The Tide is High…Keep Holding On For More Retirement Plan Fee Litigation

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by Brenda Berg

The U.S. Supreme Court’s ruling this week in Hughes v. Northwestern University will do nothing to stem the rising tide of retirement plan fee litigation. But the ruling doesn’t mean fiduciary breach claims are more likely to be successful either. Instead, the Court kept its ruling very narrow: a broad investment menu with some prudent funds will not automatically mean the fiduciaries are off the hook for offering imprudent funds.

 

The plaintiffs in Hughes were participants in two 403(b) retirement plans sponsored by Northwestern University. The participants brought claims for breach of fiduciary duty against the University, the retirement plan committee, and the individuals who administered the plans. The participants alleged the fiduciaries breached their duty of prudence by: (1) allowing recordkeeping fees that were too high; (2) allowing plan investments with excessive investment fees; and (3) providing participants too many investment options (over 400!) which resulted in participant confusion and poor investment decisions. Read more

I Feel Good… I Knew That I Would… Wellness Program Reminders

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by Alex Smith

With employers considering the imposition of health plan premium surcharges on participants who are COVID unvaccinated, a recent court decision highlights the importance of complying with the HIPAA wellness program requirements.

A federal district court in Ohio recently rejected a portion of Macy’s motion to dismiss the Department of Labor’s (DOL’s) enforcement action with respect to the tobacco surcharges on health plan premiums Macy’s imposed as part of its wellness program.  In its enforcement action, the DOL focused on the lack of a reasonable alternative standard for some of the years covered by the enforcement action and the lack of retroactively refunding the surcharge to participants who earned the right to avoid the surcharge later in the plan year for certain years in which a reasonable alternative standard was made available. As background, health contingent wellness programs are required to provide a reasonable alternative standard for earning the incentive (avoiding the surcharge) under HIPAA. Read more

Here Comes the Sun: The DOL Intends to Shine the Light on Mental Health Parity

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by Bret F. Busacker

We previously blogged about the new Mental Health Parity and Addiction Equity Act (MHPAEA) reporting and disclosure requirements established by the Consolidated Appropriation Act, 2021 (CAA).

As a refresher, employers and carriers that sponsor group health plans are now required to provide upon request a full analysis of the process followed by the plan in establishing non-quantitative treatment limitations (NQTLs) for the plan and the impact these NQTL’s have on mental health and substance use disorder (MH/SUD) benefits provided by the plan.  This disclosure requirement went into effect on February 10, 2021.

The DOL has recently signaled its intent to focus on MHPAEA issues in filing suit against United Healthcare Insurance Company (“UHIC”) and United Behavioral Health (“UBH”).   Read more

Once in a Lifetime – Make that a Year – for Lifetime Income Illustrations of 401(k) Plan Benefits

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by Brenda Berg

Plan sponsors of defined contribution plans such as 401(k) plans will soon have to provide participants with illustrations of just how much a participant’s account balance might produce on a monthly basis if converted to a single life annuity and, for married participants, a qualified joint and survivor annuity. Many plan sponsors already provide some sort of income illustration on their quarterly benefit statements to help participants with their retirement planning.

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I Just Called to Say…I Have a Benefit Claim

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by Lyn Domenick

ERISA provides that when an individual makes a claim for benefits under an employer’s plan, they are entitled to copies of all documents, records, and other information relevant to the claimant’s claim for benefits. The Department of Labor (DOL) recently issued an information letter that concludes that an audio recording of a telephone conversation (in this case, between the claimant and a representative of the plan’s insurer) must be among the materials provided to a claimant upon request. The DOL letter was provided in response to a request from a representative of a claimant who was denied an audio recording because the plan administrator considered it to be made only for quality assurance purposes, and not “created, maintained or relied upon for claim administration purposes.” Read more

Are You Ready to Provide Your MHPAEA Disclosure?

