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Older News | July 29, 2014

Appointment of M.D. Raises Clinical Bar for Private Exchanges
Employee Benefit Adviser More items by Employee Benefit Adviser

"At least one leading private health insurance exchange operator has made sure that a seasoned physician from the corporate arena has a major say in how care will be managed for employer-clients and their employees.... His responsibilities will include providing physician-level expertise for member engagement and clinical management strategies, as well as developing high-performance networks and key clinical metrics to evaluate and improve population health."
Are Some Flexible Funds Proving Academics Wrong?
Morningstar Advisor More items by Morningstar Advisor

"Tactical target-date funds are outperforming those that don't zig when the market zags.... Looking at returns through the end of 2013, target-date funds for series that stick to the strategic glide path have an average five-year total return rank in the 54th percentile, while those that use tactical management have a 39th percentile average rank. (On average, the former group beat 54% of its peers, while the latter outpaced 61%)."
IRA Withdrawals During 2012: How Much and When (PDF)
Employee Benefit Research Institute [EBRI] More items by Employee Benefit Research Institute [EBRI]

"For those at or above the required minimum distribution (RMD) age of 70-1/2, the withdrawal rates at the median (mid-point) appeared close to the amount that is required to be withdrawn, though some were significantly more. In contrast, among individuals under age 60, 10 percent or fewer had a withdrawal. Significantly, when looking at the distribution of the withdrawal rates for those ages 70 or older, the median of the three-year average withdrawal rates also show that most individuals are withdrawing at a rate that is likely to be able to sustain some level of post-retirement income from IRAs throughout their retirement years."
Larger Companies More Likely Than Smaller Companies to Offer Medical Care Benefits
U.S. Bureau of Labor Statistics [BLS] More items by U.S. Bureau of Labor Statistics [BLS]

"Employer-provided medical care benefits were available to 69 percent of private-industry workers in the United States in March 2014. Availability of medical care benefits varied by establishment size; 53 percent of workers in establishments with fewer than 50 employees were offered medical care benefits, compared with 89 percent of workers in establishments with 500 employees or more."
Narrow Networks Redux: Don't Mandate Broader Access
David Dranove and Craig Garthwaite, Kellogg School of Management More items by David Dranove and Craig Garthwaite, Kellogg School of Management
7/29/2014 [Opinion]

"Make no mistake, restrictive networks are essential to cost containment. Through narrow networks, insurers can negotiate lower prices. More importantly, they can direct enrollees to providers who have lower overall costs and higher quality.... The solution isn't to regulate narrow networks out of existence; it is to shine some light on network structure.... [W]hat we must avoid is mandating broader access. This would spell the end of market-based health reform."
Text of Testimony of Urban Institute to House Ways and Means Subcommittee on Social Security: 'What Every Worker Needs to Know About an Unreformed Social Security System'
Urban Institute More items by Urban Institute
7/29/2014 [Opinion]

"In this testimony before the House Ways and Means Committee Subcommittee on Social Security, Eugene Steuerle, Institute Fellow and Richard B. Fisher Chair at the Urban Institute discusses the fairness, efficiency and adequacy questions that arise almost no matter how much growth Congress maintains in Social Security. In particular he addresses three troubling aspects of an otherwise successful program: unequal justice; middle age retirement; and impact on the young."
What Is the Difference Between a Health Plan and a Payer? (PDF)
Workgroup for Electronic Data Interchange More items by Workgroup for Electronic Data Interchange

"By and large, the healthcare industry tends to use the terms 'health plan' and 'payer' synonymously. The HIPAA regulation, however, defines 'health plan' differently than the way the industry commonly uses the term. This variation in terminology usage has also created additional interpretation issues.... Even though an entity can be in both roles, not all payers are health plans and not all health plans are payers. Usage in transactions relies on the identification of the role the entity being identified is playing.... If a health plan, third-party administrator, administrative services organization, or a different entity currently is identified in standard transactions as a payer, it would continue to do so. If the entity currently is identified as a health plan (and continues to be identified as a health plan after November 7, 2016) in standard transactions, it must use an HPID."
2014 Proxy Season Review: Good Marks for Most U.S. Companies, but No Room for Complacency
Towers Watson More items by Towers Watson

"Say-on-pay results from 2014 annual meetings reveal that, after four years of mandatory say on pay, most U.S. companies are achieving consistently strong shareholder support for their executive pay programs. While that may not be surprising following a year in which both the S&P 500 and Russell 3000 logged annual returns over 30%, focusing on market performance as the sole cause of the support short-changes the improved dialogue and engagement among companies and their shareholders since enactment of Dodd-Frank's say-on-pay mandate."
Why Are Target Date Funds So Popular?
Paladin More items by Paladin

"The short answer to this question is 'Because their employers have chosen TDFs on their behalf.' Or more precisely, advisors choose TDFs (Target Date Funds) because employers rely on their advisors for this decision. Most assets are there by default. They belong to participants who can't or won't make an investment election. So why do financial advisors like them?"
As Profits Roll In, Aetna to Expand on Obamacare Exchange in 2015
Forbes More items by Forbes

