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Benefits in the News

Older News | May 4, 2016

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Let's Expect Transparency from All, Including the Policymakers
Michael Barry, in PLANSPONSOR
[Opinion]
5/3/2016
"If we can insist on transparency from providers and the mutual fund industry, why can't we insist on transparency -- and integrity -- from policymakers? ... That is, if you're going to pass a fiscally irresponsible highway-spending bill because politicians need it to get re-elected, then admit you're being irresponsible, instead of punishing the (in this case at least) totally innocent DB retirement system with uncalled for and double-counted PBGC premiums. While you're at it, make some obvious and simple reforms to make clear where federal tax money for retirement savings is actually being spent. And finally, craft legislation the financial consequences of which can be clearly measured. In other words: be transparent."
CIGNA Can't Avoid Providers' Claims in Database Lawsuit
Bloomberg BNA
5/3/2016
"Out-of-network health-care providers have ERISA standing to continue with their lawsuit accusing Connecticut General Life Insurance Co. of using a manipulated database to determine their services fees, the U.S. Court of Appeals for the Third Circuit ruled.... [T]he providers argued that their assignments of benefits from participants included the right to sue under ERISA to recover those benefits. CIGNA argued that the assignments were insufficient to confer derivative standing to the providers.... In rejecting CIGNA's argument, the court noted that 'an assignment of the right to payment logically entails the right to sue for non-payment.' " [Franco v. Connecticut General Life Ins. Co. et al., Nos. 14-3395 and 14-3396 (3d Cir. May 2, 2016)]
34% of Employees at Midsize Firms Elect High Deductible Health Plans When Given the Choice
Benefitfocus
5/3/2016
"[T]raditional health plans -- primarily PPOs -- dominate the mix for midsize employers (87 percent), but when given the choice, over one-third (34 percent) of employees selected an HDHP, with millennials over age 26 the most likely to opt in (40 percent). Forward thinking employers -- 13 percent -- now offer at least one high-deductible health plan (HDHP).... [R]egardless of health plan, employees are facing higher out-of-pocket costs, and with copays and coinsurance across both PPOs and HDHPs, the average family could spend nearly 40 percent more on health care in 2016 than food[.]"
TIGTA Report: IRS Verification of ACA Premium Tax Credit Claims During the 2015 Filing Season (PDF)
Treasury Inspector General for Tax Administration [TIGTA}
5/3/2016
"TIGTA's analysis of more than 2.6 million tax returns with a [premium tax credit (PTC)] claim that were filed between January 20, 2015, and May 28, 2015 ... found that the IRS accurately determined the allowable PTC on more than 2.4 million (93 percent) returns. TIGTA is continuing to work with the IRS to determine the cause for calculation differences in 150,385 of the remaining 182,884 tax returns. Computer programming errors resulted in an incorrect computation of the allowable PTC for 27,827 tax returns."
Avoiding the Tragedy of the Commons in Health Care: Policy Options for Covering High-Cost Cures
RAND Corporation
5/3/2016
"[The authors] discuss the risk that strategic behavior by health insurers could unravel the market for curative therapies for chronic diseases. Because the cost of these cures is front-loaded but the benefits accrue over time, insurers might attempt to delay treatment or avoid patients who require it, in the hope that they might change insurers. The authors discuss policy options to remedy this potential free-rider problem through alignment of incentives at the patient level, coordination among payers, and government intervention. They present a framework to analyze policy options and real-world case studies."
Final DOL Fiduciary Rule: Q&As for Employers and Plan Sponsors on Investment Education
Proskauer Rose LLP
5/3/2016
"What is investment advice? ... What are the categories of investment education? ... Does investment education constitute investment advice? ... Does investment education apply past retirement? ... Do employees of a plan sponsor provide investment advice? ... Can a plan sponsor become an investment advice fiduciary by engaging a service provider to provide investment advice? ... How certain can an employer be that educational communications do not constitute investment advice? ... When is the final rule applicable? ... As a plan sponsor, is there anything I should be doing now?"
Businesses Are Opting for Freelancers to Dodge Health Care Fees
Entrepreneur
5/3/2016
"According to a [recent] study ... [the ACA] is leading companies to hire more freelance workers rather than bring on more in-house staff.... Since 2016, health care fees including the tax penalty for having uninsured employees increased because of the act, causing 74 percent of companies to opt for freelance hires instead, the study says. In fact, 60 percent said they planned to hire more freelancers in place of full timers.... And though most companies agreed benefits were the key to attracting desirable employees, nearly one third of them are eliminating their benefit plans because of fees associated with the new health care policies."
PBGC Improvements to Online Premium Filing (MyPAA)
Pension Benefit Guaranty Corporation [PBGC]
[Official Guidance]
5/3/2016
"You may move plans in your account so that your more frequently-used plans show first as Active Plans versus Archived Plans (e.g., on your All Plans Page). All e-filing team members for a plan may retrieve an in-process screen-prepared or imported filing if the person holding the filing is not available to route the filing. The check voucher printed for a screen-prepared or imported premium filing (while you are in My PAA) will typically show the amount due that is on the e-filing."