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DOL and HHS FAQs Provide Important Insights

by Bret F. Busacker

We previously blogged about the new Mental Health Parity and Addiction Equity Act (MHPAEA) reporting and disclosure requirements established by the Consolidated Appropriation Act, 2021 (CAA). As a refresher, employers and carriers that sponsor group health plans are now required to provide upon request a full analysis of the process followed by the plan in establishing non-quantitative treatment limitations (NQTLs) for the plan and the impact these NQTL’s have on mental health and substance use disorder (MH/SUD) benefits provided by the plan. This disclosure requirement went into effect on February 10, 2021. Read more

In the Darkness at the Edge of Town…Cybersecurity Guidance for Plan Participants, Record-Keepers, and Plan Sponsors From The EBSA

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by John Ludlum

On April 14, 2021, the Employee Benefits Security Administration (“EBSA”) published guidance for plan sponsors, plan fiduciaries, record-keepers, and plan participants on best practices for maintaining cybersecurity. This is the first time that the EBSA has given cybersecurity guidance to the estimated 34 million defined benefit plan and the 106 million defined contribution plan participants with an estimated $9.3 trillion in assets. Read more

If I Could Turn Back Time… And Then Add a Year

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by Leslie Thomson and Brenda Berg

Last October, Brenda Berg posted a blog titled “I’m Just Waiting on an… End to the Extended ERISA Deadline Periods.” In that blog, Brenda explained that the IRS and DOL extended certain deadlines applicable to retirement plans and health and welfare plans.

In sum, under last year’s DOL guidance, employers were required to disregard the period from March 1, 2020 until 60 days after the president declared the COVID Pandemic National Emergency over (the “Outbreak Period”) in calculating employee notices and election deadlines for deadlines including the following:

  • The 30-day period (or 60-day period, if applicable) to request special enrollment under ERISA
  • The 60-day election period for COBRA continuation coverage
  • The date for making COBRA premium payments
  • The date for individuals to notify the plan of a qualifying event or determination of disability under COBRA
  • The date within which individuals may file a benefit claim under the plan’s claims procedures
  • The date within which claimants may file an appeal of an adverse benefit determination under the plan’s claims procedure
  • The date within which claimants may file a request for an external review after receipt of an adverse benefit determination or final internal adverse benefit determination
  • The date within which a claimant may file information to perfect a request for external review upon a finding that the request was not complete
  • With respect to group health plans, and their sponsors and administrators, the date for providing a COBRA election notice

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Staring at the Stars Above, Wonder What [Fiduciary Duties] Are We Made Of – Cybersecurity for Retirement Plans

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by John Ludlum

Noting that there has been an increase in computer crime in connection with the economic disruption caused by COVID-19, companies should remember that retirement plan accounts are attractive targets for cyber thieves because of the often larger account balances relative to ordinary financial accounts, the infrequency of checking on accounts by many of their owners, and the potential for some account owners to rely on the plan sponsor and record-keeper to provide security.

ERISA fiduciaries generally are subject to the prudent expert standard of care, and they owe a duty of loyalty to the plan participants. A prudent expert acts with the care, skill, and diligence that the circumstances call for a person of like character and like aims to use.

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That’s Life . . . New Defined Contribution Plan Disclosures

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By Kevin Selzer 

What’s in a number?  Retirement plan participants may soon better understand how account balances translate to retirement readiness.  The SECURE Act enacted last December requires defined contribution plans to show participants the value of their account balances if converted into a monthly lifetime stream of income.  The disclosures are aimed at reminding participants that retirement plan balances are meant to last for life – and busting the “wealth illusion” that single sum account balances present.  

The details on the disclosures are starting to take form following an interim final rule recently released by the Department of Labor (“DOL”).  Under the interim final rule, plans must provide participants with two lifetime income illustrations: the value of the benefit converted to (1) a single life annuity, and (2) a qualified joint and 100% survivor annuity (assuming the participant is married with a spouse of equal age). The DOL clarified in the final rule that the projections will be based on the participant’s current account balance (rather than a future projected value) and will show what that balance would buy purchasing an annuity at age 67 (or the participant’s actual age, if older).

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