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The ERISA Industry Committee

This update covers various topics including retirement legislative and regulatory updates, antitrust policy, and other important issues in the ERISA industry.

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The ERISA Industry Committee

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  1. The ERISA Industry Committee Washington Update June 1, 2015

  2. 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

  3. ERIC Antitrust Policy As a reminder, all ERIC meetings and activities are to be conducted in full compliance with the ERIC Antitrust Policy.  The antitrust laws prohibit competitors from agreeing on prices to be charged or otherwise taking steps that harm free and fair competition among them.  While ERIC’s primary mission and activities are entirely consistent with the antitrust laws, if you have any concerns about a particular topic or discussion, please raise it with ERIC staff.

  4. Washington Update Agenda Welcoming Remarks Hill Briefing: James Brandell Retirement Update Health Update Concluding Remarks/Questions

  5. Retirement

  6. Retirement – Legislative Update Tax Reform • Senate Finance Committee Working Groups • Savings & Investment (Mike Crapo R-ID)/(Sherrod Brown D-OH) • Finance Committee gives working groups extension (mid-June?)

  7. Retirement – Regulatory Update Treasury Department/Internal Revenue Service • Proposal to significantly curtail determination letters for individually designed plans still in play • Hybrid Plan Regulations (effective 1/1/16); proposed rules on transition rules • Final rule this year? • PEP plan rules • No timeframe on mortality tables

  8. Retirement – Regulatory Update, cont. Department of Labor Definition of Fiduciary/Conflict of Interest Rule- released April 16th • ERIC FocusOn Call held on May 11th • DOL extends comment letter period by 15 days; 75 day comment period becomes 90 day comment period: comments due July 20th • Hearing: week of August 10 • Stay tuned for FocusOn call with DOL reps

  9. Retirement – Regulatory Update, cont. Department of Labor Definition of Fiduciary Rule, cont. • ERIC Comment Letter: • Informal comments of employees of companies to co-workers • Investment education carve-out and specific plan investment options • Call center employees • Preamble questions: HSAs (treatment to continue) etc. • Effective date of new regulation and liability before date of final regulation • Comments due June 12th

  10. Retirement – Regulatory Update, cont. Department of Labor Other Issues in the ‘queue” • Lifetime Income & Benefits Statements • Brokerage window regulations • Report on Plan Audit Quality

  11. Retirement – Regulatory Update, cont. Investment Advice Survey • Coordinating with ERIC comment letter on DOL proposed regulation on definition of fiduciary • Questions on arrangements with outside providers for ADVICE to participants on 401(k) investments (including ER stock) • Survey closes June 5th

  12. Retirement – Regulatory Update, cont. ERISA Advisory Council • De-risking transactions (disclosure/model forms for plans) hearing May 28 • FocusOn call held on May 14th at 2pm ET to on participant disclosures/model disclosures • Lifetime Income disclosures hearing May 27th

  13. Retirement – Regulatory Update, cont. PBGC • President Obama nominates Tom Reeder to be next Executive Director PBGC

  14. Misc. Non-Bank Non-Insurer Globally Systematically Important Financial Institutions • May 29th- ERIC joined 6 other trades on comment letter supporting exclusion of pension funds from scope of non-bank non-insurer globally systematically important financial institution methodologies (Financial Stability Board & the International Organization of Securities Commissions)

  15. Legal Tibble v. Edison International • Supreme Court unanimous decision May 18th: plan fiduciaries have ongoing fiduciary duty under ERISA to monitor plan investments (separate from their duty of prudence in selecting plan investments) • Vacates 9th Circuit ruling barring claim against fiduciaries who had continued to offer certain mutual funds selected outside ERISA’s 6-year limitations period. • Remand to 9th Circuit to determine whether plan’s fiduciary breached its duty to monitor within 6-year limitations period.

  16. Legal Tibble v. Edison International, cont. • Prior to SC decision, parties agreed to ongoing duty of plan fiduciary to monitor plan investments (so no “surprise” holding here) • SC did NOT find fiduciary breached fiduciary duties for continued monitoring • Remand with instructions to “consider petitioners’ claims that respondents breached their duties within the relevant 6-year period under ERISA, recognizing the importance of analogous trust law” • ERIC filed amicus brief

  17. Health

  18. King v. Burwell and the Aftermath • King v. Burwell: are health care subsidies available for individuals enrolled through federally facilitated Exchanges? • Decision expected late June, 2015 • Aftermath: Significant impact if SCOTUS finds that subsidies not available to those in federal Exchanges • Likely death spirals for costs of individual insurance in affected Exchanges • HHS: “we don’t have a plan” – but likely to have idea about how to facilitate transformation of current federal Exchanges into state Exchanges

  19. King v. Burwell, cont. • ERIC FocusOn call July 2, 2015 • Republican concern at potential voter backlash in affected states • Looking at potential short-term extension of subsidies/transitional help and other solutions • Numerous solutions floated; no consensus among R’s at this point

  20. Key Republican post-Kingv. Burwell proposals • Proposal by Sen. Ron Johnson (R-WI): S 1016, the “Preserving Freedom and Choice in Health Care Act” • ACA individual and employer mandates would be repealed • Exchange subsidies continued until September, 2017 for those affected by King v. Burwell • 31 R co-sponsors

  21. Hatch-Burr-Upton proposal • Proposal by Sen. Orrin Hatch (R-UT); Sen. Richard Burr (R-NC), Rep. Fred Upton (R-MI) • Repeal key elements of ACA: individual and employer mandates, taxes and fees, Medicaid expansion, rules on essential health benefits and minimum value, most consumer mandates and market reforms • Cap on employee exclusion for employer-provided health care • Individual capped at $12,000; $30,000 for family • Indexed at CPI + 1 • New tax credit for low-income American citizens for buying coverage on individual market • Differentiated by age and self/family coverage

