Every Little Thing … Considerations Before Adding Crypto to a 401(k) Plan

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by Alex Smith

Fidelity Investments recently announced that it will offer its 401(k) plan clients the opportunity to offer bitcoin as a 401(k) plan investment option later this year.  While this may sound intriguing to some plan fiduciaries and participants, plan fiduciaries should proceed with extreme caution.

Based on the Department of Labor’s (DOL) public pronouncements, it appears the DOL has serious doubts about whether 401(k) plan fiduciaries who include cryptocurrency among their 401(k) plan’s investment options comply with their ERISA fiduciary duties.  In March, the DOL issued Compliance Assistance Release No. 2022-01, in which it expressed “serious concerns” about the prudence of 401(k) plan fiduciaries including cryptocurrency as a 401(k) plan investment option and announced it plans to conduct an investigative program related to cryptocurrency investments by 401(k) plans.  For more information on Compliance Assistance Release No. 2022-01, please see our prior blog post Can’t Touch This … DOL Discourages Plans From Investing in Cryptocurrency.  Following Fidelity’s announcement, a DOL official expressed “grave concerns” about the offering and indicated that the DOL intends to meet with Fidelity to discuss its concerns in comments to the Wall Street Journal. Read more

How Much is that (Investment) in the Window…A Higher Level of Fiduciary Oversight Could be Required for 401(k) Plan Brokerage Windows

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by Brenda Berg

Fiduciaries of 401(k) plans and other retirement plans know that they must prudently monitor the investment options available to participants in the plan, but are they monitoring participants’ investments made through a plan’s brokerage window? Recent commentary from the Department of Labor (DOL) on cryptocurrency investments suggests maybe fiduciaries should be – and that the DOL may check in on that soon.[i]

A “brokerage window” or “self-directed brokerage account” can allow participants access to a broad array of investments beyond the regular investment menu under the plan. Most plan fiduciaries have not paid much attention to the actual brokerage window investments. This is not surprising given the DOL’s relative lack of focus on the matter. The DOL had issued guidance in 2012 that the investment disclosure portion of the fee disclosure rules could apply to brokerage window investments in certain cases but after pushback due to the administrative burdens, the DOL withdrew that guidance. In 2014 the DOL issued a Request for Information about brokerage window practices but no further guidance was issued. Read more

What Happens in a Small Town Stays in a Small Town … Until the DOL Doubles Down on Mental Health Parity Compliance

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by Alex Smith

The Department of Labor (DOL), the Department of Health and Human Services (HHS), and the Department of Treasury (collectively, the Departments) recently issued their joint report to Congress regarding their Mental Health Parity and Addiction Equity Act (MHPAEA) enforcement activities as required under the MHPAEA and the Consolidated Appropriations Act, 2021 (CAA). The report contained insights regarding the DOL’s enforcement of the new MHPAEA reporting and disclosure requirements related to non-quantitative treatment limitations (NQTLs) established by the CAA. For additional information about the CAA’s new MHPAEA reporting and disclosure requirements, please see our previous blog post (as well as earlier blog posts). Read more

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

Doctor, Doctor . . . Health Plan Litigation Update

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By Kevin Selzer

For individuals who work with employer-sponsored benefit plans, the past 18 months has been packed with new developments from federal and state legislatures as well as executive branch initiatives and regulatory guidance. Today’s post covers two cases from the judiciary impacting employer-sponsored health plans.

SCOTUS and the ACA. Yesterday, the U.S. Supreme Court rejected challenges to the Affordable Care Act (ACA) in Texas v. California.  Specifically, the Supreme Court found that the plaintiffs do not have legal standing to challenge the individual mandate because they could not show that the $0.00 individual mandate penalty has or would cause an injury to the plaintiffs.

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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

But I Said No, No, No . . . New Requirement for Mental Health and Substance Abuse Benefits

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By Kevin Selzer

Employee benefit plans are subject to numerous laws that restrict, or at least limit, discrimination within the plans.  Many benefit plan nondiscrimination rules focus on whether highly and non-highly compensated employees are receiving equal treatment under those plans; however, the recently enacted Consolidated Appropriations Act, 2021 (CAA) is bringing some attention to an often-overlooked discrimination rule that prohibits group health plans from discriminating with respect to mental health and substance use disorder benefits (MH/SUD benefits). Read more

US District Court Pushes Back on DOL’s ERISA Plan Ruling Finding It Arbitrary and Capricious

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by Bret Busacker

As with many of the issues at stake in the upcoming Presidential election, the future of how Americans will obtain healthcare is a core issue this November. The Trump administration previously outlined its view that healthcare could be provided through Association Health Plans that consist of loosely related employer groups, including self-employed individuals. This Association Health Plan rule was then struck down by the Second Circuit Court of Appeals, which concluded the Rule was too aggressive; and exceeded the scope of the Employee Retirement Income Security Act (ERISA).

A recent US District Court case in Texas throws new fuel on the debate fire of whether healthcare coverage may be offered through ever-more expansive and creative employer sponsored arrangements; or whether ERISA should be interpreted to limit employer coverage to more traditional employer-employee structures.

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