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Benefits in the News

Older News | January 30, 2015

arrow icon Text of Federal District Court Opinion: Retroactive Plan Amendment Changing Lump Sum Interest Rate Was Not 'In Effect' on Date of Plan Termination, and Impermissibly Reduced Participant Accrued Benefits
U.S. District Court for the District of Columbia

"[R]etroactive amendments are unquestionably bound by [29 C.F.R.] Section 4041.8's prohibition on post-termination benefit-decreasing amendments.... Nothing in PPA Section 1107 affects this crucial portion of Title IV's implementing regulations.... It is undisputed that adoption of the PPA Amendment resulted in Plan participants receiving roughly $2.1 million less in distributions than they would have received in its absence. Royal Oak contends, however, that Plan participants experienced no decrease at all in the value of their benefits.... This attempt to draw a distinction between the 'amount' of benefits (which, according to Royal Oak, may decrease) and the 'value' of benefits (which, under Section 4041.8, may not decrease), is unconvincing. Royal Oak's interpretation has no basis in the text of the Regulation itself.... Despite its assertions to the contrary, Royal Oak could have easily complied with the tax code without decreasing benefits to its Plan participants." [Royal Oak Enterprises v. PBGC, No. 13-1040 (D.D.C. Jan. 28, 2015)]
arrow icon Employer Violated COBRA When Hours Reduction Hiked Premiums
Thompson SmartHR Manager

"The fact that the reduction in hours resulted in an increase in their premiums constituted a 'loss of coverage' for COBRA purposes. Also, the employer's disclosures were inadequate in explaining this outcome. This resulted in both a COBRA notice failure and a breach of fiduciary duty under ERISA.... Here, the two individuals had to pay 100 percent of premiums once they were suspended -- prior to that, they only paid 5 percent and 18.5 percent of the premium, respectively. This increase of premiums was a loss of coverage for COBRA purposes that was a direct result of their reduction in hours, the court found."
arrow icon Maximizing Contributions to an HSA: Findings from the EBRI HSA Database (PDF)
Employee Benefit Research Institute [EBRI]

"Overall, 15 percent of health savings accounts (HSAs) received the maximum contribution in 2013. HSAs opened more recently were less likely than older accounts to have received the maximum contribution. Accounts with distributions for claims and higher-level claims were more likely to have received the maximum contribution. Accounts belonging to older HSA owners were more likely than those belonging to younger ones to have received the maximum contribution."
arrow icon 11 Diverse Organizations File Amicus Briefs Supporting ACA in King v. Burwell
Families USA

"At least 11 groups representing a diverse set of stakeholders filed briefs ... expressing the shared belief that Congress always intended to bring affordable health insurance to people in every state -- and that the language of the ACA reflects that intent.... Here's a quick look at some of the individuals and groups who filed, along with the constituencies who would suffer if the Supreme Court rules in favor of withdrawing premium tax credits in states with federally facilitated marketplaces."
arrow icon Health CO-OPs under the ACA: Promise and Peril at the 5-Year Mark

"The nongovernmental, state-delimited CO-OP program [created under the ACA] was to 'foster the creation of qualified nonprofit health insurance issuers to offer qualified health plans in the individual and small group markets.' However, the CO-OPs (health insurance providers) should not be confused with accountable care organizations (coordinated health care providers). In this Viewpoint, we review the central tenets of the CO-OP program, assess its current state of implementation, and describe its future challenges."
arrow icon IRS Issues Administrative Guidance on Applying Code Section 415(c) Limits to DROPs
Gabriel Roeder Smith & Company
1/29/2015 [Guidance Overview]

"On December 8, 2014, the Director of Employee Plans (EP) at the Internal Revenue Service issued a memorandum to EP employees regarding applying Internal Revenue Code (IRC) Section 415(c) limits to governmental defined benefit (DB) plans that offer a deferred retirement option plan (DROP).... [W]hile the participant works, the retirement benefits that the participant would otherwise have received (referred to in the guidance as the 'DB Benefit Amounts) are credited to the DROP.... [A]s provided in the IRS memorandum, EP employees reviewing governmental plans should not treat the DB Benefit Amounts that are credited to the DROP as annual additions subject to the IRC Section 415(c) limit."
arrow icon Recent Changes to Ohio Insurance Laws Bring Them Into Line with Federal Rules for Health Plans (PDF)
Ohio Legislative Service Commission
1/29/2015 [Guidance Overview]

