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The ERISA Industry Committee

Washington Update February 4, 2013

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Participation Procedure

• Procedure for audience participation • Audience will be in a “listen-only” mode • If you wish to ask a question or make a

comment, press *6 on your telephone to “un-mute” your telephone

• After speaking, please press *6 again to re-enter “listen-only” mode

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New Direct Dial Telephones: Can you believe it???

Direct dial numbers • Scott Macey: 202/627-1910 • Kathryn Ricard: 202/627-1930 • Gretchen Young: 202/627-1920 • Deborah Chin: 202/627-1915 • Ted Godbout: 202/627-1918 • Adreanne Cooper: 202/627-1912 • Peggy Ross: 202/627-1914

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Washington Update Agenda

• Welcoming Remarks • Hill Briefing: Dani Kehoe • Retirement Update

• Health Update • Legal Update • Concluding Remarks/Questions

Retirement

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Retirement – Legislative Update Recap of Fiscal Cliff

• Passage of HR 325 Debt Limit Bill – authorizes payment of US debt prior to May 19,

2013 – Requires each chamber to pass a budget by

April 15 – Sets up mechanism to withhold pay of Senate

and/or House members in chamber that fail to pass a budget

Retirement – Legislative Update

Upcoming Dates of Note • March 1 – Sequestration/gov’t spending

cuts • March 27: Expiration of gov’t funding • April 15: Deadline to pass budget blueprints • May 19: Expiration of debt ceiling

extension

Retirement – Legislative Update

In the “mix” • Tax Reform • Entitlement reform • Review of retirement tax

expenditures/health premium expenditures • State of the Union Address (Feb 12) • Release of President’s Budget

Retirement – Legislative Update

“Other” retirement issues • Changes to accounting rules for pension

plan liabilities??? • Frozen DB plans and nondiscrimination

testing • Extension of MAP-21???

Retirement – Regulatory Update, Department of Labor

• 408(b)(2) “Guide” project • FAQs on 408(b)(2) disclosure regulations • Benefit statement illustrations of lifetime

income (mandate vs. safe harbor)- (“pre-rule” to ask for more input)

• Information collection request on benefit statements

Retirement – Regulatory Update, cont.

• Definition of Fiduciary proposed regulation- early 2013 (proposed regs)

• Annual Funding Notice (final regs) • Target Date Fund Disclosure (final regs) • Electronic Delivery ???? • Brokerage windows project ???

Retirement – Regulatory Update, cont.

Treasury Department/IRS

• Final Hybrid plan regulations • PEP plan regulation project • Lifetime income guidance • Frozen DB plans & nondiscrimination testing (on

radar)

Retirement – Regulatory Update, cont. PBGC

• Reports to Congress on multiemployer and single employer plans

• Reportable events interim guidance for plan years after 2012

Health

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New wellness legislation

• “Healthy Lifestyles and Prevention America Act” (S. 39) – Introduced by Sen. Tom Harkin (D-IA) – Up to ten years of tax credits for businesses that offer

wellness programs • Credit for half of employer costs, up to $200/employee for first

200 • $100/employee >200 • Program must be certified by HHS

– Participation requirement

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Wellness legislation, cont.

• Certified wellness program must contain at least 3 of these 4 components: • Health awareness • Employee engagement • Behavioral change • Supportive environment

• Up to $900/year exclusion from income for employer-paid employee gym memberships • Includes nondiscrimination requirement

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Exchange notification and other FAQs

• DOL/HHS/IRS FAQs issued 1/24/13 • Report to employees about Exchanges

– Delayed until further notice – maybe late summer or fall

• EGWPs: non-enforcement policy for plan that is an EGWP because non-Medicare supplemental drug benefit does not comply with ACA market reforms

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FAQs, cont. • Health Reimbursement Accounts (HRAs)

– HRA not considered “integrated” with health coverage offered by employer unless HRA only available to employees covered by health plan that meets lifetime/annual limit EHB rules of ACA

– Employer-sponsored HRA cannot be integrated with individual market coverage

• Would violate lifetime/annual limit EHB rule

– Integration doesn’t count if employee with HRA doesn’t enroll in “other coverage”

– Can use up pre-2014 amounts in HRA if HRA flunks integration rules

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Coordination of information between employers and Exchanges

• Employee applying for subsidized coverage in the Exchanges needs this information: – Eligibility for employer’s plan – Cost of employer’s lowest cost plan option – Whether employer plan meets 60% MV standard – (Whether employee is covered by employer’s plan)

