Spencer’s Benefits NetNews – November 17, 2017


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Featured This Week


New Reports




November 17, 2017


A brief break at Spencer’s Benefits Reports

Spencer’s Benefits Reports is taking a brief break. Spencer’s news and reports will not be issued November 20 through 24. Publication will resume on November 27, 2017. Happy Thanksgiving to all of our subscribers…..

        (Read Intelliconnect) »

Free health insurance for former employee relieved employer of liability for COBRA violation

Despite the fact that a software company failed to notify an employee of his COBRA benefits immediately following his termination, it was not liable for statutory penalties because he suffered no prejudice as a result of the COBRA violation, a U.S. District Court for the Southern District of Florida has ruled. After the employee was terminated, the company provided him and his family with free health insurance for a 10-month period. The court agreed with the employer that its provision of the free insurance placed the employee in a better position than he would have been in if there had been no COBRA violation….

        (Read Intelliconnect) »

Federal interest rates announced for pensions

The following interest rates have been announced for use in the operation and administration of qualified pension plans….

        (Read Intelliconnect) »

Insider knowledge did not obligate fiduciaries to disclose fraud artificially maintaining value of company stock

The failure of plan fiduciaries to disclose inside knowledge of a company’s unethical sales practices before the revelation adversely affected the value of the company’s stock did not breach the applicable duty of prudence, according to a federal trial court in Minnesota. Applying the governing Dudenhoeffer standard, the court ruled that the plan participants failed to establish that the fiduciaries could not have concluded that a later disclosure of the information would result in a reduced loss to the plan….

        (Read Intelliconnect) »

November 16, 2017


Employers that sponsor DCAPs need to keep a close eye on tax reform debate

The House and Senate have both released proposed tax reform bills. Employers that sponsor dependent care assistance programs (DCAPs) need to keep a close eye on this debate, according to speakers at the recent Plan Sponsor Compliance Audiocast from law firm Drinker Biddle….

        (Read Intelliconnect) »

PBGC issues December 2017 interest rates for valuing terminating pension plans

For single-employer pension plans terminating October through December 2017, and for multiemployer plans involved in a mass withdrawal, the interest rate established by the PBGC for calculating immediate annuities is 2.34 percent, down from the 2.44 percent rate that applied in July through September 2017. The interest rate for calculating immediate lump sums in December 2017 is .75 percent, the same rate that applied in November 2017….

        (Read Intelliconnect) »

Claims to lifetime retiree health insurance benefits ended with expiration of CBA

The Sixth Circuit affirmed a district court’s dismissal of a suit by retirees of Honeywell claiming the employer promised, in a collective bargaining agreement, to pay lifetime health insurance. The appeals court found that the general-durational clause in the CBA applied to the employer’s promise to provide health care. Specifically, the language of the CBA unambiguously promised health care benefits until October 31, 2011—the “duration” of the agreement. None of the retirees’ evidence showed that the duration of the agreement contained a patent ambiguity that clearly appeared on the face of a document arising from the language itself….

        (Read Intelliconnect) »

November 15, 2017


MEWA has $26M in unpaid claims, so DOL issues first Sec. 521 cease and desist order, court grants TRO

In a first-of-its-kind move, the Department of Labor has used its authority under Section 521 of ERISA to issue ex parte cease and desist orders to prevent further marketing of a plan for which the defendants have failed to pay out more than $26 million for participants’ health benefit claims in the AEU Holdings LLC Employee Benefit Plan, a Multiple Employer Welfare Arrangement (MEWA). The DOL has also obtained a temporary restraining order from a federal court in Chicago against AEU Holdings LLC and AEU Benefits LLC (collectively, AEU), and Black Wolf Consulting Inc., the plan’s fiduciaries….

        (Read Intelliconnect) »

Small employers worried about growing complexity of regulations

The majority of small employers are troubled by the growing complexity of federal, state, and local regulations, according a survey of 300 small businesses (those with five to 100 employees) by ComplyRight. The survey found that nearly 74 percent of small businesses feel that federal, state, and local laws are becoming increasingly complex. This complexity creates uncertainty: nearly half of small businesses lack full confidence in their knowledge of the laws affecting their businesses….

        (Read Intelliconnect) »

Damages award partially upheld for ERISA class action involving reciprocal contributions

Union “travelers” whose home pension funds participated in reciprocity contributions were entitled to damages for amounts wrongfully withheld by an underfunded multiemployer pension plan that used the amounts to improve the plan’s funding status, according to the Ninth Circuit U.S. Court of Appeals. However, the court vacated the district court’s damages award for withholdings under another plan amendment because the plan’s trustees did not have notice those withholdings were at issue….

        (Read Intelliconnect) »

November 14, 2017


New York City expands paid sick leave law to cover certain crime victims

On November 6, New York City Mayor Bill de Blasio signed legislation that expands current paid leave protections to domestic violence, sexual assault, stalking, and trafficking survivors. Approved by the City Council on October 17, Int. 1313-A expands the Earned Sick Time Act to permit victims of family offense matters, such as disorderly conduct and harassment, sexual offenses (such as sexual misconduct, forcible touching and sexual abuse), stalking, and human trafficking to use earned “safe” hours in connection with that abuse. It also changes the name of the Act to the “Earned Sick and Safe Time Act….”

        (Read Intelliconnect) »

Revisiting reform to prepare for what’s next

The essential barrier to consensus on health care reform stems from the differing ways that conservatives and progressives view health insurance markets. On November 6, 20017, at the American Health Lawyers Association (AHLA) Fundamentals of Health Law conference—during a seminar titled “Health Reform: Will We Ever Find Consensus?”—Peter Leibold, Chief Advocacy Officer at Ascension Health, Inc., noted that conservatives tend to view health insurance from an individualistic perspective, while progressives are inclined to understand insurance markets through a collectivistic model. Using this perspective as a backdrop, Leibold explored the history of reform and subsequent efforts to revise the Patient Protection and Affordable Care Act (ACA)….

        (Read Intelliconnect) »

PBGC increases maximum monthly benefit guarantee for 2018

The Pension Benefit Guaranty Corporation (PBGC) has announced that the maximum monthly insurance benefit for participants in underfunded pension plans terminating in 2018 is $5,420.45 per month or $65,045 per year for those who retire at age 65. On its website, the PBGC has provided a chart that shows the 2018 monthly maximum benefit guarantees for retirees from age 75 to 45….

        (Read Intelliconnect) »

November 13, 2017


IRS issues sample shared employer responsibility payment letter

The IRS has issued a sample of Letter 226J, which an applicable large employer (ALE) is likely to receive if the IRS determines that, for at least one month in the year, one or more of the ALE’s full-time employees was enrolled in a qualified health plan for which a premium tax credit was allowed. Letter 226J describes the general procedures the IRS will use to propose and assess the employer shared responsibility payment (ESRP)….

        (Read Intelliconnect) »

Prohibition on loans from 403(b) plan participant’s account to church-related employer applies to indirect loans

The rule prohibiting loans from a Code Sec. 403(b)(9) retirement account of a participant to the participant’s employer, a church-related organization, under the exclusive benefit requirement of IRS Reg. Sec. 1.403(b)-9(2)(i)(C), applies not only to loans made directly to the employer, but also to indirect loans made to the employer, according to an IRS Chief Counsel advice memorandum….

        (Read Intelliconnect) »