On January 9, 2019, Rep. Richard Neal (D-MA) introduced the Rehabilitation for Multiemployer Pensions Act into Congress.
This bill seeks to help ailing
multiemployer pension plans by establishing a new agency within the Treasury
Department called the Pension Rehabilitation Administration (PRA).
This agency would be authorized to issue bonds in order to raise capital.
The capital would then be used to issue loans to critical and declining status
plans and some already-insolvent plans that are currently receiving financial
assistance from the Pension Benefit Guaranty Corporation (PBGC).
The loan would be interest-only for 30 years with principal due at end of 30th year and in an amount needed to fund pensions for current retirees only. The pension fund would be required to purchase a commercial annuity contract with the loan proceeds, or set the funds aside in a separate pool and invest in a bond portfolio which has cash flows that mimic the expected pension payouts. In certain situations, a loan could be combined with financial assistance from the PBGC in order to prevent plan insolvency.
Loan applications would need to demonstrate that the loan will enable the plan to avoid insolvency during the 30-year period and that plan would be reasonably expected to pay the loan back with interest. The plan would not be allowed to reduce benefits during the loan term and could not accept a CBA with lower contribution rates.
US Life Expectancy Dropped Again in 2017 – Deaths from Unintentional Injuries Largest Increase
The Center for Disease Control (CDC) released its 2017 Mortality in the United States study. The average US life expectancy dropped again in 2017 (for the third consecutive year) from 78.7 years from birth to 78.6. Death rates increased significantly for those in age groups 25-34, 35-44 and 85 and over from 2016-2017. However, the death rate for those between ages 45 and 54 dropped significantly.
The top three causes of death continue to be heart disease, cancer and unintentional injuries. While seven of the top ten leading causes of death had increases from 2016 to 2017, deaths from unintentional injuries made up the largest increase. Deaths from drug overdoses fall in this category. Using data from the National Vital Statistics System (NVSS), the CDC found that adults age 25-54 had higher rates of drug overdose deaths than those aged 15-24 and 55 and over. West Virginia, Ohio, Pennsylvania and Washington DC had the highest age-adjusted drug overdose deaths in 2017. Deaths from drug overdoses has climbed from 6.1 per 100,000 standard population in 1999 to 21.7 in 2017.
The Facts & Figures page has been updated to include the employee benefit plan limits for 2018.
Download a PDF of data from 2014-2018 HERE
The Internal Revenue Service (IRS) published Notice 2018-06 which provides an extension of the deadlines for 2017 ACA annual reporting requirements. The deadline for providing individuals with Forms 1095-B and 1095-C has been extended from January 31, 2018 to March 2, 2018. The deadline to file Forms 1094-B, 1094-C, 1095-B and 1095-C with the IRS remains unchanged and is February 28, 2018 for paper filings and April 2, 2018 for electronic filings.
These extensions are automatic and replace any extension requests that have been submitted. There will be no further extensions available. The IRS has continued the interim good faith compliance standard. Therefore, no penalties will be assessed for incomplete or inaccurate information on the forms filed provided the filer can show it completed the forms in good faith. This relief is only available if the forms were filed on time.
There has been a lot of chatter as of late about possible legislation and efforts on the Hill to provide relief to failing multiemployer pension plans. On Thursday, November 16th, House Democrats introduced a bill that would allow multiemployer pension plans to receive loans from Treasury.
While the language of the bill is not yet available, according to congress.gov, the bill is intended to create a Pension Rehabilitation Trust Fund and to establish a Pension Rehabilitation Administration (PRA) within the Department of the Treasury to make loans to multiemployer defined benefit plans, and for other purposes. The PRA would allow pension plans to take out loans at low interest rates, in order for the plans to remain solvent and continue providing full retirement benefits for current and future retirees. The money for the loans would come from the sale of Treasury-issued bonds to financial institutions. There will likely be some reporting requirements and other restrictions for plans that take out such loans, to ensure that the plans can pay back the taxpayers.
This bill is in the first stage of the legislative process. The bill is now assigned to three House committees for review and consideration. If approved, it will then be sent to the House or Senate as a whole. A bill must be passed by both the House and Senate in identical form and then be signed by the President to become law.