"Lowers to 26 (from [28] the age to which health insurance coverage must be extended, upon the request of the insured, under certain health policies or plans that provide coverage to an insured's unmarried dependent children ... Increases to 30 (from  25) the minimum number of hours that an eligible employee works in a normal work week for the purposes of the law governing small employer health benefit plans.... Increases the potential length of one-time, limited duration health insurance policies, from policies that are not longer than six months to policies that are less than 12 months."
arrow icon Text of Ninth Circuit Opinion: Beneficiary Designation Forms Are Not 'Plan Documents'
U.S. Court of Appeals for the Ninth Circuit

From the summary provided by the court: "The plan participant formally designated his wife as his beneficiary. After their divorce, he designated his son as beneficiary over the telephone but did not sign and return beneficiary designation forms. The panel held that the beneficiary designation forms were not 'plan documents' governing the plan administrator's award of benefits ... The panel concluded that there was a triable issue as to whether, under state law, the plan participant strictly or substantially complied with the governing plan documents' requirements for changing his beneficiary designation. The panel remanded the case for further proceedings." [Becker (plaintiff in interpleader) and Mays-Williams v. Williams, No. 13-35069 (9th Cir. Jan. 28, 2015)]
arrow icon Two Hats, One Head, No Heart: The Anatomy of the ERISA Settlor/Fiduciary Distinction
Dana M. Muir and Norman P. Stein, via SSRN

"While the settlor/fiduciary doctrine has worked well and is not controversial in routine cases, the article shows that the doctrine has permitted employers in some cases to bypass express and implied ERISA requirements through artful plan drafting and, perhaps more troubling, has also permitted employers to exploit ERISA's broad preemption of state law to insulate plans actions from judicial or state legislative oversight, even in areas where there is broad national consensus, such as limits on claim subrogation and liability for negligent medical decision-making. The article suggests three limiting principles that courts could use to provide a more nuanced approach to balancing employer and employee interests in and related to ERISA plans. These principles would leave intact the core of the doctrine while mitigating its most troubling effects."
arrow icon Retirement Saving: Excuses and Regrets
SquaredAway Blog, by the Center for Retirement Research at Boston College

"Saving for retirement is not a major priority for 81 percent of the workers surveyed.... [S]aving takes a back seat to myriad other financial concerns, topped by the impact of the global economic downturn and the U.S. job market. Things are much clearer to retirees. Nearly half of them, when asked for the latest age at which people should start preparing to retire, said before 30. Many retirees -- about two out of five -- said 'they did not realize that their preparation had fallen short until it was far too late.' "
arrow icon Doing the Math on Teacher Pensions: How to Protect Teachers and Taxpayers
National Council on Teacher Quality

"[S]tate-by-state report cards included in this report present comprehensive state data on pension funding and pension system rules, and grade the states on the extent to which they: Offer teachers the option of a flexible and portable primary pension plan, such as a defined contribution (DC) plan.... Ensure that traditional defined benefit (DB) pension plans are portable, flexible and fair for all teachers... At a minimum, ensure some basic principles of fairness in traditional systems... Shore up pension funding for existing commitments... Require that pension systems smoothly accrue pension wealth with each year of work."
arrow icon Some Seeking Insurance Told They Didn't Qualify, Others Balked At Cost
Kaiser Health News

"Nearly half of Americans lacking health insurance during the first year of the health law's marketplaces appeared to be eligible for government assistance, but two-thirds of them said they found the health plans too expensive or were told they didn't qualify ... Far fewer cited reasons often mentioned in political circles: a philosophical opposition to the 2010 health law or sign-up difficulties cause by the early technical problems experienced by the government's enrollment website[.]"
arrow icon Gold-Plated Public School Pension Plans? Most Teachers Never See The Cash

