American Benefits Council
Benefits Byte


September 25, 2014

The Benefits Byte is the American Benefits Council’s regular e-mail and online newsletter for members only, providing timely reports on legislative, regulatory and judicial developments, along with updates on the Council’s activities in support of employer-sponsored benefit plans.

The Benefits Byte is published by the American Benefits Council, based on staff reports and edited by Jason Hammersla, Council director of communications. Contact information for Council staff related to specific topics can be found at the end of each story.

Click here to read past issues on the Benefits Byte Archive page.

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American Benefits Council IN THE NEWS: Media Coverage of A 2020 Vision

Following the September 23 release of the Council’s new strategic plan, A 2020 Vision: Flexibility and the Future of Employee Benefits, the Council’s media briefing was widely covered by news media.

The Council held a September 23 media briefing on A 2020 Vision, as part of the National Press Club’s Newsmakers series (as reported in the September 23 Benefits Byte), featuring Policy Board of Directors Chair Janet Boyd, director of government relations, tax and benefits for The Dow Chemical Company, and Board Member Michael Kiely, vice president of government affairs for the United Parcel Service, Inc.

The event was attended by reporters from the Wall Street Journal, Dallas Morning News and Kaiser Health News, among others. Coverage included articles from (subscriptions may be required):

For more information on the Council’s media outreach or the strategic plan, contact Jason Hammersla at (202) 289-6700.

CMS Issues New 'Quick Reference Guide' to Obtaining HPIDs under HIPAA

On September 24, the Department of Health and Human Services (HHS) and the Centers for Medicare and Medicaid Services (CMS) made available a quick reference guide for obtaining a health plan identifier (HPID). Health plans that are “controlling health plans” (a definition added by prior final regulationsimplementing the HPID requirements of HIPAA), with the exception of small health plans, are required to obtain an HPID by November 5, 2014. Such plans include employer sponsored self-insured health plans.

According to the Quick Guide, users that need to obtain a Controlling Health Plan (CMP) Health Plan Identifier (HPID) will go through the CMS Enterprise Portal, access the Health Insurance Oversight system (HIOS), and apply for an HPID from the Health Plan and Other Entity System (HPOES). Detailed steps are provided in the guide. CMS also announced, via it’s listserv subscriber service, that the HPOES has been updated with new functionality to allow multiple controlling health plans to register for an HPID using a single employer identification number (EIN). CMS directed users to consult the Health Plan ID User Manual as well as the Quick Guide on the CMS website for more information.

The new guide and updated functionality will provide some assistance to employers and service providers in light of ongoing uncertainty and questions as to whether or how to obtain an HPID. At a September 22, 2014, meeting of the National Committee on Vital and Health Statistics, Todd Lawson, acting director of the Office of E-Health Standards and Services (OESS) at CMS, provided an update on administrative simplification implementation. In response to committee member asking when CMS will issue HPID-related “frequently asked question” guidance, Lawson indicated that that the agency recognized it “was behind on this” and hoped to have guidance out “within the next couple of weeks.” The Council has strongly urged CMS to expedite any additional guidance so that it may be used by affected employers (and their service providers) in sufficient time to obtain HPIDs by the November 5 deadline.

Lawson also said that CMS was reviewing comments submitted on proposed regulations issued in January 2014 , that require insured and self-insured health plans to submit certain information and documentation certifying compliance with “standard transactions” under the Health Insurance Portability and Accountability Act (HIPAA). As we reported in an April 1 Benefits Byte story, the Council submitted comments on the proposed rules, expressing concerns that, under the proposed rule, all health plans that meet the definition of a CHP will be required to meet the certification requirements, regardless of whether they actually conduct any standard transactions. Self-insured group health plans typically utilize third parties to administer the plan, including carrying out any covered transactions. According to Lawson, a final regulation would not be issued before the end of 2014.

For more information, contact Kathryn Wilber, senior counsel, health policy, at (202) 289-6700.

PBGC Guidance Describes Premium Payment under Pension 'Smoothing' Provisions of Highway Act

The Pension Benefit Guaranty Corporation (PBGC) issued Technical Notice 2014-01 on September 24 explaining how the defined benefit pension funding stabilization provisions of the recently enacted Highway and Transportation Funding Act (HATFA) will affect payment of plan insurance premiums.