  22. Off-Ramp from ObamaCare • Proposal by Reps. Fred Upton (R-MI), Paul Ryan (R-WI), and John Kline (R-MN) • Would create advanceable, refundable tax credit for individuals in “affected states” • States could stick with ObamaCare or opt into new House “patient-centered” system • Main elements of ACA would be repealed, although some elements retained – e.g., keep no pre-x, guaranteed renewability

  23. Senate Off-Ramp • Proposal by Sen. Ben Sasse (R-NE), S 673, the “Winding Down ObamaCare Act” • Individuals could continue to receive COBRA-like continuation coverage if subsidy lost as result of King v. Burwell • Would receive credit of 65% of ACA subsidy for 6 months, then reduced by 5%/month through end of 18-month period • Would prohibit states from using federal Exchange technology to create state-based Exchange • No co-sponsors

  24. Rep. Tom Price (R-GA) Proposal • HR 2300: Empowering Patients First Act of 2015 • 67 co-sponsors • Repeal ACA • Advanceable, refundable tax credit, age-based • Incentivizes use of HSAs • Limitation on employer-provided health coverage • Exclusion limited to $8000/individual, $20,000 family; rest is taxable • Permits grants to states for high-risk pools • Raise wellness incentive limits to 50% • Many other provisions

  25. Sen. Bill Cassidy (R-LA) • “Patient Freedom Act” • States could stay with ACA or opt into different plan, which would repeal employer mandate, individual mandate, age banding, essential benefits mandates • Would let states use federal funds to incentivize individuals to set up HSAs • Would require insurers to publish the cash prices they pay for services to improve price transparency

  26. ACA OOP limit • Out-of-pocket limits on cost-sharing for any individual in family coverage in group health plans, self-funded or insured, cannot exceed self-only ACA OOP limit • 2015 limits: $6600 self-only, $13,200 family • 2016 limits: $6850 self-only, $13,700 family • Effective date of new policy: PYBOOA 1/1/16 • ERIC has drafted a letter to the tri-agencies asking for two-year delay and complaining about process – or lack thereof

  27. ERIC poll on OOP limits • 70% of respondents said that plans would be moderately or significantly affected by rule change • 95% of affected plans are HDHPs • Over half of respondents will share additional expense between company and participants • Need lots of time to re-design benefits, change systems, and communicate with plan participants • Big problem is understanding what carrier/TPA/vendor can do to accommodate rule change

  28. ACA 40% excise tax • ERIC comment letter submitted 5/15/15 • Also worked with NCB on more general letter on behalf of broad group of employers and trades • ERIC main points • 2 year transition period • Narrow definition of coverage subject to tax (exclude HSA contributions, most on-site medical clinics, retiree health plans) • Safe harbor for clinics spending less than $700/person/year • Do not lock in to COBRA valuation rules • Create excise tax “safety zone” • Maintain FLEXIBILITY in all things

  29. Telemedicine • Very important issue for ERIC members • ERIC will advocate at the state level in coordination with ERIC members to preserve and expand telehealth options for employers • Will also work to thwart state actions that would stymie these efforts • Please send me your contact info if you would like to join this Telemedicine Task Force • Inaugural call: Wednesday, June 3, 2:00 p.m. – 3:30 p.m. ET • Registration still open! • Teladoc wins injunctive relief against Texas Medical Board

  30. HHS Health Plan Identifiers • HIPAA created Health Plan Identifiers (HPIDs) • HHS asks for comments on using HPIDs in health plan enumeration and in electronic health care transactions • Is policy change warranted? • ERIC has pushed to eliminate HPID use by large employers • ERIC will draft comment letter, due July 28

  31. ACA Reporting • IRS updated FAQ guidance on ACA reporting rules under IRC sections 6055 an 6056 • New set of rules on reporting for COBRA beneficiaries • This set recently revised – update to FAQ 16 • Example 2 revised, new Example 3 added

  32. Under construction • ERIC comment letter on EEOC proposed regulation on wellness • Draft will be circulated soon • ERIC poll on wellness (FASCINATING!!) will be released with draft of ERIC comment letter • Coming again to a telephone near you: Third Thursday calls of ERIC Health Policy Committee • Join us on the Third Thursday of every month for a wide-ranging discussion of health benefits issues • Next call: Thursday, June 18, 4:00 p.m. – 5:00 p.m. ET

  33. Upcoming ERIC calls • Telemedicine Task Force call • Wednesday, June 3, 2:00 p.m. – 3:30 p.m. EDT • Third Thursday call of ERIC Health Policy Committee • Thursday, June 18, 4:00 p.m. – 5:00 p.m. EDT • FocusOn call on SCOTUS decision in King v. Burwell • Speaker: Tony Shelley, Member, Miller & Chevalier • Thursday, July 2, 2:00 p.m. – 3:30 p.m. EDT • Washington Update call • Monday, July 13, 11:00 a.m. – noon EDT

  34. Upcoming ERIC meetings • Washington Reps • Monday, June 8, 3:30 – 4:30 p.m. EDT • Location: ERIC offices, Washington D.C. • ERIC General Membership and Committee meetings • October 14 and 15, 2015 • Location: Washington, D.C.

  35. To receive ERIC updates • If you were forwarded this email from another person in your company but would like to receive your own copy of our emails in the future, please let us know by going to the ERIC website (www.eric.org) and clicking on “Register New User” in the upper-right hand corner, OR • Send an email to memberservices@eric.org with your contact information and company name, and indicating which mailing lists you would like to join:  health, retirement, legal, or any combination of these. 

  36. For further information • Annette Guarisco Fildes, CEO and President • aguariscofildes@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 main phone: 202/789-1400

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