• How will Exchange extract this info from employer? – Gargantuan data bank that works in real time – Templates provided individually to employees

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Individual premium tax credits. MEC, and penalties

• Definition of minimum essential coverage (MEC) not curtailed – Includes employer plans, grandfathered plans, Medicare Advantage plans – COBRA coverage is MEC only if individual enrolls

• No subsidized coverage in Exchanges for employees/retirees eligible for MEC unless: – Employee share of self-only premium of employer’s plan > 9.5% of

household income; or – Employer’s plan < 60% minimum value – Dependent eligibility for Exchange subsidy also based on self-only

premium • Individual mandate penalty based on family premium (8%

affordability test)

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HIPAA/HITECH final reg

• HHS releases final regs under Privacy, Security, and Enforcement rules under HIPAA – Also breach notification rules under HITECH – New rules effective 3/26/13 but compliance generally

deferred until 9/23/13 – Affects business associate agreements, breach

investigations, access to PHI, notice of privacy practices, enforcement; PHI includes genetic info

• ERIC FocusOn call Thursday, 2/21/13

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Contraceptive coverage under the ACA

• Under ACA, preventive health care services must be provided to covered employees with no cost sharing – Includes access to all FDA-approved

contraception – Applicable to private health plans in PYBOOA

8/1/12; certain nonprofit religious employers exempted, and others given extra year to comply

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Contraceptives, cont.

• NPRM issued last week relaxes definition of “religious employer” that need not comply – Drops criteria:

• Purpose is to inculcate religious values • Primarily employs and serves people of same faith as employer

– Certain religious employers not required to provide contraceptive coverage

• Plan participants would instead receive contraceptive coverage through separate policies at no cost to participants

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ERIC comment letters • Wellness letter filed 1/25/13

– KEY ISSUE: new “reasonable design” criteria • Government apparently adamant • Critical issue for ERIC members

– Other points raised • Programs should be able to target individuals with adverse

health factors (benign discrimination) • Permit reasonable valuation methods • Cost of goods/services used should not be part of “reward” • ACA reward increases should be implemented now • Please fix our GINA and ADA problems

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Legal

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Abbott v. Lockheed Martin

• Abbott v. Lockheed Martin (7th Cir.) – Joint amicus brief with Chamber/ABC – Alleged 401(k) excessive fee and fund

mismanagement – Interlocutory appeal re. class size/certification

and standing – Key: Parameters of litigation and scope of

possible liability

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DOMA

• Supreme Court DOMA/Same Sex Marriage Cases – Key: Effect on plan administration/tax issues

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SIAA v. Snyder

• SIAA v. Snyder (6th Cir.) – Preemption re. Health Plan Claims Tax – Key: State initiatives to tax/regulate self-

insured plans

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Fifth Third Bancorp v. Dudenhoeffer

• Fifth Third Bancorp v. Dudenhoeffer (Cert. to S.C. from 6th Cir.)

• ESOP stock drop case presumption of prudence

• Key: Risk of litigation re. employer shares funds

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Upcoming ERIC calls • ERIC FocusOn call on Shared Responsibility – the Follow-

up – Tuesday, 2/5, 3:30 – 5:00 p.m. EST (TOMORROW)

• ERIC FocusOn call on HIPAA – Thursday, 2/21, 2:00 – 3:30 p.m. EST

• ERIC FocusOn call on Dodd-Frank issues (TBD) • ERIC Strategy call on Wellness (TBD) • Washington Update conference call

– Monday, March 4, 11:00 a.m. – noon EST

• ERIC Health Care Reform Task Force call – Thursday, March 7 , 4:00 – 5:00 p.m. EST

Upcoming ERIC meetings

• Washington Representatives Committee meetings: – Monday, February 4, 3:30 p.m. – 5:00 p.m.

EST (TODAY!!!) • ERIC General Membership and Committee

meetings – Wednesday and Thursday, April 17-18

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To receive ERIC updates • If you would like to receive your own copy

of our emails and notifications of future updates, please let us know by writing to Adreanne Cooper at ERIC (acooper@eric.org.) In this email, please include your contact information or signature block, and please indicate whether you wish to receive information on retirement issues, health issues, legal issues, or all of the above.

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For further information • Scott Macey, President and CEO

– smacey@eric.org – Direct dial: 202/627-1910

• Kathryn Ricard, Senior Vice President, Retirement Security – kricard@eric.org – Direct dial: 202/627-1930

• Gretchen Young, Senior Vice President, Health Policy – gyoung@eric.org – Direct dial: 202/627-1920

• ERIC: 202/789-1400