Online SHOP Enrollment Transition Relief Extended, States Should Plan for 2019
Wolters Kluwer Law & Business
5/3/2016
"State-based Small Business Health Options Programs (SHOP) that have not yet provided online enrollment capabilities are permitted to use direct enrollment for plan years beginning in 2017 and 2018. CMS and the Center for Consumer Information & Insurance Oversight (CCIIO) is providing this extension as a transitional measure, available only to SHOPs that currently use direct enrollment."
The Five Killer Concepts that Most Confuse Retirement Savers
Fiduciary News
5/3/2016
"While professionals can confidently breeze through the retirement landscape, to the casual retirement saver, these five concepts have led to the greatest confusion: How to Save ... How Much to Save ... Inflation ... Investments ... Who do you trust?"
Fee Reductions That Could Be Yours for the Taking, If You Only Ask!
Cammack Retirement Group
5/3/2016
"[A]sking only the plan's recordkeeper is not enough ... Plan sponsors should also ask the fund families directly.... Plan sponsors should confirm with their recordkeeper that any selected proprietary funds are offered with the lowest possible fee structure available to the plan.... Some fund families offer the lower-cost 'recordkeeping share class' fund to former recordkeeping clients, and others offer it to clients that have used the fund for several years.... If the fund company knows that the fund may be removed from the array because a less expensive version is offered, they may be willing to work with you[.]"
Before Teamsters Negotiate Benefit Cuts, They Should Investigate Reason for Pension Plan Failures
Edward Siedle, in Forbes
[Opinion]
5/3/2016
"We, as a nation, have the resources to forensically investigate the reasons pensions fail to provide retirement benefits promised workers. To date, despite the widespread failures, no one seems to care. Forensic investigations of failed plans will both improve the management of existing pensions, as well as signal to Wall Street and other wrongdoers that those who contribute to the demise of a pension will be held accountable."
The Fiduciary Rule Odyssey: Phyllis Borzi at the Helm
InvestmentNews
5/3/2016
"Standing at the center of that narrative is a woman with a hard-shell concept of right and wrong and who was beat back by those who didn't see the black-and-white nature of her ideal. After patching up the battle scars from an early defeat, she regrouped with a powerful duo and conceded to the reality of gray, in one last drive to change the financial advice business forever."
A Framework for Multinational Defined Contribution Plan Governance
State Street Global Advisors, for American Benefits Council
5/3/2016
12 presentation slides. "Build efficient governance structures ... Weigh pros and cons of centralization in investment and other functions ... Define goals and align benefits ... Improve plans' effectiveness for participants."
Another Exciting Day in Washington: Legislators Take Aim at Healthcare
Frenkel Benefits
[Opinion]
5/3/2016
"Republicans are preparing to issue five position papers to spell out their legislative agenda and priorities. One of these concerns healthcare. Speaker Ryan is pushing to finally create a Republican plan to deal with the ACA. We were told the plan would promote health savings accounts, encourage innovation, and protect the doctor-patient relationship. It will also embrace technology and electronic health records. Now the bad news: in place of the Cadillac Tax, this plan will likely contain a cap on the employer exclusion."
Class Actions Will Test DOL's New Fiduciary Rule
LegalNewsLine.com
5/3/2016
"Chris Thorsen [of Bradley Arant Boult Cummings] said the DOL's final rule, while well-intentioned, will more than likely end up hurting investors and attracting plaintiffs attorneys looking for new business.... 'It used to be, when you went and signed up with an investment advisor, you had to sign an arbitration clause,' he explained. 'But now, under this rule, your contract can't have that provision in it. So all of these plaintiffs lawyers who have never been able to aggregate these claims will be able to with the implementation of this rule and that means huge, huge business for them.' "
Empowering Illinois' Pension Reform (PDF)
Diana Furchtgott-Roth, Manhattan Institute for Policy Research
5/3/2016
38 pages. "A minor change to federal bankruptcy law ... would give state legislatures and governors the option to remedy fiscal crises attributable to pension obligations, notwithstanding local laws that prohibit changes to such obligations.... [S]tate legislatures and governors would be authorized to enact pension benefit changes only after determining that funding obligations impair the performance of essential state services; and would publish the basis for their determination, conduct public hearings, and file a proceeding in a bankruptcy court identifying the changes."
Medicare Pays Bonuses to 231 Hospitals with Lower Quality Because of Cheaper Costs
Kaiser Health News
5/3/2016
"[For] the federal fiscal year that ended in September 2015 spending counted for 20 percent of a hospital's score in determining whether a hospital would get a bonus, penalty or regular payment. Under this formula, hospitals with Medicare spending below the median hospital were able to qualify for bonuses even though their quality measures were below the median.... CMS said it would consider revising the program for future years so that hospitals scoring below the national median for quality would not receive a bonus."