" 'An average of 70 cents of every dollar contributed to state teacher pension systems is paying off the ever-increasing pension debt,' according to a new study by the National Council on Teacher Quality ... Last year, state teacher pension systems had $499 billion in unfunded liabilities. That figure is up $100 billion in the two years since the group's last report. On average, that's about $10,000 in pension debt for each school-age child in the country."
arrow icon Retirement Savings Crisis Is Real and Getting Worse

"The most convincing estimates project that more than 50% of households will fall short, and even the most optimistic studies predict that nearly one-quarter of retirees will ... 'The biggest problems are that far too many people don't have access to a private-sector retirement plan, and secondly, the plans they do have access to aren't very good,' said David Madland, managing director of the [Center for American Progress] economic policy team."
arrow icon Illinois Pension Ruling May Not Impact Chicago Case

"If the Illinois Supreme Court voids Illinois' pension reform law, that ruling will not derail another law aimed at shoring up two of Chicago's public pension funds, a lawyer for the city argued ... [An attorney] representing Chicago ... said the state is basing its defense on the need to invoke its police powers to ensure it can fund essential state services. The city has an additional argument that its law does not unconstitutionally diminish pension benefits because without its cost-saving elements and higher contributions the two pension funds would become insolvent within a matter of years[.]"
arrow icon Projected Health Spending Has Fallen Since 2010, Despite ACA Coverage Expansions
Center on Budget and Policy Priorities

"The decline in projected spending, which continues a pattern of downward revisions to CBO's projections in recent years, stems from several factors. One is health reform's cuts in payments to Medicare providers and health plans.... But CBO and other experts have also concluded that a substantial part of the health care cost slowdown reflects structural changes in the health care system. Professional associations, hospitals, and doctors are taking steps to curb costly and ineffective procedures and treatments."
arrow icon Health Insurers May Be Finding New Ways to Discriminate Against Patients
The Washington Post; subscription may be required

[A]advocates say ... some insurers are placing high-cost medications for chronic conditions into the highest-priced tiers of the drugs they cover, which would force patients to pay potentially thousands of more dollars out of pocket for essential medications.... A new analysis published in the New England Journal of Medicine suggests that is the case. Of 48 exchange health plans Harvard School of Public Health researchers analyzed, they identified 12 plans that appeared to discriminate against HIV patients."
arrow icon Senate Bill: Vets Won't Trigger ACA Employer Mandate
ABC News

"A Senate committee voted unanimously Wednesday to exclude veterans from the 50-worker threshold that triggers required coverage for employees under [the Affordable Care Act]. The Senate Finance Committee vote was 26-0, a rare show of unity over a program that is usually fraught with intense partisanship.... The Senate bill would let employers exclude from that count veterans who receive health care from the Department of Veterans Affairs or the military."
arrow icon State Trends in the Cost of Employer-Sponsored Health Insurance Coverage, 2003-2013
The Commonwealth Fund

"In all but a handful of states, average deductibles more than doubled over the past decade for employees working in large and small firms. Workers are paying more but getting less [financial protection]. Costs are particularly high, compared with median income, in Southern and South Central states, where incomes are below the national average. Based on recent forecasts that predict an uptick in private insurance growth rates starting in 2015, securing slow cost growth for workers, families, and employers will likely require action to address rising costs of medical care services."
arrow icon Supreme Court Dispenses with the Yard-Man Inferences
Proskauer Rose LLP

"The Supreme Court's opinion rejects the three rationales most commonly employed in support of claims for lifetime retiree health benefits -- that the benefits are deferred compensation, that to prevent vesting the agreement must explicitly curtail the duration of the benefits, and that the duration of the health benefit is tied to the lifetime payment of pension benefits. This does not mean that employers will always prevail, but it should lessen the concerns by employers about litigating retiree benefit claims in the Sixth Circuit, as well as the inconsistency multi-jurisdictional employers faced by having different outcomes in different circuits." [M&G Polymers v. Tackett, No. 13-1010 (U.S. Jan. 26, 2015)]
arrow icon Proposed Changes to Form 5500 Series Could Complicate Compliance in 2015
ERISAdiagnostics, via Thompson HR Compliance Expert