On June 16, 2017, the Department of Labor (DOL) issued FAQ 38 implementing the Affordable Care Act (ACA) as it relates to the Mental Health Parity Act and Addiction Equity Act (MHPAEA) and the 21st Century Cures Act (Cures Act). The DOL is requesting comments on a draft model form for participants to use when requesting information about nonquantitative treatment limitations as well as confirming that benefits for eating disorders must comply with the MHPAEA.
The MHPAEA requires that financial requirements such as coinsurance and copayments and treatment limitations such as visit or day limits for mental health and substance use disorder benefits are no more restrictive than those placed on medical and surgical benefits. The regulations also state that a non-quantitative treatment limitation must be comparable.
The Cures Act requires that benefits for eating disorders are consistent with the requirements of MHPAEA. The DOL in this FAQ clarifies that the MHPAEA applies to any benefits a plan may offer for treatment of an eating disorder. Plans should review their plan information to ensure compliance with these regulations and guidance.
All comments regarding disclosures and eating disorders must be submitted by September 13, 2017.
The U.S. Treasury Department has denied the application to suspend benefits under the Multiemployer Pension Reform Act of 2014 that was submitted by the Automotive Industries Pension Fund in September 2016. Treasury noted in its denial letter that assumptions regarding mortality, Joint and Survivor election percentage by married participants, and the probability of benefit commencement by terminated vested participants over the age of 70 were considered not reasonable.
The Automotive Industries Pension Fund is projected to become insolvent in 2030 without the suspensions. As of January 1, 2016, the Plan had an unfunded benefit liability of over $700 million, was 60.7% funded, and covered over 25,000 participants.
As of the date of this posting, Treasury has received applications for benefit suspensions from a total of 15 multiemployer pension plans since MPRA took effect. Five have been denied, one has been approved, three have been withdrawn, and six are pending.
Complying with qualified domestic relations orders (QDROs) can be complicated. This article covers the basics of QDRO administration and points out the common mistakes plans make.
Are Your QDRO Practices Costing Your Plan Money?
Jim McKeogh and Mandy Notaristefano published this article in the October 2016 issue of Benefits Magazine.
The U.S. House of Representatives passed HR 1628, the American Health Care Act (AHCA), by a vote of 217-213 on May 4, 2017. This bill is the first step in the Trump Administration’s process to repeal and replace the Affordable Care Act, also known as the ACA or Obamacare.
The AHCA, as written, eliminates the individual mandate to buy health insurance, changes subsidies from income-based to age-based, ends Medicaid expansion, lessens coverage requirements for insurance companies and eliminates taxes on high-earners. The AHCA retains coverage for those with pre-existing conditions, but allows insurers to charge higher premiums to such individuals.
The bill will now head to the Senate. The GOP has a much narrower majority in the Senate (52-48) than in the House (238-193) and many Senate Republicans have already stated that they will likely rewrite the legislation or start over completely.
The ACA established the Patient Centered Outcomes Research Institute (PCORI) to fund research that can help patients and those who care for them make better-informed decisions about the healthcare choices they face every day, guided by those who will use that information. The research is funded in part by health insurers and sponsors of self-insured plans through PCORI fees.
Generally, the PCORI fees apply to group health plans (including self-insured plans). The IRS chart found HERE describes which health plans are subject to the fee. Those health plans are required to report and pay fees annually using IRS form 720. Form 720 is due July 31, 2017 for plan years ending in 2016 along with payment in the following amount:
- $2.17 per covered life for plan years ending between January 1, 2016 and September 30, 2016
- $2.26 per covered life for plan years ending between October 1, 2016 and December 31, 2016
There are three methods for calculating the number of covered lives:
- Actual Count Method – Calculate the lives covered for each day of the plan year and divide by the number of days in the plan year.
- Snapshot Method – Add the lives covered on a date during the first, second, or third month in each quarter, or an equal number of dates for each quarter, and divide the total by the number of dates on which a count was used. There are two methods for counting family members: Count the actual lives covered on the designated date; or Count the participants on the designated date and multiply by 2.35.
- Form 5500 Method – Add the participants at beginning of year and end of year as reported on the Form 5500 for the plan year (this method may be used only if the Form 5500 is filed no later than the due date for the fee imposed for that plan year).
For more information, click HERE for a question and answer page provided by the IRS.