"Aetna said ... it will expand its private health insurance products on government exchanges under the [ACA] next year to the additional market of Georgia based on the company's first-year successes.... Though new membership from government run, so-called 'public,' exchanges under the health law is just 2 percent of company business, Aetna is seeing a boom in Americans signing up to the expanded Medicaid program for the poor[.]"
Text of IRS Guidance to Practitioners Regarding Professional Obligations Under Revised Treasury Circular No. 230 (PDF)
Internal Revenue Service [IRS] More items by Internal Revenue Service [IRS]
7/29/2014 [Guidance Overview]

"The provisions of Circular 230 apply to: Attorneys; Certified Public Accountants; Enrolled Agents; Enrolled Actuaries; Enrolled Retirement Plan Agents; Appraisers ... The following is a summary description of certain obligations under [the June 2014 revision of] Treasury Circular No. 230. This summary does not address all provisions of the Regulations."
Panel Rules That Los Angeles City Hall Must Toss Out Pension Reforms
Los Angeles Newspaper Group More items by Los Angeles Newspaper Group

"[A] labor panel voted to toss out new retirement rules touted by budget officials as a way to save the city $4 billion over the next three decades. The five-member Employee Relations Board sided with a report concluding that the city of L.A. violated labor rules when City Hall officials enacted new pension rules, including raising the retirement age to age 65, without negotiating with the unions."
Paid Leave Encourages Female Employees to Stay
The New York Times; subscription may be required More items by The New York Times; subscription may be required

"Just 59 percent of workers say their employers offer them paid leave ... After California became the first state to offer paid parental leave, new mothers were more likely to return to work ... The policy debate is not just about parents of young children; paid leave policies also cover employees who need to care for aging parents. Elder care is already eating away at women's work force participation, which is why the biggest declines are among women in their 40s and 50s. That need will surge in coming years."
HSA Balances, Contributions and Withdrawals in 2012
America's Health Insurance Plans [AHIP] More items by America's Health Insurance Plans [AHIP]

12 pages. Excerpt: "Twenty-eight percent (28%) of HSAs open during 2012 were initiated that year, 21 percent were opened in 2011 and 15 percent were opened in 2010. More than half (55%) of all accounts received personal contributions during 2012 and 44 percent of the accounts received employer contributions. Of those accounts, the average personal contribution was $2,337 and the average contribution from employers was $1,142. Fifty-eight percent (58%) of all accounts had withdrawals during the year and of those accounts the average withdrawal during 2012 was $2,081."
The Transitional Reinsurance Program: Submission of Annual Enrollment and Contributions Through (PDF)
Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS] More items by Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS]

46 presentation slides. "Purpose and Objectives: [1] Explain key points of registering on; [2] Identify key points of the 'ACA Transitional Reinsurance Program Annual Enrollment and Contributions Submission Form'; [3] Provide an overview of the supporting documentation; [4] Identify key points about scheduling payment of reinsurance contributions; and [5] Review the submission process."
Why Hire an Unbundled Service Provider?
Retirement Management Services More items by Retirement Management Services

"The perceived disadvantages of 'unbundling' recordkeeping and administrative services generally fall into two areas: [1] the belief that adding more parties adds more cost, and [2] the belief that adding more parties adds more complexities for the employer.... The additional benefits of using an ' 'unbundled' arrangement include: [1] the ability to replace one service provider without changing them all; [2] more sophisticated plan designs and plan documents; and [3] more comprehensive and technically proficient services."
Delaware Chancery Court Awards Victory to the Good Guys in an Executive Compensation Disclosure Case
Winston & Strawn LLP More items by Winston & Strawn LLP

"When a company files a supplement to its proxy, the plaintiff's firm usually will demand attorneys' fees from the company and, if the company demurs, file a lawsuit seeking attorneys' fees. That is what happened in Raul v. Astoria Financial Corporation.... [T]he Court declined to award attorneys' fees to plaintiff ... [saying,] 'If, on the other hand, the stockholder has simply done the company a good turn by bringing to the attention of the board an action that it ultimately decides to take, she is not entitled to coerced payment of her attorneys' fees by the stockholders at large.'" [Raul v. Astoria Financial Corp., No. 9169-VCG (Del. Ch. June 20, 2014)]
A New Reality for ESOP Fiduciaries
Holland & Knight More items by Holland & Knight

"[A]fter the ESOP fiduciary [at a privately-held employer] seeks a redemption of shares by the sponsoring employer or its non-ESOP shareholder(s) and explores with the employer's board of directors the feasibility of a third-party sale or reorganization of senior management and business strategy, the options are exhausted. It will be difficult for a particular group of participants to plausibly argue that a reasonable fiduciary would have acted differently."
IRS Captive Insurance Ruling Creates Opportunities for Plan Sponsors
Groom Law Group More items by Groom Law Group
7/29/2014 [Guidance Overview]