Text of CMS Guidance on Policy-Based Payments: Reversal of January 2016-April 2016 Adjustments in the May and June Payment Cycles (PDF)
Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS]
[Official Guidance]
5/3/2016
Unnumbered document, dated May 2, 2016. "Consistent with the March 22, 2016 guidance, all issuers were transitioned to policy-based payments for the April, 2016 payment cycle, and CMS is ending adjustments to the calculated policy-based payment amount to the manual workbook submitted payment amount (except in cases of extreme (>25%) variation) in the May 2016 payment cycle. This guidance sets forth the approach CMS will take to smooth the cash-flow implications of this transition for issuers whose total adjustments for January through April were net-positive."
PBGC Proposes to Reduce Late Premium Penalties (PDF)
Groom Law Group
[Guidance Overview]
5/3/2016
"Under the Proposed Regulation, if a sponsor self-corrects the missed payment, the penalty would be 0.5% per month with a maximum of 25% of the unpaid premium. If PBGC issues a written notice for the premium delinquency, the proposed penalty is 2.5% with a maximum of 50% of the unpaid premium. The Proposed Regulation also provides that penalties could be further reduced for sponsors with a history of timely paying their premiums."
IRS Announces 2017 HSA/HDHP Limits (PDF)
Xerox HR Services
[Guidance Overview]
5/3/2016
"The IRS has released the health savings account and high-deductible health plan limits for 2017. The HSA annual contribution limit for self-only coverage increased over the 2016 limit, but the limits are otherwise unchanged."
Scary Retirement Statistics and Easy Ways Employers Can Help
Lawton Retirement Plan Consultants
5/3/2016
"What employers can do to help: [1] Change the way you educate ... [2] Eliminate leakage ... [3] Automate savings ... [4] Provide investment advice."
Differing Impacts of Market Concentration on ACA Marketplace Premiums
The Commonwealth Fund
5/3/2016
"In New York, premium rates grew faster in areas with greater insurer concentration (i.e., less competition). In California, areas with less insurer competition had slower premium growth, which may be related to the state marketplace's use of selective contracting with a limited number of plans and direct negotiations with plans on premium rates.... In both California and New York, there was higher premium growth in markets with greater hospital concentration."
Can You Amend Your Stock Plan to Allow Tax Withholding Up to the Maximum Statutory Rate?
Winston & Strawn LLP
5/2/2016
"[B]oth the NYSE and NASDAQ require shareholder approval of a material amendment of a plan that provides for stock awards to directors or executives.... From the perspective of the NYSE and NASDAQ, if the Stock Plan allows the recycling of shares surrendered or withheld to pay tax withholding (that is, puts those shares back in the authorized share pool and allows those shares to be re-used for future awards), then an amendment of that Plan that allows for tax withholding at the maximum rate instead of the minimum rate would be material because it will increase the number of shares available for issuance under the Plan!"
DOL Issues Guidance on Interaction Between ACA and Fringe Benefit Requirements Under Service Contract, Davis Bacon and Related Acts
Proskauer Rose LLP
[Guidance Overview]
5/2/2016
"DOL emphasizes that the [ACA] and the SCA and DBRA are independent laws, and government contractors are expected to comply with each of them. In other words, no provision of either set of laws exempts contractors from the obligations of the other. The DOL then goes on to answer a variety of common questions that have been raised."
Kroger, UPS Challenge Central States Reduction Plan
Pensions & Investments
5/2/2016
"Current and former plan participants of Kroger Co., Cincinnati, last week sued the $17.8 billion Teamsters Central States over the rescue plan.... The Teamsters union [had] negotiated a proposal to remove Kroger participants from Central States and create a new plan for Kroger employees, with the company agreeing to absorb the increased withdrawal liability, according to the federal court complaint. Because Central States trustees 'flatly refused to consider' after deliberating for just five days, the plaintiffs are asking the court to order reconsideration of the proposal, to appoint an independent fiduciary to judge the idea and to negotiate an arrangement with Kroger."
12 Counting Methods Employers Must Know When Sponsoring a Health Plan (PDF)
Compliance Dashboard
[Guidance Overview]
5/2/2016
"Employee counts are used to determine what laws, rules, fees, and penalties apply to a health plan and/or the employer sponsor. But the methods for counting employees are as varied as the laws that affect them.... [This article provides] a synopsis of 12 counting methods that employers must utilize to properly administer their health plans ... [including a summary of] these counting methods in a convenient, easy-to-follow chart."
