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PBGC proposes conforming changes to guaranteed benefits and asset allocation regs concerning owner-participants

Tue, 04/17/2018 - 18:34

The Pension Benefit Guaranty Corporation (PBGC) has issued proposed rules to conform its guaranteed benefits and asset allocation regulations to changes in the phase-in rules for owner-participants under the Pension Protection Act of 2006 (PPA).
ERISA Secs. 4022 and 4044 cover the PBGC’s guarantee of plan benefits and allocation of plan assets, respectively, under terminated single-employer defined benefit plans. Special provisions within these sections apply to owner-participants, who have certain ownership interests in their plan sponsors. PPA made changes to these provisions, which the PBGC has been operating under since they became effective. With these proposed regulations, the PBGC intends to increase transparency into its operations and provide guidance for plan administrators on the impact of the statutory changes.
The proposed regulations would amend the PBGC’s benefit payment regulation by replacing the guarantee limitations applicable to substantial owners with a new limitation applicable to majority owners. In addition, the proposed regulations would amend the PBGC’s asset allocation regulation by prioritizing funding of all other benefits in priority category 4 ahead of those benefits that would be guaranteed but for the new, owner-participant limitation. The proposed regulations also clarify that plan administrators may continue to use the simplified calculation in the existing rule to estimate benefits funded by plan assets and provide new examples to aid plan administrators in implementation.
In related amendments, the PBGC proposes to make conforming amendments to its regulations on terminology, termination of single-employer plans, and reportable events and certain other notification requirements. The PBGC also proposes to correct PBGC Reg. §4022.62(e), which currently provides that in a PPA 2006 bankruptcy termination, “bankruptcy filing date” is substituted for “proposed termination date” in PBGC Reg. §4022.62(c), by making the substitution applicable to both paragraph (c) (applicable to non-owner-participants) and paragraph (d) (applicable to owner-participants) of PBGC Reg. §4022.62.

Amendments unrelated to PPA

The PBGC proposes to make minor, nonsubstantive changes to the examples not involving owner-participants in PBGC Reg. §4022.62 and §4022.63 of the benefit payment regulation in order to improve readability. The PBGC also proposes to correct two clerical errors that were made when the PBGC previously amended the regulation—the first duplicated paragraph (f) of PBGC Reg. §4022.62, and the second duplicated the designation of paragraph (c)(1) of PBGC Reg. §4022.63. Finally, the PBGC proposes to replace the term “estimated title IV benefit” with “estimated asset-funded benefit” at PBGC Reg. §4022.63.

Applicability

The PBGC proposed regulations would follow the applicability dates of the provisions of PPA that the regulations would incorporate. Thus, the proposed amendments would be applicable to plan terminations under ERISA Sec. 4041(c) with respect to which notices of intent to terminate are provided under ERISA Sec. 4041(a)(2) after December 31, 2005, and under ERISA Sec. 4042 with respect to which notices of determination are provided under that section after December 31, 2005.

Source: PBGC proposed regulations, 83 FR 9716.
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Pension & Benefits NetNews – April 17, 2018

Tue, 04/17/2018 - 17:43

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Featured This Week

Employee Benefits Management News

  • IRS’s compliance with employer shared responsibility provision needs improvement, TIGTA says
  • Iowa enacts law allowing association health plans that evade some ACA rules
  • Managing health care benefits costs remains top priority for companies
  • IRS FAQs address new employer credit for paid family and medical leave

Pension Plan Guide News

  • IRS modifies procedures for issuing opinion/advisory letters for pre-approved DB plans with cash balance formula
  • IRS postpones filing deadline until June 29 for victims of Hurricane Maria
  • Manager must pay $87K in restitution for stealing 401(k) contributions and payroll taxes

Employee Benefits Management News

IRS’s compliance with employer shared responsibility provision needs improvement, TIGTA says

The IRS failed to identify a substantial number of employers that were potentially liable for the Employer Shared Responsibility Payments, according to a report by the Treasury Inspector General for Tax Administration (TIGTA). For more information, see ¶2114P.

        (Read Intelliconnect) »

Iowa enacts law allowing association health plans that evade some ACA rules

Iowa Governor Kim Reynolds has signed a bill that allows associations of employers or certain agricultural organizations to offer health plans that do not comply with some of the Patient Protection and Affordable Care Act’s provisions. For more information, see ¶2114R.

        (Read Intelliconnect) »

Managing health care benefits costs remains top priority for companies

Managing health care benefits costs remains employers’ top benefit priority, with 66 percent of companies with 50 to 1,000 workers ranking it as a key 2018 concern, according to recent research from Hub International. For more information, see ¶2114T.

        (Read Intelliconnect) »

IRS FAQs address new employer credit for paid family and medical leave

The IRS has issued a set of frequently asked questions (FAQs) that address the new employer credit under Code Sec. 45S for paid family and medical leave. The Tax Cuts and Jobs Act (P.L. 115-97) created the credit, which is generally effective for wages paid in taxable years of the employer beginning after December 31, 2017. For more information see ¶2114V.

        (Read Intelliconnect) »

Pension Plan Guide News

IRS modifies procedures for issuing opinion/advisory letters for pre-approved DB plans with cash balance formula

The IRS has modified procedures for issuing opinion and advisory letters for pre-approved defined benefit (DB) plans containing a cash balance formula. Specifically, the IRS has modified sections 6.03(7)(c) and 16.03(7)(c) of Rev. Proc. 2015-36 to allow pre-approved DB plans containing a cash balance formula to provide for the actual rate of return on plan assets as the rate used to determine interest credits. The IRS has also modified section 6.03(7)(c) of Rev. Proc. 2017-41 relating to the rates that are permitted to be used to determine interest credits in pre-approved DB plans containing a cash balance formula. In addition, references to “hypothetical interest” and “hypothetical interest credits” in Rev. Proc. 2015-36 have been changed to “interest credits”, consistent with terminology in Rev. Proc. 2017-41. For more information, see ¶17299v74.

        (Read Intelliconnect) »

IRS postpones filing deadline until June 29 for victims of Hurricane Maria

The IRS is reminding victims of Hurricane Maria in the U.S. Virgin Islands and in the Commonwealth of Puerto Rico that filing and payment activities have been further postponed beyond Jan. 31, 2018. The IRS extended tax deadlines for affected individuals and businesses until June 29, 2018, for the following localities: (1) In the U.S. Virgin Islands (starting Sept. 16, 2017): Islands of St. Croix, St. John and St. Thomas, and (2) In Puerto Rico (starting Sept. 17, 2017): In any of the 78 municipalities. For more information, see ¶156u.

        (Read Intelliconnect) »

Manager must pay $87K in restitution for stealing 401(k) contributions and payroll taxes

After an investigation by EBSA, the U.S. District Court for the Western District of Virginia has sentenced Felix Rafael Ginorio to time served plus two years supervised release, and has ordered him to pay restitution of $87,276 for stealing from an employee benefit plan, and failing to pay federal taxes. As a result of his conviction, Ginorio is barred from serving as a fiduciary or service provider to an employee benefit plan covered by ERISA. EBSA investigators found that from April 2013 to January 2014, Ginorio failed to remit $5,317 in employee contributions to the Southside Manufacturing Corp. Retirement 401(k) Savings Plan. He served as vice president of the Loyola Fund Inc. in Palm Beach, Florida. The Loyola Fund owned Southside Manufacturing, at which Ginorio was an onsite manager. Employees of Southside Manufacturing Inc. contributed to the plan via weekly payroll deduction. For more information, see ¶156w.

        (Read Intelliconnect) »

For more information, visit http://www.wolterskluwerlb.com/rbcs.