"Under the arrangement in Revenue Ruling 2014-15, a retiree medical plan sponsor's wholly-owned subsidiary reinsured a noncancellable accident and health policy covering retirees and their dependents that was purchased by a [VEBA]). The [IRS] held that such reinsurance constituted 'insurance,' including for purposes of determining whether the retiree medical plan sponsor's wholly-owned subsidiary qualifies as an insurance company under Subchapter L.... Revenue Ruling 2014-15 also reaffirms the general principle that, depending on the particular structure of an employee benefit arrangement, the 'insured' may be the plan sponsor's employees and their dependents, and not necessarily the plan sponsor or a plan trust."
ESOP Loans and Share Allocations Require Close Review
McGladrey More items by McGladrey
7/29/2014 [Guidance Overview]

"Of particular note in [IRS Technical Advice Memo 201425019] was the statement that the, 'requirement [in the prohibited transaction exception for ESOP loans] includes both an operational and a documentary component.' In other words, not only does the ESOP loan document need to be stated correctly ... but also, the related allocation of shares in the ESOP that results from the loan payment needs to be correct in operation.... In the past, companies that had loan documents that were properly structured to meet the exception, but that allocated the shares incorrectly in operation, could often treat the allocations as clerical errors and simply reallocate correctly, without the allocation being labeled a prohibited transaction."
GASB Statement 67 and Statement 68: Calculation Specifics on Individual Entry Age Normal and Recognition of Deferred Inflows/Outflows
Milliman More items by Milliman

"This [article] discusses the individual entry age (IEA) actuarial cost method. The IEA cost method is specifically identified in the new standards as the only appropriate method for determining a plan's total pension liability, which is the portion of the present value of benefits attributable to past service. This article will also discuss the calculation of the amortization period to be utilized in recognizing gains or losses that are due to demographic experience or actuarial assumption changes in the annual expense under GASB 68."
HATFA-14 and Discount Rates: The Latest in 'Pension Smoothing' Provisions
Milliman Retirement Town Hall More items by Milliman Retirement Town Hall

"On July 15, 2014, the U.S. House of Representatives voted 367-55 to approve H.R.5021, the Highway and Transportation Funding Act (HATFA-14) ... [The legislation] would extend the MAP-21 funding stabilization provisions for five years (through 2020).... HATFA-14 revises the minimum and maximum percentage ranges for a plan year ... The proposals relating to the applicable minimum and maximum rates are generally effective for plan years beginning after December 31, 2012."
Text of Comments by NHeLP to CMS on Proposed Rule for Exchange Annual Redetermination
National Health Law Program [NHeLP] More items by National Health Law Program [NHeLP]
7/29/2014 [Opinion]

"[We] strongly recommend CMS require the exchanges, not the issuers, be responsible for auto enrolling consumers who do not actively select a new plan. Requiring the exchange instead of the issuers to choose an alternate plan for auto enrollment will help ensure that the consumer's interest outweighs the issuer's interest, which is to retain a customer[.]"
IRS Continues to Mull Section 412(d)(2) Plan Amendments
American Society of Pension Actuaries [ASPPA] More items by American Society of Pension Actuaries [ASPPA]

"At a [recent] meeting with ASPPA and ACOPA's Government Affairs representatives ... the IRS ... indicated that closing agreements with regard to IRC Section 412(d)(2) amendments are being put on hold while they discuss the matter internally and consider and possible resolutions. We are hopeful that this is the first step in the right direction on this matter."
CMS Views Medicare Solvency through Rose-Colored Glasses
National Center for Policy Analysis Health Policy Blog More items by National Center for Policy Analysis Health Policy Blog
7/29/2014 [Opinion]

"[If] you assume the Medicare physician fee cuts will not take place; if you assume the Independent Payment Advisory Board will not be allowed to gut Medicare reimbursements; if you assume the productivity improvements that are supposed to slow Medicare spending but have failed to work, the percentage of GDP consumed by Medicare in the coming years is one-third higher than the projection under current law."
Statement of Robert Greenstein on the 2014 Social Security Trustees' Report
Robert Greenstein, President, Center on Budget and Policy Priorities More items by Robert Greenstein, President, Center on Budget and Policy Priorities
7/29/2014 [Opinion]

"The trustees caution that their projections are uncertain. For example, they estimate an 80 percent probability that trust fund exhaustion would occur between 2029 and 2038 -- and a 95 percent chance that it would happen between 2028 and 2041."
Statement of Paul Van de Water on the 2014 Medicare Trustees' Report
Paul Van de Water, Senior Fellow, Center on Budget and Policy Priorities More items by Paul Van de Water, Senior Fellow, Center on Budget and Policy Priorities
7/29/2014 [Opinion]

"Health reform, along with other factors, has significantly improved Medicare's financial outlook, boosting revenues and making the program more efficient. The HI trust fund's projected exhaustion date of 2030 is 13 years later than the trustees projected before the [ACA]. And the HI program's projected 75-year shortfall of 0.87 percent of taxable payroll is down from last year's estimate of 1.11 percent and much less than the 3.88 percent that the trustees estimated before health reform."
IRS Provides New Safe Harbors for Validation of Rollover Contributions (PDF)
Prudential More items by Prudential
7/29/2014 [Guidance Overview]

