May 5, 2004
In this issue:
- Senate Defeats Trade Bill Amendment with Changes to Health Care Tax Credit
- House Subcommittee Hears Testimony on FASB Stock Options Expensing Proposal
- Council EFAST Comment Letter Asks DOL to Encourage Electronic Filing
Senate Defeats Trade Bill Amendment with Changes to Health Care Tax Credit
On May 4, proponents of an amendment to the Jumpstart our Business Strength (JOBS) Act (S. 1637) which would have expanded the health care tax credit program under Trade Adjustment Assistance (TAA) law failed to obtain the 60 votes needed to approve a procedural motion that would have permitted a direct vote on the amendment. The TAA tax credit amendment, sponsored by Senators Ron Wyden (D-OR) and Norm Coleman (R-MN), would have:
- Changed the 63-day rule for creditable coverage to exclude the period between job termination and TAA eligibility notification;
- Provided three months of creditable coverage to all Pension Benefit Guaranty Corporation beneficiaries; and
- Given authority to the Office of Personnel Management to establish a qualified group health plan for a state under certain circumstances.
Senate Finance Committee Chairman Charles Grassley (R-IA) spoke out against the amendment, arguing that the TAA health care tax credit is a "young" program, so changes would be premature, given that the amendment proposes a massive expansion.
The Senate is expected to consider additional health-related amendments to S. 1637, including an amendment by Senator Hillary Rodham Clinton (D-NY) establishing increased privacy protections on personal information. We will keep you informed as further measures are considered. For more information, contact Maria Ghazal, Council director, health policy, at (202) 289-6700.
House Subcommittee Hears Testimony on FASB Stock Options Expensing Proposal
On May 4, the House Financial Services Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises held a hearing on the Financial Accounting Standards Board's (FASB's) recent stock option expensing proposal. At the request of Subcommittee Democrats, the panel heard detailed testimony on the proposal from FASB Chairman Robert Herz and FASB Small Business Advisory Committee Chairman George Batavick.
Similar to the April 28 hearing before the Senate Small Business and Entrepreneurship Committee (See the April 29 Benefits Byte), Herz described the process leading up to release of the stock option expensing exposure draft and Batavick outlined the small business provisions contained in the proposal. In response to questions posed by the subcommittee, Herz assured the panel that FASB remains open to suggestions and urged interested parties to submit comments and meet with FASB members.
The proposal met with mixed reaction from the congressmen in attendance. Representative Brad Sherman (D-CA) suggested that the expensing proposal is flawed because it offers a choice of valuation methods but does not provide enough information about how to choose which method is the most appropriate. By contrast, Representative Ruben Hinojosa (D-TX) expressed his concern about the impact of the FASB proposal on small businesses. Representative Barney Frank (D-MA), who has introduced the Executive Stock Option Profit Recapture Act (H.R. 4208) to curb stock option cash-outs, discussed his efforts to reconcile his belief that Congress should not interfere with FASB and his concern that the FASB proposal will harm the high-tech industry. He asked the FASB officials to provide more information in following the hearing.
Subcommittee Chairman Richard Baker (R-LA) and Ranking Minority Member Paul Kanjorski (D-PA) were not present for the hearing, though Kanjorski submitted a statement for the record urging Congress to allow the FASB proposal to go forward without interference. There was no indication about further action by the Subcommittee on this issue. For more information, contact Jan Jacobson, Council director, retirement policy, at (202) 289-6700.
Council EFAST Comment Letter Asks DOL to Encourage Electronic Filing
On May 5 the Council responded to the Department of Labor's (DOL) request for comments concerning its ERISA Filing Acceptance System (EFAST). The DOL is considering enhancements to the automated document processing system that uses computer-scanable forms and electronic filing technologies to process Form 5500 Annual Return/Report of Employee Benefit Plan and Form 5500-EZ Annual Return of One-Participant Retirement Plan (Form 5500 series).
The Council's comment letter outlined concerns that some of the DOL's simplification proposals and technological upgrades intended to discourage paper filings will unduly complicate the filing process and result in wide-spread incomplete and late submissions. The Council believes it would be more effective for the DOL to take steps to encourage electronic filing rather than discourage paper filings. The comment letter noted that currently, the biggest hurdles to electronic filing are the signature requirements and the need for paper attachments. By solving these two problems, most plans would willingly switch to electronic submission. Paper filing options may need to continue, however, to be available to smaller plan sponsors that do not have the same technological resources as their larger counterparts. The letter also discusses ways in which the DOL could encourage electronic filing of the Form 5500 series, makes suggestions for more efficient use of electronic signatures and attachments, and outlines concerns that DOL proposals designed to discourage paper filings may be counterproductive.
For more information, contact Jan Jacobson, Council director, retirement policy, at (202) 289-6700.
The American Benefits Council is the national trade association for companies concerned about federal legislation and regulations affecting all aspects of the employee benefits system. The Council's members represent the entire spectrum of the private employee benefits community and either sponsor directly or administer retirement and health plans covering more than 100 million Americans.