Managing health care benefits costs remains top priority for companies

Mon, 04/16/2018 - 18:32

Managing health care benefits costs remains employers’ top benefit priority, with 66 percent of companies with 50 to 1,000 workers ranking it as a key 2018 concern, according to recent research from Hub International. The study, Employee Benefits Barometer 2018, noted that human resource executives often turn to short-term solutions instead of the longer-term, more strategic approaches to managing employee benefits.

The study found the following:

  • HR executives aren’t embracing multi-year benefits planning. Sixty-six percent of companies have a short-term planning cycle when it comes to making major changes to benefits, funding, and contribution strategies.
  • ACA compliance worries drop. Last year, Hub found that 26 percent of employers listed complying with the Patient Protection and Affordable Care Act (ACA) as a top priority, but this year just 16 percent rank it highly, a reflection of the continued uncertainty regarding the future of the ACA.
  • Cost management is a priority, but isn’t reflected in many HR executives’ short-term plans. While two-thirds of companies said one of their goals is to better manage health benefits costs, 49 percent do not plan to implement any new cost management programs over the next 12 to 18 months. In addition, 54 percent believe that they’ve done all they can reasonably do to control rising medical costs.
  • Few prioritize addressing the diverse benefit needs of a multi-generational workforce. Even though millennials are playing an increasingly important role in the workforce, just 20 percent of respondents identified this objective as a top priority, down from 28 percent last year.
  • Wellness plans can provide a morale boost. Fifty-one percent said that improved employee morale was the biggest benefit of newly implemented wellness programs.

“With managing benefit costs ranking as the top priority, HR leaders need to surround themselves with advisors who can present more tailored insurance solutions that help reduce costs,” said Mike Barone, President of Hub International’s Employee Benefits practice. “There are many viable cost management benefit strategies for companies to explore but many are unaware of their options. Or worse, they don’t have an advisor who can help them adapt solutions such as pharmacy benefits management carve outs, narrow networks, and reference-based pricing for their employee population and organizational needs.”

SOURCE: https://www.hubinternational.com/downloads/employee-benefits-insurance/hub-employee-benefits-barometer/
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IRS guidance covers issuance of opinion/advisory letters, employer adoption deadline, opening of determination letter program for pre-approved DB plans

Mon, 04/16/2018 - 18:25

The IRS has released guidance on the issuance of opinion and advisory letters for pre-approved defined benefit (DB) plans. Also included are the deadline for employers to adopt these pre-approved plans, and the timing for the opening of the determination letter program for pre-approved DB plan adopters.

Background

Rev. Proc. 2016-37 provides that every pre-approved plan has a regular, six-year remedial amendment cycle and that master and prototype (M&P) sponsors and volume submitter (VS) practitioners may apply for new opinion or advisory letters once every six years. In addition, Rev. Proc. 2016-37 provides that when the review process for a cycle of pre-approved plans has neared completion, the IRS will publish an announcement supplying the date by which adopting employers must adopt the newly approved plans. This date is intended to provide adopting employers a window of approximately two years in which to adopt plans and, if they are otherwise eligible, apply for an individual determination letter.

Opinion/advisory letters

The IRS has announced that it intends to issue opinion and advisory letters for pre-approved DB plans that were restated for changes in plan qualification requirements listed in IRS Notice 2012-76, and that were filed with the IRS during the submission period for the second six-year remedial amendment cycle under Rev. Proc. 2007-44. The IRS expects to issue the opinion and advisory letters on March 30, 2018, or, in some cases, as soon as possible thereafter.
Under Rev. Proc. 2016-37, the second six-year remedial amendment cycle for pre-approved DB plans ends on January 31, 2019, unless the IRS revises these timing requirements and announces the revision in future guidance. Consistent with the revenue procedure, the IRS has announced the extension of the end of a pre-approved DB plan’s remedial amendment cycle with respect to the changes in plan qualification requirements included on the 2012 Cumulative List to April 30, 2020. The IRS states that an adopting employer whose DB plan is eligible for the six-year remedial amendment cycle system under section 19 of Rev. Proc. 2016-37, and who adopts, by April 30, 2020, an M&P or VS DB plan that was approved based on the 2012 Cumulative List, will be considered to have adopted the plan within the second six-year remedial amendment cycle.

Opening of individual determination letter program

An adopting employer of a pre-approved DB plan may apply for an individual determination letter (if otherwise eligible) during the period beginning May 1, 2018 and ending April 30, 2020, according to the IRS. See Rev. Proc. 2018-4) for additional information about determination letter applications for pre-approved plans.

Third six-year remedial amendment cycle

Section 16.01 of Rev. Proc. 2016-37 provides that the third six-year remedial amendment cycle for DB pre-approved plans begins on February 1, 2019. The IRS states that it will announce in future guidance a delayed starting date for this third six-year remedial amendment cycle for these plans.

Source: IRS Announcement 2018-05.
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Honeywell retirees did not have vested lifetime health care benefits

Fri, 04/13/2018 - 18:52

Collective bargaining agreements did not vest Honeywell International retirees with lifetime health care benefits because the CBAs contained general durational clauses, held a federal district court in Michigan. Without an express clause in the CBA vesting lifetime benefits, the right to benefits terminates with the CBA. However, the court rejected the employer’s argument that it could require retirees to pay a portion of the premiums, finding instead that the language of the CBA did not place a ceiling on the employer’s required contributions, but was merely a floor. Summary judgment on that point was granted in the retirees’ favor.

Background.

A union and retired workers filed an action against Honeywell alleging ERISA violations and an anticipatory breach of the CBA entered into by the union and employer-specifically, as to the scope and duration of health benefits to which the retirees were entitled. The union and employer had a series of CBAs and master negotiations (including 2003 and 2007 agreements) which contained provisions stating that the limit on the employer’s contribution to retiree health benefits will be a subject of bargaining for the 2007 CBA, and that the employer’s contribution for health care coverage after 2007 shall be not less than the greater of (1) the actual amount of the employer’s retiree contribution in 2007, or (2) the employer’s actuary’s 2003 estimate of the employer’s retiree contribution in 2007. In 2011, the employer notified retirees of its intent to limit health care contributions beginning in 2012. Ultimately, it did not do so until 2014. The retirees objected on the grounds that the CBA did not contain a cap.

Caps on premium contributions.

The plaintiffs moved for summary judgment and an injunction regarding the employer’s plan to collect monthly premium contributions from post-2003 retirees. The retirees argued that the language in the 2003 and 2007 CBAs created a floor, not a ceiling; the employer countered that the language created a cap, based on the fact that elsewhere in the document, it referred to the clause as a limit on contributions. The court sided with the retirees, holding that the “shall not be less than” language created a floor and that the parties had agreed to bargain on the issue but had not agreed on a cap. The word limit can mean a maximum or a minimum, therefore, there was no evidence to support a finding that the CBAs provided for a cap on the employer’s retiree health care contributions. Partial summary judgment for the retirees on this point was granted and the court enjoined the employer from paying anything less than the full premium amount for health care coverage for retirees under the CBAs that contained that language.

Vesting of lifetime benefits.

The employer moved for summary judgment on the grounds that the CBA does not created lifetime vested retiree health care contributions to pre-2003 retirees and contribution caps apply to those retirees. Based on recent precedent, including the Supreme Court’s 2015 decision in M & G Polymers USA, LLC v. Tackett, when the general durational clause is for the term of the CBA, the CBA does not vest retirees with lifetime health care benefits, unless there is an express clause providing that retirees are entitled to vested lifetime health care benefits. In this case, the CBA contained a general durational clause, and the CBAs did expire on the specific termination dates included in the contracts. In addition, the CBAs had a durational clause regarding health care insurance that stated that the CBA would remain in effect until a specified termination date. Therefore, the retirees were not entitled to lifetime health care benefits. Summary judgment was granted for the employer with respect to the claim that it breached the CBA by concluding that the retirees were not entitled to vested lifetime retiree health care benefits.

