EBSA posts FAQ regarding Summary of Benefits and Coverage

The FAQs indicate that the Summary of Benefits and Coverage have been modified to include statements regarding minimum essential coverage and minimum value.  In addition new coverage examples have not been added and certain relief provisions extended.

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DOL video on 401(k) participant disclosures

The DOL has released a two minute video regarding fees which effectively illustrates the impact of fees on account balances.

GAO Study issued April 2012 - includes video illustrating revenue sharing

The General Accounting Office (GAO) released a study regarding 401(k) plans.  One of the recommendations is that DOL develop and implement more proactive approaches to plan sponsor educational outreach especially as it relates to plan fees. The study revealed that plan sponsors faced challenges in understanding the fees they paid and how participants are charged.

Included in the report is a link to a short video illustrating how revenue sharing arrangements can work.  The video is 5 minutes long and it shows how complicated this can be.

DOL issues final regulations on the Summary of Benefits and Coverage

The DOL issued final regulations on the Summary of Benefits and Coverage today.

We will prepare an ErisaALERT on this and other recent guidance shortly.

EBSA Issues final 408(b)(2)regulations

EBSA issued final 408(b)(2) regulations and postponed the effective date until July 1, 2012 (see ErisaALERT 2010-11 for a discussion of the proposed rules). The final regulation is effective for both new and existing contracts or arrangements. 

As a result of the extension, the deadline for participant disclosures (see ErisaALERT 2010-12) is extended to August 30, 2012. In addition, the first quarterly participant statement which must reflect fees and expenses deducted from the participant's account is due November 14, 2012 for the quarter ending September 30, 2012.

The EBSA website provides a list of the major changes.

IRS posts FAQ regarding deferred vested benefit statement

The IRS has a long standing requirement to provided a benefit statement to participants who terminated and were reported on the Schedule SSA attached to the Form 5500.  The Schedule SSA has been replaced by Form 8955-SSA which requires plan sponsors to indicate whether or not the statement was provided to the participant (question 8).  There has been a flurry of discussions regarding how plan sponsors should answer that question.  The new FAQ should provide some comfort to plan sponsors and is reproduced below.

What are the requirements for answering “yes” to question 8 on Form 8955-SSA? Question 8 on Form 8955-SSA asks whether the plan administrator provided an individual statement to each participant required to receive a statement. The instructions to the Form add that the plan administrator must, before the expiration of the time for the filing of the Form, furnish to each affected participant a statement setting forth the information required to be contained in the Form. May the plan administrator satisfy this requirement by using other notices such as benefit statements and distribution forms? Also, does this mean that the plan administrator must furnish a notice that includes all of the information on the Form 8955-SSA? A plan administrator may answer “yes” to question 8 if the required information was timely furnished to participants in other documentation such as benefit statements or distribution forms. A separate statement designed specifically to satisfy this requirement is not required.  A plan administrator may answer “yes” to Question 8 if the statements or other documentation issued to the participants include the following information: Name of the plan Name and address of the plan administrator Name of the participant Nature, amount, and form of the deferred vested benefit to which such participant is entitled. Thus, for purposes of completing Form 8955-SSA, the plan administrator’s notice to the plan participant does not need to include the participant’s social security number, the codes on page 2 of the Form 8955-SSA used to identify previously reported participants, or any information regarding any benefits which are forfeitable if the participant dies before a certain date.

EBSA Reissues Interim Policy on Electronic Delivery of Required Disclosures

On December 8, 2011 EBSA released Technical Release 2011-03R as well as a News Release. Technical Release 2011-03R is identical to Technical Release 2011-03 except to clarify that:

• continuous access websites are permissible if the plan administrator complies with the conditions in the technical release; and
• Investment-related information under DOL regulation 2550.404a-5(d) of the participant-level fee disclosure regulation may be furnished as part of, or along with, a pension benefit statement, either electronically under the conditions in the technical release or in paper form.

To read more, download our latest ErisaALERT.

EBSA posts new FAQs - Summary of Benefits and Coverage effective date posptoned

The first question will be of special interest to many. Click here for the FAQs

Summary of Benefits and Coverage

Q1: On August 22, 2011, the Departments issued proposed regulations and proposed templates in connection with implementation of the Summary of Benefits and Coverage and Uniform Glossary requirements of PHS Act § 2715. An applicability date “beginning March 23, 2012” was proposed. At the same time, the Departments invited comments generally, as well as on a range of discrete issues, including the timing of the application of the SBC requirement.

My plan anticipates that preparation of the summary of benefits and coverage will take several months and require significant resources. In light of the March 23, 2012 proposed applicability date, we are considering moving forward with implementation of the Summary of Benefits and Coverage requirements, using the proposed rules and templates, but are concerned that the final rules and templates will differ from the proposed rules and templates, which would prompt additional implementation costs. What is the timeline for the issuance of future guidance on the summary of benefits and coverage? What actions should my plan be taking now, if any?

The Departments received many comments on the proposed regulations and templates and intend to issue, as soon as possible, final regulations that take into account these comments and other stakeholder feedback.

PHS Act section 2715 provides that group health plans and health insurance issuers shall provide the Summary of Benefits and Coverage and Uniform Glossary pursuant to standards developed by the Departments. Accordingly, until final regulations are issued and applicable, plans and issuers are not required to comply with PHS Act section 2715.

It is anticipated that the Departments’ final regulations, once issued, will include an applicability date that gives group health plans and health insurance issuers sufficient time to comply.

Revisiting W-2 Reporting of the Cost of Health Care Coverage

On October 31^st, the IRS conducted an informative webinar which should be available shortly on their website.  In addition, the IRS has a Questions and Answers page on their website. 

Here are some highlights:

Who must report the aggregate cost of employer sponsored health plan coverage?

Generally, employers who issue 250 or more W-2s in 2011. The IRS noted that the current guidance (Notice 2011-28) is interim guidance.  Any changes will be prospective and only upon issuance of further IRS guidance providing at least 6 months advance notice.

Are both employee and employer contributions reported?

Yes, the amount reported includes both employee and employer contributions even if employee contributions are pre-tax.  There is a special rule for health care FSAs.

Where is the cost information reported?

The cost is reported in Box 12 of the W-2 with code DD but is not reported on the W-3.

To read more refer to our ErisaALERT 2011-14  and ErisaALERT 2011-5