The Thatcherism of State-Sponsored Private Sector Retirement Programs
Prof. Edward Zelinsky, OUPblog
[Opinion]
5/2/2016
"Margaret Thatcher would likely have been uncomfortable with a legally-imposed mandate requiring private sector employers to participate in a state-run pension plan. It is also likely that she would have preferred that the state not compete with commercial pension providers -- though she might have been mollified by the prospect that part or all of these state programs will be outsourced to private firms. However, Margaret Thatcher would probably have viewed state-sponsored private sector retirement plans as stimulating stock ownership by low income employees. This she would have strongly supported."
Connecticut Bill Creating Private-Sector Retirement Accounts Passes
ctpost
5/2/2016
"The Democratic lieutenant governor broke an 18-18 tie in the Senate Saturday, cementing final legislative approval of a measure first proposed several years ago. It now moves to the governor. The bill creates an agency that will establish a Roth individual retirement account program for workers whose employers have at least five employees paid at least $5,000 in the preceding year. The employers will be required to automatically enroll each worker, who can opt out."
PBGC Director: Budget Proposal Passage Would Rescue Agency
Bloomberg BNA
5/2/2016
"The multiemployer insurance program can remain solvent for at least 20 years, however, if the administration's budget proposal is enacted, [PBGC Director W. Thomas Reeder] said. The proposal would give the agency's board of directors the authority to increase premiums from plan sponsors to the aggregate tune of $15 billion over 10 years[.]"
American Retirement Association Comments to IRS on Proposed Nondiscrimination Relief for Closed Defined Benefit Pension Plans (PDF)
American Retirement Association [ARA]
[Opinion]
5/2/2016
"ARA recommends that: [1] Relief under Section 401(a)(26) be provided for closed plans, similar to relief offered for Section 401(a)(4). [2] More detail be provided regarding the use of the average contribution percentage (ACP) to meet a portion of the minimum gateway allocation."
U.S. Chamber of Commerce Comments to DOL on Proposed Retirement Plan Surveys
U.S. Chamber of Commerce
[Opinion]
5/2/2016
"EBSA should implement periodic surveys as a regular aspect of its responsibilities.... [The Chamber recommends] that the initial panel be extended to at least five years.... The information collected in the survey should be made available to the public.... EBSA should consider creating an advisory panel for the survey project."
CMS Looks to Simplify Insurance Shopping with 'Simple Choice' Plans, Quality Star Ratings on Exchanges
Morning Consult
5/2/2016
"The federal insurance exchanges will offer standardized health plans and display a five-star ratings system as pilot program during the fourth open enrollment period, scheduled to open later this year.... The standardized plans, called 'Simple Choice plans' will have a uniform set of features which will allow customers to compare plans on just a few important factors, such as monthly premiums and which providers are part of a plan's network."
Comment Letter to IRS on Proposed Regs Providing Nondiscrimination Relief for Closed Defined Benefit Plans
The ERISA Industry Committee [ERIC], American Benefits Council, and 9 other employers and employer organizations
[Opinion]
5/2/2016
"[The authors] encourage further clarification on the amendments prescribed in the guidance, addressing M&A activity, eliminating the prohibition on pre-closing amendments and the five-year delay for the relief to apply, permitting DB and DC plans to be tested together for all testing purposes, and relief for plans with less than 50 active participants."
Managing Prescription Drug Plan Costs: Pricing Tricks Employers Should Watch For
Marsh Consulting Group
5/2/2016
"Make sure the PBM contract has minimum pricing guarantees. A PBM that passes the pricing it pays the pharmacies on to you (rather than charging you a higher price than the PBM pays the pharmacies for drugs) is a great way to help ensure the best pricing. Carefully review and negotiate virtually every word in the contract to ensure the PBM will actually deliver the pricing promised. Negotiate generous rights to audit the PBM. Even with a carefully negotiated contract, it's not at all uncommon for PBMs to breach the negotiated contract with complete disregard for its provisions."
DOL Fiduciary Rule: What 'Best Interests' Means, and How It Affects Financial Services
Ron Rhoades
[Opinion]
5/2/2016
"Ignoring the several exemptions the DOL promulgated, the Final Rule, at its core, is an example of the best form of government regulation. It applies ERISA's tough sole interests fiduciary standard of conduct, by requiring conflicts of interest to be avoided. ERISA's tough prohibited transaction rules are also applied, in the context of the statutory exemption from same that permits 'necessary' services for 'reasonable compensation.' In essence, the DOL's Final Rule is elegant in its simplicity and in its application. It is an example of government getting things right."
Understanding Domestic Partner Health Benefits After Obergefell
Calhoun Law Group, P.C.
5/2/2016
"[M]ost domestic partner health benefits plans today rely on some sort of certification by the employee, rather than state action, to determine who is a domestic partner.... In most instances, employers see a domestic partner benefit as being equivalent to a spousal benefit. However, domestic partner health benefits policies raise a variety of concerns not present in spousal benefits.... [1] Compliance with federal and state nondiscrimination statutes. [2] Defining who is a domestic partner. [3] Federal and state tax concerns. [4] COBRA issues."