"Rollovers made electronically will qualify for either of the new safe harbors as long as the distributing plan administrator or IRA trustee provides the required information regarding the source of funds to the administrator for the receiving plan. If the distributing plan is not required to file Form 5500 ... the EFAST2 records will not be an option for confirming plan status.... Plan administrators may develop other processes for making reasonable conclusions that a potential rollover contribution is a valid rollover contribution."
What Makes a 'State' Exchange?
Timothy Jost, for Health Affairs More items by Timothy Jost, for Health Affairs

"Establishing the exchange -- that is, using the power of state government to enable the exchange to operate and fulfill its responsibilities -- is different from the carrying out the day-to-day operations of the exchange, which might be carried out by public officials, private contractors, or even the federal government.... It is not enough for a state simply to set up a website. It is also not sufficient if a state Department of Insurance operates some functions in a partnership relationship with a federal exchange."
Private Health Insurance Exchanges Must Live Up to Promises
Healthcare Payer News More items by Healthcare Payer News

"Many insurers have little choice but to participate in private exchanges, lest their group accounts start diminishing. But the rise of private exchanges has also meant that retail insurance is being thrust upon the industry, challenging companies to adopt new businesses processes, marketing and technologies. Not getting private exchanges right in the short term ... could vex future prospects -- because employees using private exchanges and the companies paying for them have high expectations."
ESOPs and 401(k) Plans: Coordination Tips for Administrators
Tom Roback, Blue Ridge ESOP Associates, via LinkedIn More items by Tom Roback, Blue Ridge ESOP Associates, via LinkedIn

"[F]or ESOP providers, the [408(b)(2) regulations] require that there be a specific written agreement outlining the scope of work, direct and indirect compensation, termination compensation, and manner of receipt. Investment entities, brokers, and their fiduciaries that hold plan assets (such as the investments from an ESOP non-stock account) must provide information on fees and expenses related to the investments.... When you provide more than one qualified plan to your employees, plan administration should be done in harmony. The delivery of compliance services should be seamless."
Obama Administration to Expand Health Coverage for Federal Workers
The Blaze More items by The Blaze

"The Obama administration [is publishing] a proposed rule that would give thousands of temporary and seasonal government workers access to the government's health care program, even though current law would appear to prohibit them from using that program. The rule from [OPM] would let these federal workers sign up for coverage ... and also allow some of them to enjoy a government contribution to their insurance premiums. Both steps would be done through OPM's proposed regulation, and not through an Act of Congress."
Revisions to CBO's Projections of Federal Health Care Spending
Congressional Budget Office [CBO] More items by Congressional Budget Office [CBO]

"CBO now projects that, if current laws remained generally unchanged, net federal spending for the government's major health care programs in 2039 would equal 8.0 percent of gross domestic product (GDP) -- 1.6 percentage points, or about 15 percent, less than the 9.6 percent the agency projected in 2010 ... That revision stems in large part from the observed slowdown in health care spending in recent years, but it also includes the effects of other factors; some of those factors reduced projected spending, and others increased it."
Text of GAO Report: Railroad Retirement Board Total and Permanent Disability Program at Risk of Improper Payments
U.S. Government Accountability Office [GAO] More items by U.S. Government Accountability Office [GAO]

"The Railroad Retirement Board's (RRB) policies and procedures for processing total and permanent (T&P) disability benefit claims do not adequately ensure that claimants meet program eligibility requirements.... GAO recommends that RRB explore options for obtaining more timely earnings information; revise its policy concerning the supervisory review of disability claims; establish a regular quality assurance review of T&P disability decisions; develop a performance goal to track decision accuracy; and develop and implement fraud awareness policies, procedures, and annual training."
2014 Annual Report of the Boards of Trustees of the Medicare Trust Funds (PDF)
The Boards of Trustees, Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds More items by The Boards of Trustees, Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds

283 pages. Excerpt: "The estimated depletion date for the HI trust fund is 2030, 4 years later than was shown in last year's report. As in past years, the Trustees have determined that the fund is not adequately financed over the next 10 years.... The Trustees project slight surpluses in 2015 through 2022, with a return to deficits thereafter until the fund becomes depleted in 2030."
Medicare Trustees Report Shows Significant Improvements for Seniors and Taxpayers
The White House Blog More items by The White House Blog

"Today's annual report from the Medicare program's Boards of Trustees brings good news about the program's financial future: Its Trust Fund will last four more years, to 2030, and projected Part B premiums for 2015 will not increase for the second year in a row."
Text of 2014 Annual Report of the Board of Trustees of the Social Security Trust Funds (PDF)
The Board of Trustees, Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds More items by The Board of Trustees, Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds

258 pages. Excerpt: "The Trustees project that the asset reserves of the OASI Trust Fund and of the theoretical combined OASI and DI Trust Funds will be adequate over the next 10 years under the intermediate assumptions. However, the projected reserves of the DI Trust Fund ... are depleted in the fourth quarter of 2016. At the time reserves are depleted, continuing income to the DI Trust Fund would be sufficient to pay 81 percent of scheduled DI benefits.... For the combined OASI and DI Trust Funds to remain solvent throughout the 75-year projection period: [1] revenues would have to increase by an amount equivalent to an immediate and permanent payroll tax rate increase of 2.83 percentage points (from its current level of 12.40 percent to 15.23 percent; a relative increase of 22.8 percent); [2] scheduled benefits during the period would have to be reduced by an amount equivalent to an immediate and permanent reduction of 17.4 percent applied to all current and future beneficiaries, or 20.8 percent if the reductions were applied only to those who become initially eligible for benefits in 2014 or later; or [3] some combination of these approaches would have to be adopted." [Also available are Supplemental Single-Year Tables, Documentation of Key Assumptions, and Model Documentation.]
Status of the Social Security and Medicare Programs: A Summary of the 2014 Annual Reports (PDF)
Social Security and Medicare Boards of Trustees More items by Social Security and Medicare Boards of Trustees

28 pages. Excerpt: "[Social Security's Disability Insurance (DI)] Trust Fund reserves ... declined to 62 percent at the beginning of 2014, and the Trustees project trust fund depletion late in 2016, the same year projected in the last Trustees Report.... The Trustees project that the Medicare Hospital Insurance (HI) Trust Fund will be the next to face depletion after the DI Trust Fund. The projected date of HI Trust Fund depletion is 2030, four years later than projected in last year's report."
Obamacare's Taxpayer Bailout of Health Insurers and the White House's Involvement to Increase Bailout Size
Committee on Oversight and Government Reform, U.S. House of Representatives More items by Committee on Oversight and Government Reform, U.S. House of Representatives

"Among today's House Oversight report findings is that almost all insurance companies expect to receive Risk Corridor payments to cover their expected losses on ObamaCare-compliant plans. The projections suggest that the size of the bailout will approach $1 billion this year alone. Between October 2013 and May 2014, the projected size of this bailout increased by more than 33 percent."
Fact Sheet: Social Security and Medicare Trustees Reports
U.S. Department of the Treasury More items by U.S. Department of the Treasury

"Taken in combination, Social Security's retirement and disability programs have dedicated resources sufficient to cover benefits for the next 19 years, until 2033. However, the projected depletion date for the separate Social Security's Disability Insurance (DI) Trust Fund is only two years away, in late 2016."
Text of Amicus Brief by SHRM and COLLE Urging Supreme Court to Overrule Sixth Circuit Presumption of Vesting for Retiree Health Benefits (PDF)
Society for Human Resource Management [SHRM] and Council on Labor Law Equality [COLLE] More items by Society for Human Resource Management [SHRM] and Council on Labor Law Equality [COLLE]
7/28/2014 [Opinion]

"The imperative to establish a uniform labor policy requires a consistent and easy to understand test for determining when, in the case of a health plan created in collective bargaining, retirees become vested in a right to receive health-care benefits that cannot be either terminated or altered after the contract itself has expired. The only test consonant with ERISA, federal common law under the NLRA, and general principles of contract law, is one which requires clear and unmistakable language evincing the plan sponsor's intention to vest retired participants in a right to receive such significant and costly employer- provided benefits in perpetuity." [M&G Polymers USA, LLC v. Tackett, No. 13-1010 (on appeal from 6th Cir., cert. granted May 5, 2014)]
New Obamacare Enrollment Data Indicates Decline in Employer-Based Healthcare Coverage
The Heritage Foundation More items by The Heritage Foundation

"[D]uring the last quarter of 2013, enrollment in individual-market coverage declined by nearly 500,000 individuals, but then increased in the first quarter of 2014 by just over 2.7 million individuals. For the combined six-month period, the result was a net enrollment increase of just over 2.2 million for the individual market.... [O]ver the six-month period, net total enrollment for all three segments of the private coverage market increased by just over 520,000 individuals. Thus, the reduction in employer-sponsored coverage offset 77 percent of the gain in individual-market coverage during the period."
Employers Must Appeal to Needs of Savers, Not Investors, to Boost Retirement Readiness (PDF)
State Street Global Advisors More items by State Street Global Advisors

"[P]articipants are pursuing a new vision of retirement. In the new vision, an individual's priorities and daily activities shift gradually over time, rather than changing drastically from full-time work to full-time retirement.... Plan sponsors should consider taking some or all of the following steps to help participants make the choices that are appropriate for their own unique paths toward retirement readiness: [1] Connect your Plan Design to retirement readiness... [2] increase employee engagement... [3] Address work force management implications."
HSA Contributions May Produce Large Lifetime Accumulations and Tax Savings (PDF)
Employee Benefit Research Institute [EBRI] More items by Employee Benefit Research Institute [EBRI]

"HSAs provide account owners a triple tax advantage. Contributions to an HSA reduce taxable income. Earnings on the assets in the HSA build up tax free. And distributions from the HSA for qualified expenses are not subject to taxation.... This paper examines the amount of money an individual could accumulate in an HSA over his or her lifetime. It also examines lifetime tax savings from HSA contributions. Limitations of an HSA are also discussed."
Detroit-Style Pension Cuts: Could It Happen in California?
Calpensions More items by Calpensions