"[If] the proposed changes to the 2015 Form 5500 are accepted, the annual reporting process will require more concentrated effort for gathering data to answer the form's questions.... Given the disparity between the draft form and related instructions, we can expect to see revised drafts of one or both documents. For example ... Line 9 of the Form 5500-SUP requests the amount of contributions deducted and whether the contributions exceeded the deductible limit. The instructions for Line 9, however, relate to the amount of distributions made under certain circumstances. IRS expects that the questions on the Form 5500-SUP will be added to the 2015 Form 5500 and Form 5500-SF and related schedules."
arrow icon ACA Users Are No Sicker Than Those on Commercial Exchanges
William Gallagher Associates

"First year data showed that newly-insured members were scheduling PCP, women's health and preventive care visits at a much higher percentage than commercially-covered members. Prior to Obamacare, preventive visits were likely a low-priority for the uninsured, but now that these services are free under the new law, more enrollees are taking advantage of their ability to access care.... It's possible that over time, a correlation may emerge between preventive visits and increased referrals for specialty care, so these patterns will need continual monitoring."
arrow icon One in Three SSA Disability Determinations Involve Mental Disorder Diagnosis
Lane Powell PC

"ERISA plan administrators must consider Social Security Administration (SSA) disability determinations when making the disability benefit decision. ERISA plan administrators are not bound by the SSA's determination. But the benefit denial letter should provide an explanation why the SSA determination was not followed. Failure to provide that explanation raises questions whether the adverse benefits determination was 'the product of a principled and deliberative reasoning process.' So, it is always worthwhile to see the latest trends in disability findings from the Social Security Administration."
arrow icon Text of Amicus Brief to Supreme Court by 52 Economists in Support of Health Insurance Subsidies (PDF)
Jenner & Block

"Congress well understood the importance of subsidies to the ACA reforms. The basic economic framework undergirding that statute can be analogized to a stool with three legs. All three legs [(namely, non-discrimination rules, individual mandate and premium subsidies)] are necessary to foster stable, functioning insurance markets consistent with Congress' goal of broad, affordable coverage. Economic modeling confirms what Congress understood: without premium subsidies for every eligible person who buys insurance on an Exchange, the ACA cannot achieve its goals." [King v. Burwell, No. 14-1158 (4th Cir. July 22, 2014; cert. pet. granted Nov. 7, 2014)]
arrow icon Comparing Nonqualified Stock Options to Awards of Restricted Stock

"[W]hen a company's stock has very little value, the recipient is likely to prefer restricted stock; however, as the value of the stock rises, the recipient may prefer NSOs because of the potential immediate tax (with an 83(b) election) on grant. On the other hand, if the company performs poorly, the stock's value may fall below the NSO's exercise price, rendering the NSO worthless. Restricted stock awards may be more complicated for the company because the recipient becomes a shareholder on the award date, even though some of the shares remain subject to forfeiture."
arrow icon Analyzing Separations from Service Under Section 409A (PDF)
Groom Law Group, via Bloomberg BNA Pension & Benefits Daily

"Nonqualified plans, including severance and change in control plans subject to Section 409A, are frequently designed to commence benefit payments to an employee after the employee incurs a 'separation from service,' which is a permissible payment trigger. However, the rules surrounding the Section 409A definition of 'separation from service' are complex, and it is not always clear when an employee separates from service -- and consequently, when the employee's deferred compensation should be paid. This article discusses the Section 409A rules relating to the separation from service payment trigger, and how those rules apply in several scenarios commonly faced by companies."
arrow icon Tips for Increasing Revenue and Decreasing Expenses in Operating Your Multiemployer Plan
Bond Beebe Accountants & Advisors