Medicaid Managed Care Final Rule: Examining the Alignment with Qualified Health Plan Requirements
Health Affairs
[Guidance Overview]
5/2/2016
"CMS has rechristened standardized plans as 'simple choice plans.' These are plans with standardized benefit and cost-sharing parameters. Although CMS has not yet decided how exactly these plan options will be displayed or described, the blog post does say that they will be displayed prominently in Plan Compare and that consumers will be able to choose to see only standardized plans if they want to compare only these plans."
Illinois Mandatory Small-Business Retirement Plan Faces Resistance
Chicago Tribune; subscription may be required
5/2/2016
"As Illinois moves toward becoming a national model in retirement savings for small-business workers, the designers of the state's new Secure Choice IRA plan were warned ... that if they don't get the plan right, it could be doomed from the start.... [T]he state board planning the new program was warned repeatedly that the project could flop if small businesses are overwhelmed with bureaucratic paperwork and if low-income workers feel nervous about saving too much for retirement when paychecks already are stretched thin."
Simplifying Choices in the Marketplace: Simple Choice Plans and Quality Star Ratings
Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS]
[Guidance Overview]
5/2/2016
"To improve decision making, Simple Choice plans will display prominently in Plan Compare, with clear visual cues that show consumers the plans that are easy to compare vs. the ones that should be researched for differences. Consumers also will be able to choose to only see these types of plans, if they want to quickly compare them."
Q&As on DOL Fiduciary Rule: Plan Sponsor Responsibilities
fi360
5/2/2016
"[T]he new Fiduciary Rule is intended to make it easier for the plan sponsor to identify who is a 'real' fiduciary and who is not.... [To] a large extent plan sponsors are shielded from fiduciary liability as long as they follow a prudent process in selecting and monitoring the advisor's activities.... Sponsors should, at a minimum, review the materials available to employers on the DOL's website ... [and] designate an appropriate staff person to take a fiduciary training course or hire a fiduciary advisor to provide them with an objective overview of the plan sponsor's responsibilities."
IRS Confirms California 'Waiting Time Penalties' Are Not Wages for Federal Income Tax Purposes
Proskauer's ERISA Practice Center
5/2/2016
"A recent IRS information letter confirms that 'waiting time penalties' paid under California law are not wages for federal income tax withholding purposes. Section 203 of the California State Labor Code imposes penalties on employers that fail to pay final wages to terminated employees within a specified period of time.... [T]he guidance clarifies that these penalty payments are not includable as wages for benefit plan purposes under a plan (like a 401(k) or pension plan) that calculates benefits based on 'W-2 income.' "
CMS Releases Revised Transparency Proposal for QHPs
Health Affairs
[Guidance Overview]
5/2/2016
"Insurers may link to existing documents, such as their summaries of benefits and coverage, that provide this information. The general public must be able to access the information, however, without having to log on, create a user ID, or enroll in a plan. This information will be collected on an insurer-level, rather than a plan-level basis, but if policies differ by state or market, insurers must provide 'applicable material.' If policies are changed, the website should be updated within seven days."
Text of CMS Bulletin on Display of Quality Rating System Star Ratings and Qualified Health Plan Enrollee Survey Results for QHPs Offered Through Marketplaces (PDF)
Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS]
[Official Guidance]
5/2/2016
Unnumbered document, dated Apr. 29, 2016. "This guidance announces that there will be an additional year of QRS and QHP Enrollee Survey testing to inform the public display of quality rating information on Marketplace websites.... Although public reporting of QRS results in the FFMs (including FFMs where the State performs plan management functions) and SBM-FPs will now begin with the 2018 open enrollment period, [CMS does] not anticipate major changes to the QRS methodology for the 2018 plan year ... The revised timeframe for the public display will also provide QHP issuers additional time to measure and improve the quality of QHPs offered through Marketplaces using the current QRS measure set and methodology."
Text of CMS Submission to OMB: Information Collection for Transparency in Coverage Reporting by Qualified Health Plan Issuers
Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS]
[Official Guidance]
5/2/2016
"This data collection would collect certain information from QHP issuers in Federally-facilitated Exchanges and State-based Exchanges that rely on the federal IT platform (i.e., HealthCare.gov). HHS anticipates that consumers may use this information to inform plan selection.... HHS intends to phase in implementation for other entities over time.... [B]roader implementation ... will continue to be addressed in separate rulemaking ... For State-based Exchanges not addressed in the current proposal, standards will be proposed later." [CMS submission package includes Supporting Statement, Comments and responses, and Data Collection Overview.]