"In California, pension debt is an unresolved issue in two cities that declared bankruptcy in 2012 about five weeks apart -- Stockton on June 28 and San Bernardino on Aug. 1. But the state law in California and the financial pressure on the two cities, both members of the California Public Employees Retirement System, are different from the situations in Detroit and Central Falls."
Paying for Public Employee Health Costs
National Center for Policy Analysis More items by National Center for Policy Analysis

"Health insurance premiums for state workers have grown much less rapidly than premiums for those in the private sector. The share of health insurance premiums paid by public employees has been steady or has risen, whereas the share paid by private employees has fallen. For public employees, growth in employee premium share has been especially high in highly unionized states."
Employer-Provided 'Free' Parking May Be Taxable
Thomson Reuters / EBIA More items by Thomson Reuters / EBIA

"This information letter offers a useful reminder that 'free' parking for employees may result in taxes for both the employee and the employer (since the employer pays a portion of FICA, as well as FUTA taxes). While the fair market value of employer-provided parking often falls short of the maximum excludable amount, monthly parking costs in major cities may regularly exceed the excludable maximum."
IRS and Treasury Officials Provide Informal Views on Various Employee Benefits Issues
Thomson Reuters / EBIA More items by Thomson Reuters / EBIA

"While some of the answers [to questions posed by the Joint Committee on Employee Benefits (JCEB) of the American Bar Association] clearly have broad significance, others are highly dependent on the factual scenarios presented ... For example, the remarks regarding stock fund investments do not mention the regulations that permit restrictions on the divestiture of stock fund investments when such restrictions are 'reasonably designed' to assure compliance with the federal securities laws. In addition to health care reform, the report also includes items of interest to sponsors of defined benefit plans, 403(b) plans, 457(b) plans, ESOPs, and nonqualified deferred compensation arrangements."
An Article of Faith: The Gratuity Theory of Pensions and Faux Church Plans
Prof. Norman Stein, via Employee Benefits Committee, Section of Labor and Employment Law, American Bar Association [ABA] More items by Prof. Norman Stein, via Employee Benefits Committee, Section of Labor and Employment Law, American Bar Association [ABA]

"This article ... concludes that the IRS position is inconsistent with the statute's unambiguous text and that the legislative history establishes that the 1980 amendments [to ERISA's definition of 'church plan'] were designed only [1] to allow plans established by churches to continue to cover employees of church-affiliated agencies and [2] to clarify that a church plan did not lose its status as such if it were maintained by an organization controlled or affiliated with a church whose purpose was to fund or administer the plan.... There are, however, two district court opinions taking the opposite position. At present, it seems possible if not probable that the Supreme Court will have to resolve the issue."
The Required Minimum Distribution Rules Do Not Work Well with Longevity Annuities
Ken Steiner, FSA Retired More items by Ken Steiner, FSA Retired

"[Actuary Steve Vernon] has his hypothetical 65-year-old woman buy a Qualified Longevity Annuity Contract (QLAC), work half-time in retirement until age 70, defer Social Security commencement until age 70 and use some of her accumulated savings from age 65 until she commences Social Security to supplement her employment income until then.... But then Steve inexplicably has her run off the train tracks on her smart retirement train ride by using the RMD rules to determine her annual withdrawals from her accumulated savings. The RMD rules just don't coordinate well with her decision to buy the QLAC."
Target Date Funds: An Investment Fiduciary's Checklist
InvestmentNews More items by InvestmentNews

"In addition to standard due diligence on the underlying holdings, the investment fiduciary's checklist should include factors relating to the manager's philosophy and practices regarding portfolio composition, and strategic and tactical asset allocation. These include the use of active versus passive funds, correlation among holdings, glide path trajectory, volatility of the TDF's returns over time and whether a 'to' versus 'through' approach is used."
IRS Issues Regs, Forms and Additional Guidance on Exchange Penalties and Subsidies
Thompson SmartHR Manager More items by Thompson SmartHR Manager
7/28/2014 [Guidance Overview]

"The rules and guidance are designed to help individuals and businesses calculate both their penalties if they don't have health coverage, and subsidies, if they are eligible, to help them pay for coverage. The draft forms give an idea of the format in which IRS will be asking companies and individuals to report on the health coverage they had in tax year 2014."
IRS Publishes Draft Versions of Forms for New ACA Employer Reporting Requirement
Hill, Chesson & Woody More items by Hill, Chesson & Woody
7/28/2014 [Guidance Overview]

"[T]he reporting requires collection and disclosure of information including, but not limited to, the following: Social Security numbers of employees, spouses and dependents; ... Number of full-time employees for each calendar month; Total number of employees (full-time equivalents) for each calendar month; ... Employee's share of the lowest-cost monthly premium for self-only, minimum value coverage for each calendar month; and Applicable Section 4980H safe harbor for each calendar month."
Dudenhoeffer Decision: Securities Laws Affect Prudence of Buying More Stock or Disclosing Negative Nonpublic Information
October Three Consulting More items by October Three Consulting