"Establishing an aggressive collection policy might aid in the timely collection of employer contributions while keeping legal fees for the collection of older delinquent contributions in check.... There are several methods a trustee may consider when looking to reduce the expenses paid by their plan. However, trustees should also keep in mind that choosing the lowest cost option may not always be the prudent choice. In most cases, lower cost means lower quality, which can increase issues in the future that ultimately become more costly."
arrow icon Is It Time to Update Your Cafeteria Plan?
Clifton Budd & DeMaria, LLP

"The IRS has recently issued Notice 2014-55 which expands the circumstances under which a participant may make a mid-year revocation of his election to participate in an employer sponsored health plan and elect coverage under a plan offered on the Health Insurance Exchange.... The expansion of the modification rules does not apply to elections under flexible spending accounts.... For plan years beginning in 2015, the cap on salary reduction contributions has increased to $2,550.... All cafeteria plans should be reviewed to reflect the Federal recognition of same sex-marriages.... Finally, employers should consider allowing a $500 carry over for a health FSA for contributions that are not reimbursed in the plan year in which deducted (and any applicable grace period)."
arrow icon Good News, Bad News: Avoiding FICA Taxes Can Lead to Lower Social Security Benefits
Michael Kitces in Nerd's Eye View

"[B]ecause of the so-called 'bend points' used to calculate an individual's Primary Insurance Amount under the Social Security rules, not all FICA tax avoidance strategies have the same consequences.... In fact, those who don't have enough years of income to qualify for Social Security benefits may even want to pay more in FICA taxes, to both increase their benefits and ensure that they can receive those benefits at all!"
arrow icon Will DOL Require ESOP Appraisers to Be ERISA Fiduciaries? Probably Not
The ESOP Association

"It's generally known among DC groups that are following the DOL's proposed fiduciary rule that the portion of the rule directed toward ESOPs will not be included in the re-proposed fiduciary proposal from 2010. It should be noted, however, that the DOL will be looking for clarity and guidance on ESOP appraisals that are in accord with ERISA rules for private ESOP stock to be valued at fair market value, as defined by a 'willing buyer/willing seller' construct."
arrow icon Geographic Variation in Spending for Certain High-Cost Procedures Driven by Inpatient Prices
U.S. Government Accountability Office [GAO]

"Spending for an episode of care in the private sector varied across metropolitan statistical areas (MSA) for coronary stent placement, laparoscopic appendectomy, and total hip replacement, even after GAO adjusted for geographic differences in the cost of doing business and differences in enrollee demographics and health status. MSAs in the highest-spending quintile had average adjusted episode spending that was 74 to 94 percent higher than MSAs in the lowest-spending quintile, depending on the procedure. MSAs with higher spending on one procedure generally had higher spending on the other two procedures. High- or low-spending MSAs were not concentrated in particular regions of the nation."
arrow icon Committee Leaders to HHS: Do You Have a Plan for King v. Burwell Decision?
Energy & Commerce Committee, U.S. House of Representatives

"House Energy and Commerce Committee Republican leaders [have] sent a letter to the Secretary of [HHS], Sylvia Burwell, seeking information about the administration's contingency planning for the upcoming Supreme Court decision in the case of King v. Burwell. 'Given HHS's responsibilities, [the authors] believe it is prudent that the Department plan for the full range of potential outcomes and consequences of the Court's decision.' "
arrow icon Senator Orrin Hatch Questions IRS Announcement Waiving Certain ACA Tax Penalties
U.S. Senate Committee on Finance

"Senate Finance Committee Chairman Orrin Hatch (R-Utah) sent a letter to [IRS] Commissioner John Koskinen questioning the IRS's announcement that the agency would waive certain tax penalties under the [ACA].... Hatch asks that IRS explain what led to this new waiver program, how many taxpayers are expected to owe tax debt based on excess insurance subsidies, whether the Internal Revenue Service communicated with other agencies in creating the waiver program, and if there are plans for future waiver programs."
arrow icon Target Risk Funds: How Do They Work?
Edwin J. Elton, Martin J. Gruber, and Andre De Souza; all are with the New York University [NYU] -- Department of Finance