Breach of implied warranty of authority.

The employer filed a counterclaim arguing that the union breached an implied warranty of authority by misrepresenting its authority to negotiate on behalf of retirees. The court denied the union’s motion for summary judgment on this claim, finding a genuine dispute of fact on the issue. The parties disagreed as to the identity of the union’s chief negotiator and there was a dispute as to whether the employer believed that the union had authority to negotiate on behalf of the retirees.

The union also argued that the claim was time-barred, but the court rejected that argument. The claim was based on fraudulent concealment. The statute of limitations was potentially tolled because there was a dispute as to whether the union concealed that it lacked authority to negotiate on behalf of the retirees and a dispute as to whether the employer exercised due diligence. The union also argued that the counterclaim was barred by the LMRA, but the court rejected that argument as well. In order to analyze the breach of warranty claims, the court said, it would need to examine the conduct of the parties during contract negotiations, but not the CBAs themselves.

SOURCE: United Auto Workers v. Honeywell International, Inc. (E.D. Mich.), No. 2:11-cv-14036-DPH-DRG, March 29, 2018.
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Tax law fueling changes to employer benefits and executive pay programs

Fri, 04/13/2018 - 18:41

The recently-enacted tax reform law, the Tax Cuts and Jobs Act (P.L. 115-97), is fueling changes to corporate America’s employee benefits, compensation, and executive pay programs, according to a survey by Willis Towers Watson. The survey of 333 large and midsize employers reveals nearly half (49 percent) of the respondents are considering making a change to at least one of these programs this year or next.
“The tax reform law is creating economic opportunity to invest in their people programs,” said John Bremen, managing director, human capital and benefits, Willis Towers Watson. “While a significant number have already announced changes to some of their programs, the majority of employers are proceeding to determine which changes will have the highest impact and generate the greatest value.”

Benefit programs

Two-thirds of those (66 percent) surveyed are planning or considering making changes to their benefit programs or have already taken action. The most common changes organizations have made or are planning or considering include expanding personal financial planning (34 percent), increasing 401(k) contributions (26 percent) and increasing or accelerating pension plan contributions (19 percent). Other potential changes include increasing the employer health care subsidy, reducing or holding flat the employee payroll deduction, or adding a new paid family leave program in accordance with the Family and Medical Leave Act’s tax credit available for paid leave for certain employees.

Compensation

Sixty-four percent of employers are planning or considering taking action on their broad-based compensation programs, or have already taken action. The most common changes organizations have made or are planning or considering include conducting a review of their compensation philosophy (43 percent), addressing pay-gap issues (36 percent) and introducing a profit-sharing or one-time bonus payout to all employees (21 percent).

Executive pay

About four in ten companies (41 percent) are also planning or considering changes to their executive pay programs, or have already taken action. The most common changes employers have made or are planning or considering include spending more time and analysis on this year’s incentive target (33 percent) and increasing the use of discretion in 2018 incentive plans (19 percent).
“The results of our survey, coupled with the actions taken by some large employers over the past few weeks, suggest that investing in their people remains a top priority. We fully expect most organizations will take the time to thoughtfully evaluate the impact of the tax law on their organization and then make changes that support their specific business strategy,” said Kathy Walgamuth, director, communication and change management, Willis Towers Watson. “The tax law and subsequent company announcements have made headlines, so employees may already have established their own set of expectations. Wherever an organization lands, even if the decision is made to not take any direct action for employees, it’s essential for them to consider the need to communicate and address employee questions.”

Source: Willis Towers Watson press release.
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Spencer’s Benefits NetNews – April 13, 2018

Fri, 04/13/2018 - 17:35
  About this Newsletter

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Featured This Week

 

New Reports

 

 

News

 

CCIIO modifies employee counting method for MLR provision

The Center for Consumer Information and Insurance Oversight (CCIIO) has issued technical guidance regarding the employee counting method for determining market size for purposes of the Patient Protection and Affordable Care Act’s (ACA; P.L. 111-148) medical loss ratio (MLR) provision. In addition, the CCIIO has issued technical guidance on the process for a state to submit a request for adjustment to the individual market MLR standard.

        (Read Intelliconnect) »

Many small businesses using QSEHRA to offer health benefits for first time, survey finds

More than 70 percent of small businesses that used the new qualified small employer health reimbursement arrangement (QSEHRA) in 2017 did so to offer employee health benefits for the first time, according to The QSEHRA: Annual Report 2018 from PeopleKeep.

        (Read Intelliconnect) »

IRS FAQs address new employer credit for paid family and medical leave

The IRS has issued a set of frequently asked questions (FAQs) that address the new employer credit under Code Sec. 45S for paid family and medical leave. The Tax Cuts and Jobs Act (P.L. 115-97) created the credit, which is generally effective for wages paid in taxable years of the employer beginning after December 31, 2017. It is not available for wages paid in taxable years beginning after December 31, 2019.

        (Read Intelliconnect) »

Managing health care benefits costs remains top priority for companies

Managing health care benefits costs remains employers’ top benefit priority, with 66 percent of companies with 50 to 1,000 workers ranking it as a key 2018 concern, according to recent research from Hub International. The study, Employee Benefits Barometer 2018, noted that human resource executives often turn to short-term solutions instead of the longer-term, more strategic approaches to managing employee benefits.

        (Read Intelliconnect) »

Iowa enacts law allowing association health plans that evade some ACA rules

Iowa Governor Kim Reynolds has signed a bill that allows associations of employers or certain agricultural organizations to offer health plans that do not comply with some of the Patient Protection and Affordable Care Act’s provisions. Senate File 2349 allows employer association health plans (AHP), a type of multiple employer welfare arrangement (MEWA), to be established by bona fide associations of employers.

        (Read Intelliconnect) »

IRS’s compliance with employer shared responsibility provision needs improvement, TIGTA says

The IRS failed to identify a substantial number of employers that were potentially liable for the Employer Shared Responsibility Payments, according to a report by the Treasury Inspector General for Tax Administration (TIGTA).

        (Read Intelliconnect) »

Not currently diagnosed with sleep apnea, fired dispatcher can’t show FMLA or disability bias

Thu, 04/12/2018 - 18:40

Affirming summary judgment against FMLA interference and retaliation and disability bias claims of a 911 dispatcher who was fired after being late repeatedly, the Seventh Circuit found it was not established that she actually suffered from sleep apnea at the time and clearly was not under continuing treatment for it to qualify as a serious health condition. Her prior tardiness was not constructive notice of her need for FMLA leave, and the decision to terminate her was made before she requested FMLA during her termination meeting. Although she had taken several FMLA leaves during her tenure and had been disciplined within months, she failed to show that any of the disciplinary actions were unwarranted and had no direct evidence linking her discipline to her FMLA leaves; temporal proximity wasn’t enough to support her retaliation claims. Finally, whether or not the dispatcher had a disability, she had not shown that she suffered an adverse action because of a disability; the supervisor who fired her did so after warning her that her repeated tardiness could cost her the job, and he did not know she suffered from sleep apnea.

Disciplinary history.

The dispatcher worked at the county’s 911 call center from 2002 until she was fired in 2013. In 2006 she was diagnosed with sleep apnea and treated for it; in 2008, she had gastric bypass surgery, which appeared to alleviate her sleep apnea. She had not been re-diagnosed with sleep apnea when she was fired. But she did have a checkered disciplinary history. She received five verbal or written warnings about her use of vacation time or casual time between 2004 and 2013; three verbal or written warnings for failure to timely complete mandatory proficiency tests; and one verbal warning for failure to report to work (she mistakenly believed she was not scheduled). She also had taken several FMLA leaves during her tenure, and several of these disciplinary actions happened shortly after her return from those leaves. In the second half of 2012 and early 2013 she was late four times, and after the fourth incident, where she said she had overslept, received a written warning that if she were late again, she could be fired.