The funding stabilization (or “smoothing”) provisions in HATFA extended for five years the measures originally passed as part of the previous transportation bill, the Moving Ahead for Progress in the 21st Century (MAP-21) Act of 2012. The original MAP-21 provision stabilized interest rates for purposes of calculating defined benefit plan funding by constricting the segment rates used to determine funding status within a specified percentage of a 25-year average of prior segment rates, with the specified percentage starting at 10 percent and phasing out over four years. (See the August 1 Benefits Byte story for more details.)

First, Technical Update 14-1 confirmed that Technical Update 12-1 (implementing MAP-21) continues to apply with respect to the new legislation. Technical Update 12-1 provides clarifications with respect to the use of stabilized interest rates for purposes of variable rate premiums.

Second, under IRS Notice 2014-53, plans may decide whether to use MAP-21 or HATFA rates for 2013 funding determinations as late as December 31, 2014 (or, if later, the due date for the 2013 Form 5500). This results in unique timing issues related to the enactment of HATFA. Accordingly, Technical Release 2014-01 states that “PBGC will not require a plan that makes a 2014 premium filing using an asset value that includes 2013 contributions receivable discounted using MAP-21 effective interest rates and uses HATFA rates for 2013 funding purposes, to pay additional premium or late payment charges or amend its 2014 premium filing” under the following conditions:

  • The 2014 premium filing is due on or before December 31, 2014, and is timely made.
  • As of the 2014 premium due date, the plan has not filed a 2013 Schedule SB based on HATFA calculations.
  • The asset value reported in the 2014 premium filing included contributions made after the end of the 2013 plan year discounted using the effective interest rate that would have applied had HATFA not been enacted (i.e., based on the MAP?21 corridor).
  • The plan's contributions for the 2013 plan year made after the end of such plan year do not exceed $25 million.

The PBGC has also revisited its 2011 policy statementon amended filings and redesignations, ruling in Technical Update 2014-01 that “plans that redesignate 2013 contributions to 2014 in accordance with IRS Notice 2014-53 should amend their 2014 premium filings to exclude the discounted value of such redesignated contributions from the value of assets used to determine the 2014 [variable-rate premium]. In general, such a redesignation will affect premiums for both 2014 and 2015. If the redesignation is made after the 2014 premium filing, the 2014 filing should be amended to reflect the higher premium.”

For more information, contact Lynn Dudley, senior vice president, global retirement & compensation policy, or Jan Jacobson, senior counsel, retirement policy, at (202) 289-6700.

PBGC Issues ICR on Proposal to Require Reporting of De-Risking

On September 23, the Pension Benefits Guaranty Corporation (PBGC) formally requested comments on its intention to modify the premium filing procedures for 2015 to require companies making pension risk-transfer offers to their employees to report such offers to the PBGC.

The ICR announces the PBGC’s intention to propose revising the 2015 premium filing procedures and instructions to require “reporting of certain undertakings to cash out or annuitize benefits for a specified group of former employees,” commonly referred to as “de-risking.” The PBGC stated that this requirement is aimed to help the PBGC determine its future liabilities.

A growing number of companies have engaged in de-risking strategies, such as transferring all or a portion of their pension plan's assets and liabilities to an insurance company through an involuntary annuity buyout or directly to plan participants through a voluntary lump-sum distribution.

The Council testified on de-risking issues before the U.S. Department of Labor ERISA Advisory Council in June 2013, describing the key motivations behind de-risking activity. The testimony emphasized that the legislative and regulatory environment for pension plans has made sponsorship increasingly difficult over the past few decades by increasing cost, uncertainty and risk.

The PBGC also intends to revise the 2015 filing procedures and instructions to include changing certain premium declaration certification procedures and offering the option for a plan to provide a telephone number specifically for inclusion in PBGC’s Search Plan List on PBGC’s Web site, instead of the number provided for PBGC to contact the plan administrator. PBGC is also intending to update the premium rates.

For more information, contact Jan Jacobson, senior counsel, retirement policy, or Lynn Dudley, senior vice president, global retirement and compensation 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.

Notice: the information contained herein is general in nature. It is not, and should not be construed as, accounting, consulting, legal or tax advice or opinion provided by the American Benefits Council or any of its employees. As required by the IRS, we inform you that any information contained herein was not intended or written to be used or referred to, and cannot be used or referred to (i) for the purpose of avoiding penalties under the Internal Revenue Code, or (ii) in promoting, marketing or recommending to another party any transaction or matter addressed herein (and any attachment).