"Target risk funds and target date funds are two types of mutual funds that make the asset allocation decision for an investor. Target risk funds have not been studied before: this article is the first comprehensive study of their characteristics and performance and how they compare to target date funds as an investment vehicle." [From the article: "These funds differ from target date funds in that they attempt to hold risks (on a relative or an absolute basis) constant over time while a target date fund attempts to lower risk as an investor's time horizon approaches."]
arrow icon Debt of the Elderly and Near Elderly, 1992-2013 (PDF)
Employee Benefit Research Institute [EBRI]

"The percentage of American families with heads ages 55 or older that had debt increased from 63.4 percent in 2010 to 65.4 percent in 2013.... The debt levels among those with housing debt have obvious and serious implications for the future retirement security of these Americans, perhaps most significantly that these families are potentially at risk of losing what is typically their most important asset -- their home."
arrow icon It's Time for the Employer Mandate to Go
San Antonio Express-News
1/28/2015 [Opinion]

"[T]he real reason the White House and congressional Republicans both seem unhappy with the employer mandate but reluctant to fully dismantle it [is that to do so] would increase federal deficits by eliminating revenue raised from penalties and increasing the pool of Americans eligible for subsidies. But there are better, less distortionary ways to address these budget concerns while still promoting access to affordable health care -- if only Congress and the White House could just admit they're both on the same page."
arrow icon Financial Services Institute Chair Calls White House Fiduciary Memo 'Offensive'

" 'The ignorance in the memo is shocking to me,' [Adam Antoniades, chair of the Financial Services Institute] explained. 'For those who spend their lives in the industry, it is frankly offensive.' ... What's the industry to do? 'We highlight the good we do, how the good outweighs the bad, and we come together to address what's wrong and craft a solution,' he explained. 'As industry leaders, we must be brave, bold and strong enough to take policies and positions founded on our core beliefs of how to engage clients in a conflict-free ... manner.' "
arrow icon Industry Group to Back Results-Focused Healthcare Payments
The New York Times; subscription may be required

"A coalition of some of the nation's largest health care systems and insurers vowed on Wednesday to change the way hospitals and doctors are paid -- placing less emphasis on the sheer amount of care being delivered and more on improving quality and lowering costs.... The private coalition includes, among others, Partners HealthCare, the powerful Boston health system that oversees Brigham and Women's and Massachusetts General hospitals; Ascension, the nation's largest Catholic and nonprofit health system; Aetna, a national for-profit insurer; and Health Care Service Corporation, which operates five state Blue Cross plans."
arrow icon CBO Now Says 10 Million Will Lose Employer Health Plans Under ACA
Investor's Business Daily

"Thanks to ObamaCare, the CBO now expects that 10 million workers will lose their employer-based coverage by 2021. This finding stands in sharp contrast to earlier CBO projections, which at one point suggested ObamaCare would increase the number of people getting coverage through work, at least in its early years. The budget office has, in fact, increased the number it says will lose workplace coverage every year since 2011."
arrow icon Independent Panel Proposes Changes to Military Pensions
The Wall Street Journal; subscription may be required

"[P]ersonnel costs [have] become the fastest growing part of the Pentagon budget. Between 2000 and 2014, those expenses rose 46%, according to [CBO], to $142 billion -- or about a third of the defense budget. Military officials worry that the price tag for salaries, health care and retirement will consume growing costs and leave less money for other things."
arrow icon Teacher Pensions: The Math Adds Up to a Crisis
CBS MoneyWatch

"In 2014, state teacher pension systems had a total of $499 billion in unfunded liabilities, which has risen $100 billion in just two years, according to a new report from the National Council on Teacher Quality, a nonpartisan research and policy group dedicated to restructuring the teaching profession. The report card on teacher pensions found that 70 cents of every dollar contributed to state pension systems pays for this massive debt rather than covering current employees' future retirement benefits."
arrow icon For Passive Funds, a Stronger Link Between Fees and Performance