Tardiness leads to termination. But she was late again within days, and the county determined to fire her. Although she brought a doctor’s note to the meeting at which she was terminated, it said only that she “most probably” had sleep apnea and that she “needs to be re-tested and treated.” The parties disputed whether she provided the note before or after she was told she was being fired, and whether she asked for FMLA leave during or after that meeting. Nonetheless, she was fired, and she sued, alleging FMLA interference and retaliation as well as disability discrimination and retaliation. The district court granted the county summary judgment against all her claims.

No serious health condition. In the Seventh Circuit’s view, it was not clear from the evidence that the dispatcher even suffered from sleep apnea at the time she was fired, given the contents of the doctor’s note which said only that it was likely. What was clear was that she was not receiving inpatient care for sleep apnea or receiving continuing treatment for it. Consequently, she did not show she even had a serious health condition qualifying her for FMLA leave.

No FMLA notice.

Notwithstanding that finding, the appeals court also disagreed with the dispatcher’s argument that the county had constructive notice of her need for FMLA leave from her repeated and allegedly uncharacteristic tardiness. But five instances of oversleeping over a period of more than eight months was not “the sort of stark and abrupt change which is capable of providing constructive notice of a serious health condition,” concluded the court. (At the time, the dispatcher had also attributed non-medical reasons to her late arrivals, the court also pointed out.) Finally, even if the dispatcher had provided actual notice at the time of her termination meeting, it was undisputed that the decision to fire had already been made by an individual who had no notice of her sleep apnea before actual notice of a request for FMLA leave had been made. Thus, her FMLA interference claim failed on appeal.

No FMLA retaliation.

Here, the appeals court succinctly noted that the decision to terminate the dispatcher’s employment was made by an individual with no knowledge of her sleep apnea, and her request for FMLA leave at the termination meeting a week later could not have “caused” her termination. Her contentions that earlier FMLA leaves had been followed by disciplinary action relied only on temporal proximity, said the court, which was not enough to establish a fact issue to survive summary judgment, and she did not contend that any of the earlier disciplinary action had been unwarranted.

Plus, the dispatcher’s claim that other individuals who had not taken FMLA leave but who had been late to work were treated more favorably was hampered by a “self-drafted” document naming 27 comparators she had identified. But that document was a hot mess: she didn’t identify when the comparators were late or how late they were, what shift they worked at the time, who their supervisor was at the time, or what their disciplinary history was at the time. Some of them worked different shifts or held different job titles, and she really didn’t know if they had taken FMLA leave or not. For this and other reasons, her FMLA retaliation claim was properly denied.

No viable disability claims.

Saying it need not decide whether the dispatcher was a qualified individual with a disability, the appeals court said that even if she was, she failed to identify any evidence to show she suffered an adverse employment action resulting from her alleged disability. The decisionmaker did not know that she had sleep apnea prior to deciding to fire her; instead, she was fired for her repeated failures to show up to work on time, not as a result of a disability.

Accommodation.

In fact, there was no evidence that the county was even aware of dispatcher’s initial diagnosis of sleep apnea or subsequent treatment. Her 2011 fitness-for-duty exam failed to even mention sleep apnea, although it did say she “no longer has excessive need for sleep or sleep hunger and is really feeling much more like her normal self.” The only other record evidence as to whether the county was informed that she had sleep apnea was disputed (either her last day late or the day she was terminated), but the conduct for which the dispatcher was fired had already occurred. The undisputed evidence establishes that she was fired based on her repeated late arrivals, the last of which occurred before her conversation with her immediate supervisor (not the decisionmaker), when she may have revealed she might have sleep apnea. “After the fact requests for accommodation do not excuse past misconduct,” stressed the appeals court.

SOURCE: Guzman v. Brown County (CA-7), No. 16-3599, March 7, 2018.
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Yard-Man inferences can’t create ambiguity in CBA to find lifetime vesting for retiree health benefits

Thu, 04/12/2018 - 18:33

In a per curiam decision concerning vested rights to lifetime health care benefits for retirees, the Supreme Court reversed and remanded a Sixth Circuit decision that had held that the same Yard-Man inferences it once used to presume lifetime vesting could be used “to render a collective bargaining agreement ambiguous as a matter of law, thus allowing courts to consult extrinsic evidence about lifetime vesting.” That approach was inconsistent with the High Court’s decision in M&G Polymers USA, LLC v. Tackett, which required ordinary principles of contract law to be applied to collective bargaining agreements (CBAs). Because Yard-Man inferences from International Union, United Auto, Aerospace, & Agricultural Implement Workers of Am. v. Yard-Man, Inc. (Yard-Man), CA-6 (1983), 716 F2d 1476 are not “ordinary principles of contract law,” stressed the Court in an unsigned opinion, they cannot be used to support more than one “reasonable interpretation” of a contract to create an ambiguity and bring in extrinsic evidence.

1998 CBA

Like Tackett, the case before the Court was a dispute between retirees and their former employer, CNH, about whether an expired CBA created a vested right to lifetime health care benefits. The operative CBA was from 1998 and provided health care benefits under a group benefit plan to certain “employees who retire under the … Pension Plan,” but it said that “all other coverages,” such as life insurance, ceased upon retirement. The group benefit plan was made part of the CBA and ran concurrently with it. The 1998 CBA said it disposed of all bargaining issues, whether or not they were presented during the agreement, and it contained a general durational clause that it would terminate in May 2004.
When the 1998 agreement expired in 2004, a class of retirees and surviving spouses filed suit, seeking a declaration that their health care benefits vested for life and an injunction preventing CNH from changing them. Tackett was decided while their lawsuit was pending. First granting summary judgment to CNH, after reconsideration, the district court awarded summary judgment to the retirees. The Sixth Circuit affirmed, reasoning that while it considered features of the CBA it previously had used to “infer vesting” under Yard-Man, nothing in Tackett precluded its analysis: “There is surely a difference between finding ambiguity from silence and finding vesting from silence.”

Tackett inferences

The Supreme Court rejected the appellate court’s analysis. A contract is not ambiguous unless, after applying established rules of interpretation, it remains reasonably susceptible to at least two reasonable but conflicting meanings, according to the Court. The 1998 CBA was not ambiguous unless it could reasonably be read as vesting health care benefits for life, reasoned the Court, and the Sixth Circuit interpreted it that way only by employing inferences that the Supreme Court rejected in Tackett. There were no explicit terms, implied terms, or industry practice suggesting that the 1998 CBA vested health care benefits for life. Instead, to find ambiguity, the Sixth Circuit applied several Yard-Man inferences. The appellate court declined to apply the general durational clause to the health care benefits, and then it inferred vesting from the presence of specific termination provisions for other benefits and the tying of health care benefits to pensioner status.
But Tackett rejected those inferences precisely because they are not “established rules of interpretation”-not because of the consequences that the Sixth Circuit attached to them (presuming vesting versus finding ambiguity). “They cannot be used to create a reasonable interpretation any more than they can be used to create a presumptive one,” stressed the Court. And no other court of appeals would find ambiguity in these circumstances. When a CBA is merely silent on the question of vesting, other courts would conclude that it does not vest benefits for life; when a CBA does not specify a duration for health care benefits, other courts would simply apply the general durational clause; and other courts would not find ambiguity from the tying of retiree benefits to pensioner status, concluded the Court.