Robo-Advisor Movement Is Dying as Growth Rates Crash
Michael Kitces in Nerd's Eye View
5/2/2016
"[T]he combination of rising client acquisition costs and declining average revenue per client may be an outright death knell for the direct-to-consumer robo-advisor movement, as they approach the unsustainable crossover point where the lifetime value of a client, cumulatively, is less than the cost to acquire a single client ... [T]ech-augmented human advisors are rapidly growing past both their robo-advisor and traditional human advisor peers, and an outright 'arms race' of technology is emerging amongst financial advisor custodians and broker-dealers all seeking to be the future platform of choice."
New Incentive Compensation Rules: Implications for Private Equity Firms (PDF)
Debevoise & Plimpton LLP
[Guidance Overview]
5/2/2016
"[T]he Federal Deposit Insurance Corporation and several other agencies have released revised proposed rules to implement Section 956. The proposals released to date preview what are expected to be substantially similar proposed rules coming from the SEC in the near term. The SEC's version of the proposed rules should provide additional detail that would apply specifically to investment advisers -- including advisers to private equity funds and other private funds -- and to broker-dealers. The proposed rules differ significantly from the original rule proposals issued in 2011."
Official DOL Family and Medical Leave Act (FMLA) Poster
Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]
[Official Guidance]
5/2/2016
"All covered employers are required to display and keep displayed a poster prepared by the [DOL] summarizing the major provisions of The Family and Medical Leave Act (FMLA) and telling employees how to file a complaint. The poster must be displayed in a conspicuous place where employees and applicants for employment can see it. A poster must be displayed at all locations even if there are no eligible employees."
Why Bankrupt San Bernardino Didn't Cut Pensions
Calpensions
5/2/2016
"San Bernardino follows the path of previous bankruptcies in Vallejo and Stockton by limiting the main cuts in long-term debt to bonds and retiree health care, while raising taxes, slowly rebuilding reduced services, and leaving pensions untouched.... The San Bernardino disclosure gave the same basic reason as Stockton for not attempting to cut pensions in bankruptcy: Pensions are needed to be competitive in the job market, particularly for police."
Paul Ryan Does Not Seem to Understand High-Risk Pools
Physicians for a National Health Program [PNHP]
[Opinion]
4/29/2016
"[W]hat about the 10 percent of people who account for two-thirds of our health care costs. Their premiums would have to be about 7 times what the premium would be if everyone were covered under a common risk pool, or about 20 times what everyone else is paying. As Paul Ryan says, they are 'really kind of uninsurable.' So he proposes high-risk pools at the state level, with subsidized premiums. Expecting the states to subsidize two-thirds of our health care costs is a non-starter. Without massive increases in taxes, which are opposed by the Republicans anyway, the states would not be able to fund those pools."
American Academy of Actuaries Comments to IRS on Proposed Nondiscrimination Regs (PDF)
American Academy of Actuaries
[Opinion]
4/29/2016
12 pages. "The proposed regulations will provide relief for some employers and will help to stem the trend toward fully freezing pension plans; however, many plan sponsors will not be able to use the closed plan rules for a variety of reasons. We respectfully submit that the regulations need to go further in order be effective. In addition, we believe that certain aspects of these regulations, if implemented as proposed, could have unintended consequences that will likely lead to more plan freezes and terminations, further eroding the retirement security of the workforce."
Employment Cost Index, March 2016
U.S. Bureau of Labor Statistics [BLS]
4/29/2016
"Compensation costs for civilian workers increased 1.9 percent for the 12-month period ending in March 2016.... Benefit costs increased 1.7 percent for the 12-month period ending in March 2016. In March 2015, the increase was 2.7 percent.... Compensation costs for private industry workers increased 1.8 percent over the year, lower than the March 2015 increase of 2.8 percent.... The increase in the cost of benefits was 1.2 percent for the 12-month period ending in March 2016, significantly lower than March 2015 when the increase was 2.6 percent."
Fiduciary Duty to Review Fees Goes Beyond Fee Benchmarking
Buck Consultants
4/29/2016
"In today's environment, even if you and your participants are pleased with your current outsourcing vendor, completing a full-scope RFP every 3 to 5 years helps you conform to additional best practices for fulfilling your fiduciary duties and can offer significant defense against fiduciary fee challenges. A full RFP can also help you identify new or creative services being offered in the market, cost savings available or a fresh approach to administrative practices: a win for everyone."
UPS Warns of $3.8 Billion Cost If U.S. Backs Pension Benefit Cut
Bloomberg
4/29/2016
"The cost would be triggered if the U.S. Treasury Department approves benefit cuts to protect the solvency of the Central States Pension Fund, UPS executives said Thursday. UPS pulled out of the fund in 2007 but agreed to make up any losses its remaining members experienced. The world's largest package-delivery company may have to record a charge of $3.2 billion to $3.8 billion if the government approves the benefit cuts, executives said in an earnings conference call. UPS plans to oppose such a move by the Treasury."