"Unlike the Porsche, there is no cachet from buying a high-priced fund. Still, price can be useful when predicting results -- though not in the way fund companies would like.... As the chart illustrates, there appears to be an inverse relationship between fees and performance.... This suggests that investors can increase their probability of success by selecting low-cost funds. Fortunately, there are a lot of low-cost passive and active funds to choose from."
arrow icon Employer's Poorly Drafted FMLA Policy Allows Employee to Advance FMLA Claim (That Should Have Never Seen the Light of Day)
FMLA Insights

"[The employer (the Road Commission)] maintained an FMLA policy in which 'eligibility' to take FMLA leave was satisfied if [an employee] met the first two criteria [allowed by the FMLA statute] (12 months and 1,250 hours). The Road Commission's FMLA policy made absolutely no reference to the requirement that [an employee would be eligible only if he works at a location where the employer employs at least] 50 employees [who] work within 75 miles.... Because the Road Commission left out the third prong of what the court considered an 'unambiguous and unqualified' FMLA eligibility provision, a 'reasonable person in [Terry's] position could fairly have believed that he was protected by the FMLA.' "
arrow icon With Interest Rates So Low, LDI Positions Are Unlikely to Change
Russell Investments

"A lot has been said over the past fifteen years about what pension plans ought to do regarding liability-driven investing (LDI). But, with interest rates having fallen this year to levels we haven't seen in decades, [author Bob Collie thinks] that what many plans will do is: not much at all. Whatever the position a plan is in, low interest rates make it difficult to make changes now."
arrow icon DC Sponsors' Big Concern: Controlling Costs
Money Management Intelligence

"Almost half of the employers surveyed (47%) said they had recently taken the first [step] in managing plan costs, which is reviewing them. Of the remaining half, 71% were very likely to do so in 2015.... One-quarter of plans surveyed said they have recently restructured their administrative fees in other to be calculated in a more equitable manner, meaning as a per-person charge to participants or using an asset-based or revenue sharing model."
arrow icon Sen. Orrin Hatch Outlines Plans for Retirement Reform

"Many industry groups were particularly fond of Title II in the [Secure Annuities for Employees (SAFE) Retirement Act], which would expand the availability of qualified retirement plans among private sector workers, especially for employees of small businesses.... Other key elements of the SAFE Retirement Act would 'ensure that hardworking Americans will continue to have affordable access to professional investment advice by restoring jurisdiction over the IRA fiduciary duty rule to the Treasury Department and requiring Treasury to consult with the [SEC] when prescribing rules relating to the professional standard of care owed by brokers and investment advisors to IRA owners.' "
arrow icon High Court Opinion Vacates Longstanding 6th Circuit Position on Retiree Healthcare Liabilities
Thompson SmartHR Manager

"[According to the Court, in] Yard-Man, the 6th Circuit was imposing its own suppositions about the parties' intentions, when the evidence at hand was not sufficient to support those conclusions ... For example, the circuit inferred that the parties would not leave so important a matter as retiree benefits to future negotiations. That was an unacceptable assumption to make, because it was not backed by any showing that this was a common belief or practice in the industry. It was also a mistake because the circuit was allowing that assumption to outweigh contrary implications from the CBA's duration clause terminating the agreement generally." [M&G Polymers v. Tackett, No. 13-1010 (U.S. Jan. 26, 2015)]
arrow icon Underfunded Pensions: Tackling an 'Invisible' Crisis
Wharton School of the University of Pennsylvania

"Wharton finance professor Robert Inman ... noted, for example, that Chicago's unfunded liabilities are 10 times its revenues. 'Just assume that they're going to have to pay 5% of that [number annually]. That means you're looking at 50% of their cash that will have go to pensions.' Philadelphia, Boston, New York, Houston and other major cities will face similar challenges."
arrow icon Supreme Court Says No Presumption That Retiree Medical Benefits Are Vested
Liebert Cassidy Whitmore