No Yard-Man, no ambiguity, no lifetime vesting

Without those Yard-Man inferences, the case was straightforward. The 1998 CBA contained a general durational clause that applied to all benefits unless the agreement specified otherwise, and there was no provision subjecting health care benefits to a different durational clause. Plus, the CBA said that the health benefits plan “ran concurrently” with the CBA, thus tying the health care benefits to the duration of the rest of the agreement. Had the parties “meant to vest health care benefits for life, they easily could have said so in the text. But they did not.” Because the only reasonable interpretation of the 1998 CBA was that the health care benefits expired when the CBA expired in May 2004, the Court reversed and remanded.

Source: CNH Industrial N.V. v. Reese, U.S. Supreme Court, Dkt. No. 17-515.
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Iowa enacts law allowing association health plans that evade some ACA rules

Wed, 04/11/2018 - 18:02

Iowa Governor Kim Reynolds has signed a bill that allows associations of employers or certain agricultural organizations to offer health plans that do not comply with some of the Patient Protection and Affordable Care Act’s provisions. Senate File 2349 allows employer association health plans (AHP), a type of multiple employer welfare arrangement (MEWA), to be established by bona fide associations of employers.
The law also provides that health benefit plans sponsored by a nonprofit agricultural organization domiciled in the state will not be classified as health insurance, and will not be subject to regulation by the Commissioner of the Iowa Insurance Division if requirements outlined within the law are met. The health benefit plans are to be provided through a self-funded arrangement and administered by a domestic third-party administrator that holds a certificate of registration issued by the Commissioner.
Governor Reynolds praised the Farm Bureau for its work on the legislation saying in a press release that “thousands of Iowans will now have affordable health care coverage.” But America’s Health Insurance Plans (AHIP) had opposed it, stating in a letter that the bill would remove important consumer protections, increase premiums and promote an unlevel playing field.
Iowa’s move comes ahead of the Department of Labor’s issuance of a final rule on expanding the criteria for forming AHPs. The DOL issued a proposed rule in January 2018, and comments were plentiful. A coalition of 17 Attorneys General registered their opposition, viewing the rule as a move to evade the consumer protections enshrined in the ACA and sabotage the health care reform law. Proponents, however, say these plans could provide better access to health care for small businesses, the self-employed, and gig workers, who often find themselves priced out of good options.

SOURCE: SF 2349, signed on April 2, 2018.
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Democratic staff of Joint Economic Committee warns Americans’ retirement security is headed for disaster

Wed, 04/11/2018 - 17:54

Americans’ retirement future is shaky and Congress must immediately enact policies to secure it, according to a February 2018 report from the Democratic staff of the Joint Economic Committee. Challenges to planning and saving for retirement include inadequate savings, stagnant wages, and limited access to low-cost and high return accounts, according to the recently-released “Retirement Security in Peril.”

Fewer DB plans

One cause of the lack of retirement security, says the committee, is the shift from employer-provided defined benefit (DB) plans, such as traditional pension plans guaranteeing lifetime income during retirement, to defined contribution (DC) plans, such as 401(k) plans and individual retirement accounts (IRAs). For those close to retirement, a financial crisis or economic downturn can profoundly diminish savings in DC plans, so that workers assume investment risks that, under DB plans, would have been borne by their employers.
DB plans now also often have a down side for employees, says the committee, since local and state pension plans, representing a majority of DB plans, have recently experienced benefit cuts, partly in response to the decline of state and local pension fund assets following the market crash of 2008. In addition, the committee estimates that there are about a million participants in underfunded multiemployer DB plans.

Gig economy

Many Americans have no access to an employer-provided plan and the committee partly blames the gig economy for this, with its accompanying increase in remote location independent contractors. The number of independent contractor workers is up over 50% since 2005, according to the report, and independent contractors now make up approximately 16% of the American labor force. These so-called contingent workers are two-thirds less likely to have access to employer-provided retirement plans than their traditional employee counterparts. By comparison, however, well over 30% of even full-time private-sector workers lack access to either a DB or DC plan through their employers.
The report cites 2013 statistics from the Economic Policy Institute which show that retirement savings accounts for families at the bottom 50% of the earning scale have declined by 17% since 1998. A median family’s retirement account in 2013 had only $5,000.
Another contributing factor to the increasing lack of retirement security, says the committee, is the rising cost of education. Older Americans, many of whom are parents who financed their Millennial children’s education, have an estimated $247 billion in outstanding student loan debt. Many DC plans do not allow participants to withdraw savings penalty-free in order to supplement a child’s tuition, and participants with student loan debt are more likely to have low retirement account balances and to neglect important health needs. Those who default on their loans often have to surrender about 15% of their Social Security benefits.

Recommendations

The committee points to various policy proposals that it says could help address the retirement crisis. First is a proposal that Congress modernize Social Security by raising the current payroll tax cap of $128,400. This would ensure, the committee says, that a larger share of wealthier Americans’ earnings would go into the Social Security trust fund.
The committee is also recommending that workers be given better access to employer-based retirement plans, perhaps by establishing “startup” tax credits for small businesses that offer retirement plans for the first time, or allowing businesses to pool their DC plans.
Coming up with a long-term solution to ensure the stability of the Pension Benefit Guaranty Corporation (PBGC) is also critical, says the committee, and it pointed to both the Joint Select Committee to Solve the Multiemployer Pension Crisis and the Butch Lewis Act of 2017 as ways to strengthen multiemployer plans. Numerous underfunded plans and the decreasing number of DB plans are putting the PBGC financial future at risk, according to the report.

Source: Joint Economic Committee “Retirement Security in Peril.”
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IRS’s compliance with employer shared responsibility provision needs improvement, TIGTA says

Tue, 04/10/2018 - 18:50

The IRS failed to identify a substantial number of employers that were potentially liable for the Employer Shared Responsibility Payments, according to a report by the Treasury Inspector General for Tax Administration (TIGTA).
The Patient Protection and Affordable Care Act’s (ACA’s) Employer Shared Responsibility Provision requires employers with an average of 50 or more full-time employees, including full-time equivalent employees, offer health insurance coverage to full-time employees and their dependents beginning in January 2015. Moreover, additional improvements were required to ensure that paper ACA information returns were accurately processed, TIGTA found.
Also, a Service-wide strategy was required to reduce resources expended on maintaining multiple Taxpayer Identification Number (TIN) validation processes. Seven stand-alone systems and 28 different programs performed validation processes; however, for the 15 systems and programs for which maintenance costs could be provided, the IRS indicated that it spent a total of $2.8 million in Fiscal Year (FY) 2016.
TIGTA made five recommendations, including ensuring that the data used to identify employers are complete and accurate and developing a Service-wide TIN validation strategy to reduce and streamline validation efforts. The IRS agreed with all the recommendations.

SOURCE: TIGTA Report: Affordable Care Act: Processes to Identify Employers Subject to the Employer Shared Responsibility Payment Need Improvement (Reference Number: 2018-43-022)
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Millennials bring online consumer behaviors to health care interactions

Mon, 04/09/2018 - 19:00

Millennials interact with their health care providers differently than other generations, according to recent research from the Employee Benefit Research Institute (EBRI). Analysis of the EBRI/Greenwald & Associates Consumer Engagement in Health Care Survey (CEHCS) reveals how Millennials—who now outnumber Baby Boomers—are more comfortable with non-traditional engagement with their health care providers, and are more likely to apply shopping habits commonly found in the online retail realm to their health care decision-making.