"[W]hile fiduciaries may have lost the protection of the 'presumption of prudence,' they may have gained something more valuable -- a set of principles that recognizes that, with respect to publicly traded company stock, the idea that prudence compels a sale (or discontinuance of purchase) at market prices must overcome [1] some basic principles of economics ... and [2] a preference for regulating the issue of insider information under the securities laws." [Fifth Third Bancorp v. Dudenhoeffer, No. 12-751 (U.S. June 25, 2014)]
Distribution Planning for Beneficiaries: Why It's Important to Check IRA Agreements and Retirement Plan Provisions
The Slott Report More items by The Slott Report

"Most employer plans do not offer a stretch option to a non-spouse beneficiary because they do not have to.... On the IRA side, a custodian does not have to offer a direct transfer option.... Other items to check for are the ability to use a trust as a beneficiary, the ability to use a power of attorney and the ability to disclaim inherited retirement assets."
Executive Compensation: Governance and Litigation Considerations
Good Risk Governance Pays More items by Good Risk Governance Pays

"[C]ompany officers and directors have an obligation to make themselves aware of regulatory mandates as well as the activities of the plaintiffs' bar.... [It] is critical that they track what is going on in large shareholder land. Certain pension plans have been far from shy in taking their complaints to court.... Non-retirement plan investors are proving themselves to be no less active."
Enrollees in Exchanges Need Only Pay 11 of 12 Months, Healthy People Can Wait and Only Pay 9 of 12 Months
Benefit Revolution More items by Benefit Revolution
7/28/2014 [Opinion]

"[W]ithout a correction to these regulations, no healthy person ever needs to pay for the last three months of his or her plan-year coverage. But carriers needn't worry too much about this shortcoming because taxpayers will help them shoulder the burden in their shortfalls during, at least, the first three years of PPACA under the Three R's 'Bailout' program."
States Try to Protect Health Exchange Subsidies in Wake of Court Ruling
The Wall Street Journal; subscription may be required More items by The Wall Street Journal; subscription may be required

"[S]ome of the 36 states in which the federal government has a role in the exchanges are moving to shore up their status. Some are saying publicly that their exchanges have always been state-operated. Others are trying to make the case that they should be considered to have state exchanges regardless of federal involvement. Still others, such as Arkansas, are pushing ahead to take over their exchanges, which would likely free them from the effects of any court decision."
The Pitfalls for Participants of Choosing Longevity Annuities in 401(k)s
Motley Fool More items by Motley Fool

"[If] you are offered a longevity annuity, be sure to do your homework before signing on the dotted line. Ask the following questions. What insurance company is guaranteeing this plan? What happens if that company goes bankrupt? ... What happens if I die before my first payment? ... Will my payments keep pace with inflation?"
California Pension Reforms Don't Go Far Enough
Orange County Register More items by Orange County Register
7/28/2014 [Opinion]

"Only in California could a bill that requires 32 years to catch up and fund parts of the California State Teachers' Retirement System's current $74 billion in unfunded liability be hailed as a major reform.... In reality, [Gov. Jerry] Brown's reforms are weak and don't fix the pension mess."
Study Examines Medicare Advantage Cuts Per Congressional District
American Action Network More items by American Action Network

"[D]istrict-by-district data analysis finds that seniors in every congressional district in the U.S. will experience benefit cuts in 2015. On average nationwide, seniors will face an annual benefits reduction of $1,538 or 13.32%. The largest cuts per district are 26.16% and $4,796 per senior, both in districts in New York." [Full district-by-district data is available.]
IRS Releases Premium Tax Credit Rules and Draft Forms
Timothy Jost for Health Affairs More items by Timothy Jost for Health Affairs
7/28/2014 [Guidance Overview]

"Insurers and self-insured health plans will provide a Form 1095-B to each of their enrollees and members, and file these forms, together with a transmittal Form 1094-B with the IRS. Large employers must provide a Form 1095-C to each employee, and transmit these, together with a transmittal [Form 1094-C] to the IRS. Exchanges will provide their enrollees a Form 1095-A. Individuals who receive premium tax credits will file a Form 8962 ... while individuals claiming an exemption from the individual mandate will file a Form 8965. Though the forms are not accompanied by instructions, they are quite straightforward and track closely the earlier released rules."
Health Plans Learn to Accommodate Information-Hungry Consumers
Healthcare Payer News More items by Healthcare Payer News

"A decade ago, health plans worked with employers to manage almost all health benefit decisions, leaving consumers relatively unaware of the costs associated with their healthcare needs.... Today, employers and consumers are more frequently choosing plans with higher deductibles; more than 15.5 million Americans are enrolled in such plans ... As a result, more effectively engaging with consumers has become a high priority for health plans to remain competitive and maintain customer satisfaction. To meet these new challenges, [one insurer] has focused on three key aspects of healthcare consumerism: education, administrative and financial."
Text of Amicus Brief by ERIC Urging Supreme Court to Overrule Sixth Circuit Presumption of Vesting for Retiree Health Benefits (PDF)
The ERISA Industry Committee [ERIC] More items by The ERISA Industry Committee [ERIC]
7/28/2014 [Opinion]

