinker Biddle
[Guidance Overview]
7/27/2016
"The application package for access to the Limited Access DMF must now include documentation from an 'Accredited Conformity Assessment Body' determining that the applicant meets security and safeguarding requirements described in the final rule.... The final rule also imposes a penalty of $1,000 for each disclosure or use of Limited Access DMF to those not meeting the certification requirements or for non-legitimate purposes, as outlined in the rule."
Proposed Overhaul of Form 5500 Comes with Generous Lead Time (PDF)
Lockton
[Guidance Overview]
7/27/2016
"The lengthy delay in applicability of these changes gives employers and service providers a good amount of time to prepare for the more extensive Form 5500 filings. When the proposed changes are finalized it will be a good idea for plan sponsors to review their group health plans' terms and procedures, with a view to ensuring the sponsors can collect all the relevant information that will be required to prepare the new form[.]"
Forum Selection Provisions in ERISA Plans (PDF)
The Wagner Law Group, via Benefits Law Journal
7/27/2016
15 pages. "This article discusses in detail how courts are divided on the issue of the enforceability of forum selection clauses in ERISA plans."
ERISA Advisory Council to Meet August 23-25, 2016
Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]
7/27/2016
"The purpose of the open meeting is for Advisory Council members to hear testimony from invited witnesses and to receive an update from [EBSA]. The EBSA update is scheduled for the morning of August 25, subject to change. The Advisory Council will study the following topics: [1] Participant Plan Transfers and Account Consolidation for the Advancement of Lifetime Plan Participation, on August 23 and [2] Cybersecurity Considerations for Benefit Plans, on August 24."
Text of Ninth Circuit Opinion: ERISA Church Plan Exemption Requires that Plan Be Established by Church (PDF)
U.S. Court of Appeals for the Ninth Circuit
7/27/2016
26 pages. "We conclude that the more natural reading of subparagraph (C)(i) is that the phrase preceded by the word 'includes' serves only to broaden the definition of organizations that may maintain a church plan. The phrase does not eliminate the requirement that a church plan must be established by a church. The other circuit courts that have considered the question agree with this reading." [Rollins v. Dignity Health, No. 15-15351 (9th Cir. July 26, 2016)]
401(k) Plans Still in the Crosshairs: New Cases Challenge Plan Fees
Cohen & Buckmann, P.C.
7/27/2016
"[L]itigation continues unabated with new theories and new targets. Are the targets just Wal-Mart and Fidelity-sized? Not any more.... There is more reason than ever for them to adopt fiduciary best practices with regard to plan fees.... Hire a co-fiduciary investment adviser or a fiduciary investment manager if you don't already have one.... Don't set it and forget it.... Benchmark fees and do RFPs on a regular basis to evaluate your fees.... Evaluate share classes and revenue sharing arrangements to get the best deal for your participants."
HHS Mental Health and Substance Use Disorder Parity Task Force Wants to Hear Your Experiences
U.S. Department of Health and Human Services [HHS]
7/27/2016
"The Task Force wants to hear from patients, families, consumer advocates, health care providers, insurers, and other stakeholders on their experience with mental health and substance use disorder parity requirements.... [including] [1] Suggestions on how to improve understanding of parity among key stakeholders such as consumers, families, health care providers, and insurers. [2] What are some examples of the types of information you commonly see health plans and insurance issuers share with enrollees or providers when coverage for a mental health or substance use disorder benefit is denied? [3] When health plans provide parity compliance-related information, how easy or hard is it for consumers and providers to understand? Do consumers and providers know how to act on this information?"
Health Insurance Exchange Notices to Employers: To Appeal or Not to Appeal? (PDF)
Deloitte
[Guidance Overview]
7/27/2016
"If the exchange notice relates to an individual who has enrolled in the employer's health plan all year, then the employer ... may be able to help the employee avoid having to repay a large subsidy amount at tax time. If the exchange notice relates to an individual who is not part of the employer's ACA compliance records, then the employer may wish to research whether the individual is a member of a class that was overlooked by mistake. If the employer unexpectedly receives exchange notices for a large number of employees in a particular division or geographic area, the employer may wish to explore whether an administrative error has occurred that resulted in an inadvertent failure to offer coverage to those employees."
Text of CMS Draft 2016 Call Letter for the Quality Rating System and Qualified Health Plan Enrollee Experience Survey (PDF)
Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS]
[Official Guidance]
7/27/2016
11 pages. "The refinements proposed in this document focus on stakeholder engagement, QRS and QHP Enrollee Survey participation requirements, and the QRS rating methodology. Proposed refinements to the participation requirements ... apply to both the QRS and the QHP Enrollee Survey programs."
A Plan Sponsor Finds Surprises in Adviser Benchmarking
PLANSPONSOR
7/27/2016
"Happy with its adviser, Dot Foods only completed the RFP process for due diligence, but what it discovered led it to hire a new adviser."
Record Share of Private Industry Workers Have Paid Sick Leave
U.S. Department of Labor [DOL] Blog
7/27/2016
"Over the last year, the share of private industry workers with access to at least one day of paid sick leave increased from 61 percent to 64 percent, the highest on record. There has been a total increase of 7 percentage points over the last decade.... Further, the increase between 2015 and 2016 was almost entirely due to an increase in access among workers in low-wage occupations, that is, workers in occupations with average wages in the bottom 25 percent."
CMS Releases Draft Call Letter for Quality Rating System (QRS) and Qualified Health Plan (QHP) Enrollee Experience Survey
Timothy Jost, in Health Affairs
[Guidance Overview]
7/27/2016
"The QRS and QHP Enrollee Experience Survey are used to derive a star rating that will be displayed ... on the marketplace shopping site to signal to consumers the quality of the alternative health plans available to them. The call letter proposes an annual call letter process for future years and minor changes for the 2017 and 2018 rating years.... The 2016 draft call letter also proposes a few refinements for data collection during the 2017 ratings year."