There's Rare Good News on the Retirement Front
Bloomberg
4/29/2016
"A record 13.6 percent of 401(k) participants raised their savings rate during the first quarter this year. Overall, employee contributions, combined with employer matching funds and profit sharing, rose 12.7 percent to reach another record. Not only are savings rates up, but more people are saving in both a 401(k) and an Individual Retirement Account ... Fidelity's universe of double-barreled savers is up 7 percent from a year ago, to 1.3 million people, with an average contribution of $11,600, up $300."
First Quarter Retirement Savings Analysis: Account Balances Lower, Long-Term Savers See An Increase
Fidelity
4/29/2016
"The average 401(k) balance dipped slightly at the end of Q1 and is down roughly five percent from the record high balance at the end of Q1 2015. The average IRA balance also decreased at the end of Q1, and is also down five percent from one year ago.... The average balance for people who have been in their 401(k) continuously for 10 years increased 2 percent year-over-year to $240,700. For long-term savers between the ages of 35-39 -- when, according to Fidelity, individuals should aim to have saved between two to three times their salary in retirement savings -- the average balance was $131,000 at the end of Q1."
U.S. Chamber of Commerce Statement for House Subcommittee Hearing: 'Innovations in Health Care -- Exploring Free-Market Solutions for a Healthy Workforce' (PDF)
U.S. Chamber of Commerce
[Opinion]
4/29/2016
"[E]mployers have driven recent advancements in health care coverage through the adoption of workplace wellness programs, the implementation of private exchanges, use of the Accountable Care Organization (ACO) model, and the integration of telemedicine into plans. However, providing affordable health insurance coverage is becoming progressively more challenging with new restrictions on plan design and new requirements governing employer-sponsored coverage."
Text of IRS Rev. Proc. 2016-28: 2017 Inflation Adjusted Amounts for Health Savings Accounts (HSAs) (PDF)
Internal Revenue Service [IRS]
[Official Guidance]
4/29/2016
"For calendar year 2017, the annual limitation on deductions ... for an individual with self-only coverage under a high deductible health plan is $3,400 ... [and for] family coverage under a high deductible health plan is $6,750.... For calendar year 2017, a 'high deductible health plan' is defined under Section 223(c)(2)(A) as a health plan with an annual deductible that is not less than $1,300 for self-only coverage or $2,600 for family coverage, and the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $6,550 for self-only coverage or $13,100 for family coverage."
Grabbing Victory Out of the Jaws of Defeat: Late Plan Restatements (PDF)
Ferenczy Benefits Law Center LLP
[Guidance Overview]
4/29/2016
"The IRS has addressed two types of nonamender situations: those affecting individual plans and their sponsors and those that affect many clients of given service providers.... If you are a service provider that sponsors a preapproved plan document and you have at least 20 clients who are nonamenders, you may file to protect those plans on an omnibus basis.... The program does not require that the failure to adopt a timely restatement be the service provider's fault or the result of a systemic error by the service provider. Therefore, this program may be used by a service provider who has 20 or more plans that were not signed timely by their plan sponsors for whatever reason."
PBGC Proposes Reduced Late Premium Filing Penalties (PDF)
Xerox HR Services
[Guidance Overview]
4/29/2016
"The proposed changes would also add a new 80% waiver of the higher penalty applicable when PBGC provides notice for plans with good compliance history.... Eligibility for the 80% waiver would require satisfaction of two conditions: [1] The plan must have a five-year record of premium compliance -- timely payment or penalties fully waived. [2] The premium shortfall would need to be corrected promptly -- within 30 days of PBGC's notification."
Text of IRS Chief Counsel Memorandum 201618010: Review of Chief Counsel Advice on Application of Section 162(m)(6) to Risk-Bearing Entities Providing Services to Medicaid Recipients (PDF)
Internal Revenue Service [IRS]
[Official Guidance]
4/29/2016
"[T]he determination of whether section 162(m)(6) applies to a risk-bearing entity providing services to Medicaid recipients requires application of the definitions of health insurance issuer and health insurance coverage to those arrangements.... Although section 162(m)(6) is a provision that is not part of HIPAA but rather is a provision of the Internal Revenue Code over which the Treasury Department and the IRS have sole jurisdiction, the failure to coordinate the definition [with other agencies] raises significant litigation hazards with respect to enforcement of the application of the deduction limitation to these entities.... Accordingly, we advise that for purposes of section 162(m)(6) the type of organizations identified in the recently issued CCAs not be identified as health insurance issuers and that the arrangements not be treated as providing health insurance coverage until such time as that coordination has been completed, and that any such treatment depend on the result of such coordination."
New HIPAA Phase 2 Audits: Targets Notified by Email Only
Perkins Coie LLP
4/29/2016
"[E]ntities eligible for Phase 2 Audits should take the time now to ensure their systems, policies and implementation procedures are up-to-date and properly documented. Given the short timeline for Phase 2 Audits, once a target receives a notice of audit selection, it will likely be too late to bring its procedures into compliance with HIPAA Privacy, Security and Breach Notification Rules."