The analysis finds that Millennials are:

  • More than twice as likely as Baby Boomers to use a walk-in clinic. Thirty percent of millennials have used a walk-in clinic, compared to 14 percent among Baby Boomers and 18 percent among Gen Xers.
  • More than twice as likely to be interested in telemedicine than Baby Boomers. Forty percent of Millennials are interested in telemedicine compared with 19 percent among Baby Boomers and 27 percent among Gen Xers.
  • More likely than other generations to have researched health care options, such as checking the quality or rating of a doctor or hospital (51 percent Millennial vs. 34 percent Gen X and 31 percent Baby Boomers); using an online health cost tracking tool (28 percent Millennial vs. 17 percent Gen X and 10 percent Baby Boomers); or otherwise finding health cost information (72 percent Millennial vs. 65 percent Gen X and 64 percent Baby Boomers).
  • More likely to participate in wellness programs. For example, Millennials are more than twice as likely than Baby Boomers to participate in counseling on stress management, mindfulness classes, and resiliency training (33 percent Millennial vs. 21 percent Gen X and 15 percent Baby Boomers).

“Interestingly, Millennials’ health care consumption habits correspond to being significantly more satisfied with their health plan choices,” said Paul Fronstin, director of the Health Research and Education Program at EBRI. He noted that Millennials are more satisfied with the ease of selecting a plan (56 percent Millennial vs. 46 percent Gen X and 43 percent Baby Boomers); information available to help understand health plan choices (56 percent Millennial vs. 46 percent Gen X and 46 percent Baby Boomers); number of health plans to choose from (47 percent millennials vs. 34 percent Gen X and 32 percent Baby Boomers); and availability and affordability of health plans (46 percent Millennial vs. 33 percent Gen X and 29 percent Baby Boomers).

“This perhaps reflects their comfort in researching consumer decisions online, and applying the same consumer habits they use on Amazon or other retail online cites to the health care arena.” Fronstin concluded.

SOURCE: www.ebri.org
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Benefit funds can’t revive ERISA suit against company owners for unpaid contributions

Fri, 04/06/2018 - 18:02

A group of employee benefit trust funds were unable to revive their ERISA action seeking unpaid contributions from the owners of a company whose benefit plans they managed. Rejecting the trusts’ assertion that the unpaid contributions were trust assets over which the owners exercised control, and that they could therefore sue the owners to collect the contributions under contracts governing the plan, a divided Ninth Circuit panel held that the claim was foreclosed by the Ninth Circuit’s decision in Bos v. Bd. of Trustees (Bos I), which held that parties to an ERISA plan cannot designate unpaid contributions as plan assets. Dissenting, Judge Gleason disagreed with this interpretation of Bos I, and would have found that outside of the bankruptcy context, unpaid employer contributions to employee benefit plans may constitute plan assets when the ERISA plan document expressly defines them as such.

Contractually required to contribute.

The trusts brought this lawsuit against the two sole owners and officers of Accuracy Glass & Mirror Company, Inc. (one was the president, the other the secretary-treasurer). Accuracy was a party to two master labor agreements, under which the company was required to contribute to the trusts to provide employee benefits, including health insurance and pensions. In addition, each trust was governed by its own trust agreement, which purported to treat unpaid contributions as trust assets.

Fiduciary duty claim.

After Accuracy failed to make the required payments, the trusts filed this lawsuit against the owners asserting breach of fiduciary duty. The trusts argued that, pursuant to the contracts, the unpaid contributions were trust assets over which the owners exercised control and that the trusts could therefore sue them as fiduciaries to collect those contributions. The district court disagreed and dismissed their claim, reasoning that pursuant to Bos I, an employer’s contractual requirement to contribute to an employee benefits trust fund does not make it a “fiduciary of unpaid contributions.” Thus, the owners were not subject to fiduciary liability under ERISA.

Dismissal affirmed.

The Ninth Circuit agreed with the district court that Bos I foreclosed the trusts’ fiduciary duty claim. It had previously adopted the general rule that “until the employer pays the employer contributions over to the plan, the contributions do not become plan assets over which fiduciaries of the plan have a fiduciary obligation.” And while it subsequently left open whether to recognize an exception to that rule when plan documents expressly define the fund to include future payments, the appeals court rejected such an exception in Bos I.

Bos I was bankruptcy case.

In Bos I, the company had similarly consented to be bound by a master agreement that required it to contribute to the trust funds. The associated trust agreements generally defined each fund to include “any other money received or held because of or pursuant to the trust.” When the company struggled to make the required payments, the fund trustees filed a grievance against the both company and its president individually, and an arbitrator granted awards against both. After the president filed for bankruptcy, the trustees filed a complaint in his bankruptcy proceeding arguing that pursuant to the Bankruptcy Code, the debt owed to the trusts was not dischargeable.

Holding extends to ERISA.

Under Ninth Circuit case law, if an individual is a fiduciary under ERISA, he or she is also treated as a fiduciary for purposes of the Bankruptcy Code. Thus, Bos I addressed whether the president was a fiduciary of the trusts under ERISA and therefore properly considered a fiduciary under the Bankruptcy Code. After recognizing disagreement in other circuits over whether an individual who controls money contractually owed to ERISA funds is a fiduciary under ERISA, the Bos I court sided with the circuits that declined to apply an exception to “the general rule that an employer cannot be an ERISA fiduciary with respect to unpaid contributions.” In other words, even an ERISA plan that treats unpaid contributions as plan assets does not make an employer a fiduciary with respect to those owed funds.
Here, the trusts argued that Bos I did not control in this ERISA case since Bos I was a bankruptcy case and fiduciary duties are construed more broadly under ERISA than under the Bankruptcy Code. However, the Bos I court declined to recognize an exception to the “general rule that unpaid contributions to employee benefit funds are not plan assets.” Rather, it held that the president was not a fiduciary under ERISA or the Bankruptcy Code.
Therefore, the majority in this case held that the implications of Bos I extended beyond bankruptcy to ERISA. Even if the wording of Bos I left room for doubt on this issue, the same Ninth Circuit panel clarified in Bos II that it had concluded that the company’s president was not a fiduciary under ERISA, and “thus the Bankruptcy Code’s ‘fiduciary’ exception to discharge could not be applied to him.” Because that rule applied equally here, the district court was correct to conclude that the two owners were not fiduciaries of the trusts.

Dissent: Bos I limited to bankruptcy.

Judge Gleason disagreed with the majority’s interpretation of Bos I, and would find that outside of the bankruptcy context, unpaid employer contributions to employee benefit plans may constitute plan assets when the ERISA plan document expressly defines them as such. Moreover, the majority’s holding was at odds with other circuits, including the Second and Seventh Circuits, which have held that unpaid employer contributions may constitute plan assets when the parties explicitly agree to treat them as such.

SOURCE: Glazing Health and Welfare Fund v. Lamek, (CA-9), No. 16-16155, March 21, 2018.
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Benefits were 31.7 percent of total compensation in December 2017, BLS finds

Thu, 04/05/2018 - 18:47

Employer-provided benefits costs for civilian workers in private industry and state and local governments in December 2017 averaged $11.38 per hour worked, accounting for 31.7 percent of total compensation costs, which averaged $35.87 per hour worked. The cost of benefits as a percentage of compensation has risen over the past several years from 27.4 percent of total compensation. These are among the findings of the December 2017 Employer Costs for Employee Compensation report, produced quarterly by the Bureau of Labor Statistics (BLS).

Insurance benefits costs averaged $3.14 per hour, or 8.7 percent of total compensation, in December 2017, representing the largest nonwage employer cost. Legally required benefits costs averaged $2.63 (7.3 percent), employer costs for paid leave benefits averaged $2.55 (7.1 percent), and the cost of retirement and savings benefits averaged $1.90 (5.3 percent).

Private industry.