When Developing Your Retirement Spending Budget, Carefully Consider How to Deploy All Retirement Assets
Ken Steiner, FSA Retired
7/27/2016
"[E]ven though it may be common sense to deploy all your assets to meet your retirement spending objectives, you generally won't find much discussion of how to accomplish this with ... approaches such as the 4% Rule or other safe withdrawal rate approaches. What you do hear with those approaches is something like, 'trust us, based on complicated Monte Carlo modeling, if you invest your accumulated savings at least 50% in equities, you will have a 95% chance of not running out of money.' On the other hand, with the Actuarial Approach, you develop a reasonable spending budget based on your best estimates of future experience and your financial situation."
Interesting Angles on the DOL's Fiduciary Rule, Part 13
FredReish.com
[Guidance Overview]
7/27/2016
"It is not clear under current rules whether 'suggesting' investment policies is a fiduciary act. In that vein, it's also not clear if providing a sample investment policy statement (IPS) is a fiduciary act. However, that is about to change.... [If] you don't want to be a fiduciary for that purpose, the safest bet is to avoid suggestions of investment policies or providing a sample IPS."
More Than Price Transparency Is Needed to Empower Consumers to Shop Effectively for Lower Health Care Costs
The Brookings Institution
7/27/2016
"[H]igh-deductible plans ... that provide extensive price information to consumers often have only limited impact because of the complexity of shopping for each service involved in a course of treatment -- something close to impossible for inpatient care. In addition, high deductibles are typically met for most hospitalizations ... so those consumers are less incentivized to comparison shop. Plans that have limited provider networks relieve the consumer of much complexity and steer them towards providers with lower costs[.]"
Innovations for Controlling Self-Funded Plan Costs
Corporate Synergies
7/27/2016
"As employers gain a better understanding of the questionable value of PPO discounts and pricing optics, reference-based pricing and reference-based reimbursement provide possible solutions by addressing the demand for: [1] Price transparency; [2] Claims cost benchmarking; [3] Elimination of inappropriate charges; [4] A plan sponsor fiduciary/co-fiduciary."
Faith-Based Health Systems Ask Supreme Court to Hear 'Church Plan' Cases
Pensions & Investments
7/27/2016
"Two faith-based health systems want the U.S. Supreme Court to weigh in on whether their pension plans should be exempt from certain federal protections for workers -- an issue that has spurred dozens of lawsuits across the country in recent months. Advocate Health Care in Illinois and St. Peter's Healthcare System in New Jersey argue that because of their religious affiliations, their employee pension plans should not be subject to [ERISA]."
Why the Last Defense of Public Pensions Is Eroding
The Wall Street Journal; subscription may be required
7/27/2016
"Twenty-year annualized returns for public pensions in the U.S. are poised to decline to 7.47%... That would be the lowest-ever annual mark recorded by Wilshire, which began tracking the statistic 16 years ago. In 2001, near the height of the dot-com boom, pensions' 20-year median return was 12.3% ... The dip is intensifying a national debate over whether states and cities can continue to afford pension obligations, as the soaring costs are squeezing budgets across the U.S."
What's Bad for Health Insurers May Be Good for Consumers
CBS MoneyWatch
7/27/2016
"Employees of large companies may have the most to gain from the blocked mergers, explained Gary Claxton, vice president of Kaiser Family Foundation. There are a lot of regional and small insurers that offer employer-sponsored insurance but only the big insurers have large national networks the likes of which giant corporations usually hire. The mergers would mean these employers would have even fewer choices and that would likely translate into fewer plan choices for employees."
Orszag and Emanuel Do Not Seem to Understand Bundled Payments
Physicians for a National Health Program [PNHP]
[Opinion]
7/27/2016
"The clinical course of a heart attack is highly variable and could involve only a few or a great many interventions. Under a bundled payment, the physicians and hospital are bearing the risk of the high costs of a potentially complicated, protracted course. Isn't it the role of the insurer, in this case Medicare, to pool risk? Shifting that risk to the health care delivery system creates the potential for either a reduction in important beneficial health care services, or exposing the delivery system to potential monetary losses and the risk of insolvency -- neither of which are desirable."
One Court Case That Could Really Hurt Obamacare Insurers
Morning Consult
7/26/2016
"It's a little unclear what will happen if the House succeeds in its lawsuit, but the general wisdom among analysts is that insurers will still be required by law to continuing giving consumers the cost-sharing reductions. Thus, the GOP has argued in hearings, it's not consumers who will suffer if federal money stops going to the program.... But that cost must be made up elsewhere, probably in monthly premiums. In January, the Urban Institute predicted that a House win in the case would cause silver plan premiums to increase $1,040 per person in 2016, and this number would increase over time. Marketplace enrollment would decrease by 1 million people, and federal government costs would increase by $3.6 billion in 2016."
The New Schedule J for Form 5500: Big Changes for Small Group Health Plans
Stinson Leonard Street
[Guidance Overview]
7/26/2016
"Approximately 6,200 small group health plans currently file a Form 5500, at an aggregate cost of $4.1 million, but under the proposed changes that number would increase to an estimated 2,158,000 small group health plans at an estimated aggregate cost of $227.9 million.... Schedule J alone is estimated to affect an estimated 2,205,900 group health plans of all sizes and will increase Form 5500 filing costs by $202.6 million, while the total increased burden from all proposed Form 5500 changes for group health plans is estimated to be a 2.2 million hours and $241.6 million."

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