"While this decision arises out of the private sector, it has application and force to public employers. The California Supreme Court in Retired Employees' Association of Orange County v. County of Orange has similarly held that retiree medical benefits contained in a collective bargaining agreement are to be interpreted according to ordinary contract principles." [M&G Polymers v. Tackett, No. 13-1010 (U.S. Jan. 26, 2015)]
arrow icon Annual Reporting Requirements for Incentive Stock Options and Employee Stock Purchase Plans
1/27/2015 [Guidance Overview]

"For [1] any exercise of an incentive stock option (ISO) during 2014 or [2] transfer during 2014 of a share previously purchased pursuant to a tax-qualified employee stock purchase plan (ESPP) where the purchase price paid for the share was (a) less than 100% of the fair market value on the date of grant or (b) not fixed or determinable on the date of grant, the Internal Revenue Code requires companies to: furnish, by February 2, 2015, annual information statements to the participant who exercised the ISO or transferred the ESPP share; and file, by March 2, 2015 (for paper filers) or by March 31, 2015 (for electronic filers), an information return with the IRS[.]"
arrow icon Federal District Court in California Asked to Determine Retroactive Applicability of United States v. Windsor
Bass, Berry & Sims

"The IRS has stated its position. In Notice 2014-19, the IRS stated that retirement plans are not required to recognize same-sex spouses prior to June 26, 2013, the date of the Windsor decision. However, the IRS permits employers to amend their plans to reflect the outcome of Windsor prior to June 26. In other words, employers can provide retroactive benefits, but they are not required to do so. It seems unlikely that the California district court, and perhaps ultimately the Supreme Court, would take a position different from the IRS. Nonetheless, employers should keep a close eye on the outcome of the decision. If the court finds that Windsor should be applied retroactively to employee benefits, it is possible that many other suits may be filed, and those suits may not be limited to surviving spouse benefits."
arrow icon How Often Should an Investment Policy Statement Be Updated?

"Individual clauses can be reviewed and updated on a schedule that corresponds with normal portfolio monitoring procedures.... [T]he IPS should be reviewed in full on an annual basis to review for any outdated information. Once the IPS is sufficiently old, you and the client (or the courts!) might consider it stale and no longer valid.... [E]very IPS ought to be rewritten every 3-5 years, just to remind the client this is an active and important document and because it needs to accurately reflect the client's current thinking and circumstances[.]"
arrow icon Health Insurance Marketplace 2015 Open Enrollment Period: January Enrollment Report (PDF)
Assistant Secretary for Planning and Evaluation [ASPE], U.S. Department of Health and Human Services [HHS]

44 pages. "More than 7.1 million people have selected or been automatically reenrolled into 2015 Marketplace plans in the 37 states that are using the platform in 2015 as of January 16th ... Nearly 2.4 million people have selected or been automatically reenrolled into 2015 Marketplace plans in the 14 states (including DC) that are using their own Marketplace platforms in 2015, based on data through January 17th ... Among the plan selections in the 37 states that are using the platform in 2015, 87 percent qualify for premium tax credits and/or cost-sharing reductions, and 2.5 million are under the age of 35."
arrow icon QPAM Exemptions for Money Managers Being Evaluated
Good Risk Governance Pays
1/27/2015 [Opinion]

"Far from being a theoretical construct, Credit Suisse Asset Management stands to lose revenue if it cannot maintain its QPAM status for more than $2 billion of ERISA assets.... Given the variability in QPAM awareness, it might be extremely helpful to have QPAM audit results made public. Not only could ERISA plan participants review the results but investment fiduciaries could examine the audit reports as part of their due diligence, both prior to hiring an asset manager and then regularly thereafter."
arrow icon Supreme Court Rejects Presumption of Vesting of Retiree Welfare Benefits
Sidley Austin LLP

"The Court held that although a court may look to known customs or usages in a particular industry to determine the meaning of a contract, the court may not rely on its own unsupported suppositions. Instead, the parties must prove those customs or usages with actual evidence." [M&G Polymers v. Tackett, No. 13-1010 (U.S. Jan. 26, 2015)]

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