According to the BLS, private industry benefits costs averaged $10.25 per hour in December 2017, accounting for 30.4 percent of total compensation costs, which averaged $33.72 per hour worked. Private industry employer costs for insurance benefits averaged $2.70 (8.0 percent), legally required benefits averaged $2.62 (7.8 percent), paid leave benefits averaged $2.36 per hour worked (7.0 percent), and retirement and savings benefits averaged $1.29 (3.8 percent).

Health care benefits, private industry.

The average cost for health care benefits in private industry was $2.55 per hour worked (7.6 percent of total compensation) in December 2017. Among occupational groups, employer costs for health care benefits ranged from $2.75 (9.8 percent) for production, transportation, and material moving occupations to $1.06 per hour (6.7 percent) for service occupations. Health care benefits for goods-producing industries averaged $3.55 per hour (9.1 percent of total compensation), compared with $2.35 (7.2 percent) for service-producing industries.

State and local governments.

In December 2017, state and local government benefits costs accounted for 37.4 percent of total compensation, or $18.38 per hour worked. Employer costs for insurance benefits averaged $5.82 per hour, or 11.8 percent of total compensation. The largest component of insurance costs was for health insurance, which averaged $5.68 per hour worked, or 11.5 percent of total compensation. The average cost for retirement and savings benefits in state and local governments was $5.65 per hour worked, or 11.5 percent of total compensation. Costs for legally required benefits averaged $2.72 per hour worked, or 5.5 percent of total compensation.

SOURCE: http://www.bls.gov/news.release/ecec.toc.htm
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PCORI made about $2 billion in commitments for awards from 2010 to 2017: GAO

Wed, 04/04/2018 - 18:01

The Patient-Centered Outcomes Research Institute (PCORI) made about $2 billion in commitments for awards in fiscal years 2010 through 2017, according to an analysis by the Government Accountability Office (GAO). The report, Activities Funded by the Patient-Centered Outcomes Research Trust Fund, noted that PCORI provides funding through award commitments from the Patient Centered Outcomes Research Trust Fund (Trust Fund) and may pay these awards over multiple years.

Background.

The Patient Protection and Affordable Care Act (ACA) authorized the establishment of PCORI to carry out comparative effectiveness research (CER) and established the Trust Fund from which PCORI and the Department of Health and Human Services (HHS) are expected to receive an estimated $4 billion from fiscal years 2010 through 2019. The ACA directed the GAO to review the PCORI’s and the HHS’s use of the Trust Fund.

Findings.

The GAO report examined the PCORI’s use of the Trust Fund for CER activities, and the HHS’s use of the Trust Fund for these activities. Of the $2 billion PCORI committed as of the end of fiscal year 2017, about $1.6 billion (or 79 percent of its commitments) is for research awards, and $325 million (or 16 percent) is for building the capacity to use existing health data for research, the GAO found. Through fiscal year 2017, commitments for dissemination and implementation awards—intended to share CER findings with potential users of this research—were limited because most PCORI-funded research was still underway. PCORI projects to commit an additional $721 million for awards in fiscal years 2018 through 2021. In addition to awards, PCORI spent $310 million on program and administrative support services in fiscal years 2010 through 2017 and projects to spend an additional $206 million for these services through fiscal year 2024.

From fiscal years 2011 through 2017, the HHS obligated about $448 million from the Trust Fund. Of this amount, HHS obligated about $260 million (or 58 percent of all obligations) to the dissemination and implementation of CER findings. As most PCORI-funded CER had not yet been completed due to the time needed to conduct this research, HHS efforts focused instead on the dissemination and implementation of CER funded by other federal entities. Additionally, HHS obligated funds for efforts to train researchers on conducting CER, build data capacity, and on administrative activities. HHS projects to obligate an additional $120 million for these activities in fiscal years 2018 through 2020.

SOURCE: https://www.gao.gov/assets/700/690836.pdf
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Pension & Benefits NetNews – April 3, 2018

Tue, 04/03/2018 - 18:55
 

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Featured This Week

 

Employee Benefits Management News

 

  • Fifth Circuit vacates DOL fiduciary rule
  • AG coalition opposes DOL’s AHP expansion proposal, but would it increase health care access?
  • Jury to say whether employer had notice of employee’s in loco parentis relationship with grandmother
  • Millennials bring online consumer behaviors to health care interactions

Pension Plan Guide News

 

  • IRS reduces user fee for determination letter request submitted on Form 5310
  • IRS guidance covers issuance of opinion/advisory letters, employer adoption deadline, opening of determination letter program for pre-approved DB plans
  • IRS provides tax tips on early plan withdrawals

 

Employee Benefits Management News

 

Fifth Circuit vacates DOL fiduciary rule

A final rule promulgated by the Department of Labor in April 2016 expanding the definition of “investment advice fiduciary” conflicts with the text of ERISA and the Internal Revenue Code and is unreasonable under Chevron and the APA, the Fifth Circuit has held. For more information, see ¶2114H.

        (Read Intelliconnect) »

AG coalition opposes DOL’s AHP expansion proposal, but would it increase health care access?

A coalition of 17 Attorneys General have registered their opposition to the Department of Labor’s proposed rule that would expand the criteria for forming association health plans (AHPs), in what they see as a move to evade the consumer protections enshrined in the Patient Protection and Affordable Care Act (ACA) and sabotage the health care reform law. For more information, see ¶2114I.

        (Read Intelliconnect) »

Jury to say whether employer had notice of employee’s in loco parentis relationship with grandmother

Despite a confusing sequence of events in which an employee called HR to falsely request bereavement leave related to the death of her grandfather when she actually intended to assist her grandmother, who suffered with dementia, to visit family—and then did not timely return from that leave but instead called back and requested leave “to tend to” her grandmother, a federal district court in Illinois denied cross-motions for summary judgment on the employee’s claims for violations of the FMLA based on her resulting discharge. For more information, see ¶2114M.

        (Read Intelliconnect) »

Millennials bring online consumer behaviors to health care interactions

Millennials interact with their health care providers differently than other generations, according to recent research from the Employee Benefit Research Institute (EBRI). For more information see ¶2114O.

        (Read Intelliconnect) »

Pension Plan Guide News

 

IRS reduces user fee for determination letter request submitted on Form 5310

The IRS has reduced the user fee applicable to a determination letter request submitted on Form 5310 (Application for Determination for Terminating Plan). Appendix A (Schedule of User Fees) of Rev. Proc. 2018-4 has been modified to reflect a reduction of the user fee from $3,000 to $2,300 effective January 2, 2018. In Rev. Proc. 2018-4, the IRS had increased the fee from $2,300 for 2017 to $3,000 for 2018. Applicants who paid the $3,000 user fee listed in Rev. Proc. 2018-4 will receive a refund of $700. For more information, see ¶17299v72.

        (Read Intelliconnect) »

IRS guidance covers issuance of opinion/advisory letters, employer adoption deadline, opening of determination letter program for pre-approved DB plans

The IRS has released guidance on the issuance of opinion and advisory letters for pre-approved defined benefit (DB) plans. Also included are the deadline for employers to adopt these pre-approved plans, and the timing for the opening of the determination letter program for pre-approved DB plan adopters. For more information, see ¶17097u32.

        (Read Intelliconnect) »

IRS provides tax tips on early plan withdrawals

Many taxpayers may need to take out money early from their Individual Retirement Account or retirement plan. Doing so, however, can trigger an additional tax on early withdrawals. They would owe this tax on top of other income tax they may have to pay. The IRS has provided some tax tips on key points that taxpayers should know. For more information, see ¶156p.

        (Read Intelliconnect) »

 

For more information, visit http://www.wolterskluwerlb.com/rbcs.