"[T]his Court should apply the longstanding rule that the benefits and burdens of a contract do not survive the agreement's expiration (and thus do not vest for life) absent a clear and unequivocal statement to the contrary.... [If] the parties wish to negotiate lifetime healthcare benefits for retirees and their families, they are free to do so. But such lifetime benefits should not be a 'gotcha' sprung by the judiciary on employers who never intended to assume such costly and unpredictable burden." [M&G Polymers USA, LLC v. Tackett, No. 13-1010 (on appeal from 6th Cir., cert. granted May 5, 2014)]
Dispelling the Myth: Is a 3(16) Fiduciary Really Necessary?
Retirement Management Services More items by Retirement Management Services

"Very few firms offering 3(16) services will actually go as far as being named the 'Plan Administrator' in the plan document, which means that they are limited to taking on 3(16) responsibility only for the areas that are indicated in their contracts, and the Employer as Plan Administrator retains responsibility for administering all other plan functions, plus monitoring the prudence of the 3(16) selection.... [It] is easy for a 3(16) provider to contractually limit its own liability for services when the 3(16) provider does not control the payroll or human resource functions for the Employer."
Designation of Obesity as a Disease: Implications for Health Plan Sponsors
Sibson Consulting More items by Sibson Consulting

"To some extent, the designation of obesity as a disease will increase plans' immediate costs. However, over the long term, covering obesity treatments is likely to save plans money by avoiding serious and costly chronic diseases and conditions for which obesity is a major risk factor.... Ultimately, prudent plan sponsors will get ahead of this issue and structure benefit coverage to support effective weight-reduction and management programs in a manner that reduces wasteful spending and holds providers and patients accountable for taking action to best manage this disease."
Redesigning Your DC Plan to Help Employees' Retirement Income Last a Lifetime
Sibson Consulting More items by Sibson Consulting

"There are ... several ways employees can use their DC plan assets to maximize guaranteed lifetime income. Employers need to be familiar with these strategies and, if necessary, redesign the distribution options in their DC plans to help their employees take advantage of them. They should also communicate these strategies to employees who are approaching retirement, to educate them about their options."
What to Outsource in Defined Contribution Plans
Russell Investments More items by Russell Investments

"In all defined contribution (DC) plans, some functions are delegated to outside service providers, if only record keeping and some investment management. Before undertaking a formal program of outsourcing fiduciary responsibility, however, a sponsor will want to engage in an explicit decision-making process to determine which functions to outsource and which to retain control over. Generally, the outsourcing decision will begin with an inventory of the relevant plan responsibilities, functions, and a determination of the sponsor's plan objectives and resources. This paper explores how DC plan sponsors should think about what functions to outsource and provides a client case study[.]"
Maximizing Your Investment in DC Advisor Value-Added Programs (PDF)
Chatham Partners More items by Chatham Partners

"[1] There is a strong correlation between being a DC Advisors' preferred provider and offering strong value-added programs. [2] One size does not fit all, programs have varying appeal that is often dependent upon the type of advisor, channel, or, even, target market segment. [3] Value-added programs open doors or break ties. [4] Winning firms have adopted best practices around creating and managing their value-added programs for both DC Advisors and their Broker/Dealer and Advisory firm home offices."
Forms: Draft Versions of IRS Forms for Health Coverage Information Reporting by Employers and Insurers
Internal Revenue Service [IRS] More items by Internal Revenue Service [IRS]
7/25/2014 [Official Guidance]

"On July 24, 2014, the IRS released draft forms that employers will use to report on health coverage that they offer to their employees. In accordance with the IRS' normal process, these draft forms are being provided to help stakeholders, including employers, tax professionals and software providers, prepare for these new reporting provisions and to invite comments from them. We anticipate that draft instructions relating to the forms will be posted to in August." Here are the forms: [1] Form 1094-B: Transmittal of Health Coverage Information Returns; [2] Form 1095-B: Health Coverage; [3] Form 1094-C: Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Return; and [4] Form 1095-C: Employer Provided Health Insurance Offer and Coverage. (With a tip of our hat to the American Benefits Council for posting these online.)
How the IRS Harassed the Administration's Political Opponents and Saved its Healthcare Law
The Wall Street Journal; subscription may be required More items by The Wall Street Journal; subscription may be required
7/25/2014 [Opinion]

"The evidence shows that career officials at the IRS did indeed do as Treasury Department and Health and Human Services Department officials told them.... We know this thanks to a largely overlooked joint investigation and February report by the House Oversight and Ways and Means committees into the history of the IRS subsidy rule. We know that in the late summer of 2010, after ObamaCare was signed into law, the IRS assembled a working group -- made up of career IRS and Treasury employees -- to develop regulations around ObamaCare subsidies. And we know that this working group initially decided to follow the text of the law. An early draft of its rule about subsidies explained that they were for 'Exchanges established by the State.'"

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