December 16, 2004
In this issue:
- EBSA Releases Rule to Extend Sunset Date for Mental Health Parity Law
- ERISA Advisory Council Submits Report on Fees to DOL
EBSA Releases Rule to Extend Sunset Date for Mental Health Parity Law
The Employee Benefits Security Administration (EBSA) of the Department of Labor (DOL) has released an interim final amendment to modify the sunset date of interim final regulations under the Mental Health Parity Act (MHPA) to comply with action taken by Congress to extend the current law for an additional year. The current law now sunsets (expires) on December 31, 2005.
The current law mandates parity in annual and lifetime dollar limits between medical and surgical benefits covered by a health plan and any mental health benefits covered by the same plan. In the last Congress Senators Pete Domenici (R-NM) and Edward Kennedy (D-MA) sponsored the Mental Health Equitable Treatment Act, which would significantly expand current law requirements, but were also reportedly working on a compromise that would eliminate the requirement in their bill that all mental health diagnoses in the "DSM-IV" (the compendium of mental health disorders) be included in the parity requirement. The compromise would reportedly also permit some limits on mental health benefits if the health plan includes these limits on "substantially all" medical and surgical benefits, a term which is undefined.
The Council expects mental health parity legislation to be reintroduced in the 109th Congress and will continue to raise concerns with policymakers about any expansion of current law. The Council will recommend instead that the current federal mental health parity standards be extended. For more information, contact Maria Ghazal, Council director, health policy, at (202) 289-6700.
ERISA Advisory Council Submits Report on Fees to DOL
The Advisory Council on Employee Welfare and Pension Benefit Plans, created by the Employee Retirement Income Security Act (ERISA) to provide advice to the U.S. Department of Labor (DOL), recently submitted to DOL a report by its working group on fee and related disclosures to participants.
The report essentially summarizes the testimony provided during hearings on August 5 and September 21, including the statement of Louis Campagna, chief of the Division of Fiduciary Interpretations of DOL's Office of Regulations and Interpretations. The report also provides a number of recommendations, including:
- The profile (summary) prospectus of each investment option should be delivered to each employee upon eligibility to participate. Providing this information prior to the initial investment decision should eliminate the need to automatically provide a full prospectus or other information concerning the particular investment options elected immediately after the investment options are elected.
- Along with the prospectus, participants should be given materials (like a glossary) that explain the meaning of the terms used in the profile prospectus (or similar document). Account and investment recordkeepers should also be encouraged though not necessarily required to develop Internet Web sites and other Web-based tools where participants can research information about plan investment options and review information about their own investment choices.
- The annual statement must provide the expenses of each investment option expressed as a ratio along with other information provided about the investment options. There must also be an identification of the investment expenses that are paid entirely or in part by the plan sponsor. This requirement should have a delayed effective date as applied to small and medium sized plans, based on the number of participants, allowing service providers time to design necessary systems to provide the contemplated disclosures in a cost effective manner.
- The DOL should provide a sample model disclosure format that is available on its Web site.
Should the DOL choose to integrate these recommendations in its official guidance, the Council will keep you informed. 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.