ECFC wants clarification on modified HSA limit

Tue, 04/03/2018 - 17:52

The Employers Council on Flexible Compensation (ECFC) has written to the IRS requesting clarification on the modified inflation-adjusted amount for tax deductible contributions to health savings accounts (HSAs). On March 5, 2018, in Rev. Proc. 2018-18, the IRS changed the annual limitation on deductions under Code Sec. 223(b)(2)(B) for an individual with family coverage under a high deductible health plan to $6,850, which is $50 less than the contribution amount previously announced by the IRS in Rev. Proc. 2017-37.
The ECFC is requesting guidance on how to handle accounts where contributions have already been made in the maximum amount announced in Rev. Proc. 2017-37. ECFC notes that application of the current rules regarding excess contributions is administratively complex. Code Sec. 223(f)(3) prescribes the tax treatment of excess contributions that are returned to an individual prior to the due date of the participant’s return. In addition, returned contributions must reflect the net income attributed to the excess contribution and such income must be included in the gross income of the individual for the taxable year in which received. Following this complex correction methodology would require HSA trustees and custodians to determine the net income attributable to the extra $50 contribution and address reporting of this additional taxable income.
ECFC requests that the IRS provide transitional relief to HSA trustees and custodians allowing them to just return the $50 excess contribution to the individual without having to calculate and include the net income on that contribution.

SOURCE: http://www.ecfc.org/files/Neis_comment_letter.pdf
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Only half of Americans feel knowledgeable about HSAs

Mon, 04/02/2018 - 18:23

Only 51 percent of Americans believe they are knowledgeable about Health Savings Accounts (HSAs), according to a new joint report by the LIMRA Secure Retirement Institute and Insured Retirement Institute (IRI).

The survey found that many Americans are unaware that they can use HSA assets accumulated in their working years to pay for health care and long-term care expenses in retirement. In fact, two in five Americans mistakenly believe that balances must be spent by the end of the year, or forfeited. The growing costs of health care and long-term care have prompted many advisors to address these risks with their clients as they plan for retirement. Nine in 10 advisors surveyed say they typically discuss health care or long-term care with clients but only seveb in 10 have specifically addressed the use of an HSA. Those who do not discuss HSAs acknowledge they have insufficient expertise with HSAs. Nearly all advisors (96 percent) surveyed say they would like to learn more.

“Today, only a quarter of Americans plan to use HSA assets to fund future health care costs in retirement,” noted Judy Zaiken, corporate vice president and project director, LIMRA Secure Retirement Institute. “The findings underscore a great opportunity for the industry to educate consumers and advisors on the value of using HSAs for tax-free asset growth and as a financial hedge against retirement health care costs, which is still an uncommon strategy.”

The study found there were some groups of consumers that are more likely to be knowledgeable about HSAs than others:

  • Wealthier households are more likely to be knowledgeable about HSAs. Among households with $100,000 or more in financial assets, 65 percent are knowledgeable as compared to just 40 percent of those with less wealth.
  • Men are more likely than women to report being knowledgeable about HSAs (58 percent of men versus 48 percent of women are somewhat or very familiar).
  • Married workers report more HSA knowledge than do non-married workers (69 percent versus 52 percent).
  • Consumers with children report more HSA knowledge than those without children (55 percent versus 44 percent).

SOURCE: www.limra.com
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Previous inaction on performance issues, positive reviews, cast doubt on motivation for post-FMLA firing

Fri, 03/30/2018 - 17:33

Though an employer argued that certain events during an employee’s FMLA leave were the “final” straw that led to her being terminated following her return from a six-week FMLA leave, triable issues prevented a federal court in Wisconsin from granting its motion for summary judgment on her claims of FMLA interference and retaliation. The employer would have to explain to a jury why, after years of inaction and solid reviews, it suddenly chose to act on alleged, longstanding concerns about her performance only a few days after she returned from leave.
The employee worked as a children’s services manager in a county’s department of human services (DHS). She was hired on March 2012, after DHS split the job of “professional services manager” into two separate new positions. The individual who had served in that initial role became her counterpart as the behavioral health and clinical services manager.

Relationship with counterpart.

The employee and her counterpart had a strained relationship, and he complained early on to their supervisor about her poor leadership and communication skills. Her supervisor then consulted with members of her staff, who provided mixed feedback. At some point, the supervisor counseled her about the need to contain her own emotions and to serve as a better example to her staff.

Early positive reviews.

Nevertheless, she received positive performance reviews during her first two years on the job. She was rated as “very good” or “exceptional” in all categories, except in her second review she received a “satisfactory” rating for communication. The comments in these evaluations were also positive and optimistic, but identified some areas for improvement.

Corrective Action Plan.

During 2014, her supervisor received additional complaints relating to her leadership skills and she also failed to submit a grant application, resulting in the loss of a source of funding. As a result, in early December she was placed on a six-month Corrective Action Plan (CAP) which identified nine areas for improvement. Though she was later formally removed from the plan after she received a fairly positive review, her supervisor purportedly continued to hold private concerns about her performance and met with the county’s attorney regarding his concerns and desire to replace her.

FMLA leave and termination.

Meanwhile, the employee was granted her request to take six weeks of FMLA leave to undergo total knee replacement surgery, from December 21, 2015 to February 1, 2016. On January 22, while she was still on leave, the county discovered that a child it serviced had lost Social Security disability payments and eligibility, purportedly due to the employee’s error. Around the same time, two senior staff members complained about the low morale caused by her lack of leadership and threatened to quit if the conditions continued.
Her supervisor again met with the county’s attorney and the two agreed that she should be replaced after she returned from leave. Four days after she returned on an intermittent-FMLA basis, she was given the choice to either resign or be terminated.

Appropriate parties.

At the outset, the court tossed her FMLA claims against the supervisor since he had only been sued in his official capacity. Her claims against DHS were also dismissed since it was merely a division of the county. Moreover, since she didn’t dispute that their inclusion was unnecessary and inappropriate, any objection to their dismissal was waived.

Timing and prior inaction.

However, the county would face a jury on her FMLA interference claim since triable issues existed as to whether she was denied her FMLA right to reinstatement. While the county maintained that the termination decision was unrelated to her leave, a reasonable jury could infer that her taking FMLA leave and continuing to take intermittent leave was a factor. In particular, the close temporal proximity could justify an inference of causation.
Moreover, though the county produced evidence of deficiencies that might have prompted it to decide to fire her regardless of her FMLA leave, she remained employed in the same position for nearly four years despite its purported awareness of these same types of issues. And while it could argue that the final straw was a closer-in-time event, such as the staff members’ ultimatum, a jury could find that the proximity of her FMLA leave to her termination, considering her employment history, was more instructive. The county’s previous inaction could also lead to an inference that the county attributed her unit’s problems to institutional deficiencies and overwork, rather than to her performance, particularly in light of her positive reviews.
Thus, the county would have to explain to a jury why, after years of inaction and solid reviews, it suddenly chose to act on longstanding concerns about her performance only a few days after she returned from FMLA leave. While the jury might credit its assertion that its termination decision was performance-based and the closeness to her FMLA leave was coincidental, it could also find that the temporal proximity and employment history created an inference of FMLA interference.

Retaliatory motive.

The evidence could also lead a jury to reasonably conclude that a retaliatory motive was present and that the county’s explanation was pretextual. While her reviews may have been an attempt to maintain morale or due to one of the county’s other “benign explanations,” resolving this issue required credibility determinations. For example, a jury might reasonably choose to discount the early performance concerns that led to her CAP, given the length of time that elapsed between those concerns and her termination, or it could reasonably choose to credit those concerns, especially after being reinforced while she was on leave.

SOURCE: Degner v. Juneau County, (W.D. Wis.), No. 3:16-cv-00674-wmc, March 5, 2018.
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