Treasury Issues Final MPRA Suspension Regulations
Segal Consulting
4/29/2016
"The final regulations make changes and clarifications to many specific provisions of the proposed regulations. Examples include: [1] Addressing numerous actuarial assumption and projection issues; [2] Clarifying that the plan must pay for actuarial, legal, and communication expenses of the retiree representative; [3] Adopting a new procedure permitting trustees, with the Treasury's approval, to withdraw and resubmit a revised suspension application; [4] Adding new procedural requirements for the participant vote. The final regulations do not change the statutory requirement that those who do not vote are counted as voting in support of a suspension."
Flying Autopilot with Target Date Funds: Points to Consider
The Washington Post; subscription may be required
4/29/2016
"How much of my target-date fund do I want in stocks now? ... How much stock will I want 10, 20, 30 years from now? ... How much are the fees? ... Do I need to invest in anything else? ... Does my target-date fund have to be set for the year I want to retire?"
Health Insurer's Three-Word Denial Brings Cold Shoulder from 2nd Circuit
DeBofsky & Associates, P.C.
4/29/2016
"Although the court persuasively rejected the 'substantial compliance' doctrine, this ruling will undoubtedly trigger further litigation as to the meaning of 'inadvertent and harmless' noncompliance. The court could also have gone much further because the harm here is one that is typical (and frustrating) in health care -- summary denials lacking any explanation.... Obtaining a comprehensible explanation for a denial so that it can be effectively challenged is hard enough, but obtaining the so-called administrative record is often impossible." [Halo v. Yale Health Plan, No. 14-4055 (2d Cir. Apr. 12, 2016)]
More Definitions on Incentive-Based Compensation for Financial Institutions
Winston & Strawn LLP
[Guidance Overview]
4/29/2016
"The new proposed rules give a separate definition for each of the following terms: [1] Long-term incentive plan; [2] Incentive-based compensation plan; [3] Incentive-based compensation program; [4] Incentive-based compensation arrangement; [5] Qualifying incentive-based compensation."
The Executive Compensation Provisions of Dodd-Frank: Where We Are Now
Mintz Levin
[Guidance Overview]
4/29/2016
"It's been over five years since the signing of the Dodd-Frank Wall Street Reform and Consumer Act and we are still waiting for the [SEC] to finalize rules on several provisions related to executive compensation. [This article provides] a summary of the current landscape of Dodd-Frank as it relates to key executive compensation provisions."
Why Chobani Gave Employees a Financial Stake in Company's Future
National Public Radio
4/29/2016
"Employee stock ownership is not all that unusual, especially among technology firms. Food companies like Starbucks and Whole Foods offer stock grants.... Their popularity is increasing ... in part because they enjoy large tax benefits and because retiring baby boomers who own companies see it as a good way to transfer ownership. [Corey Rosen, of the National Center for Employee Ownership,] estimates nearly one-tenth of American workers are part of an ESOP."
House Passes Resolution to Block DOL Fiduciary Rule
Committee on Education and the Workforce, U.S. House of Representatives
4/29/2016
"H.J. Res. 88, which passed the House by a vote of 234 to 183, will... [1] Protect access to affordable retirement advice for all Americans. [2] Ensure small business owners can continue to find the advice they need to help their employees plan for retirement. [3] Build upon a larger, bipartisan effort to strengthen protections and help all Americans retire with the financial security and peace of mind they deserve." [Editor's note: the President has stated he will veto the resolution if is presented to him (i.e., if it is approved by the Senate).]
This Plan Could End Your 401(k) as You Know It
Philadelphia Business Journal
[Opinion]
4/29/2016
"Hamilton 'Tony' James, President of private equity giant Blackstone Group, and liberal leaning economist Teresa Ghilarducci have recently proposed a new plan for retirement savings, and it completely abandons the current 401(k) layout that has affected the lives of millions of Americans across the country.... But why have a labor economist and the president of a private equity firm, two polar opposites, come together to create such a plan? Tony James' background in private equity is worrisome, even if he says all the right things. There is something brewing in the background, with numerous private equity firms buying up insurance companies -- an unusual practice for the buy and sell market of private equity."
U.S. Chamber of Commerce Statement to House Ways and Means Committee on the Tax Treatment of Health Care (PDF)
U.S. Chamber of Commerce
[Opinion]
4/29/2016
"[O]ver 175 million Americans are enrolled in employer-sponsored coverage.... We urge you to protect ERISA and employer-sponsored coverage. Second, we urge you to repeal the [ACA]'s 40% excise tax on high-cost plans and preserve the longstanding tax treatment of employer-sponsored coverage for employers and employees alike. There is no direct evidence that changing the tax treatment of these benefits will result in savings.... Finally, we believe that greater innovations in employer-sponsored coverage may continue to help to reduce health care spending."

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