American Benefits Council
Benefits Byte


October 13, 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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Council Announces "Pomeroy Perspectives" Series

The Council is pleased to introduce the first edition of a new series of interviews and essays led by former U.S. Congressman Earl Pomeroy (D-ND), now a member of the Council’s Policy Board of Directors and senior counsel at Alston & Bird LLP. As a Member of Congress, Earl Pomeroy served for several years on the U.S. House of Representatives Ways & Means Committee – the chief tax-writing committee with jurisdiction over retirement and health policy. Prior to serving in Congress, Earl was the state insurance commissioner for North Dakota. In his current capacity he works with clients on a range of issues related to employee benefits, financial services, energy and agriculture.

The Council has invited Earl to draw upon his extensive public sector and private sector expertise on public policy developments in a series we are calling Pomeroy Perspectives. This will include occasional essays by Earl as well as interviews he will conduct on policy trends, challenges and opportunities with leading thinkers and public policymakers.

This first edition of Pomeroy Perspectives is A Legacy of Pensions: An Interview with Josh Gotbaum. Pomeroy interviewed Gotbaum, former director of the Pension Benefit Guaranty Corporation (PBGC), in September shortly after Gotbaum completed his tenure as the longest serving director in the agency’s history. They covered a variety of topics, including risk allocation within retirement plans, the challenges facing multiemployer plans and PBGC premiums, among others.

For more information on this series or suggestions for future subjects, contact Jason Hammersla, senior director, communications, at (202) 289-6700.


Council Voices Support for Legislation Clarifying Defined Benefit Plan 'Shutdown' Procedures

On October 10, the Council sent letters to key members of the U.S. House of Representatives and the U.S. Senate  in support of S. 2511, a measure to clarify the definition of “substantial cessation of operations” of a defined benefit pension plan sponsor under ERISA Section 4062(e).

As we reported in the September 17 Benefits Byte, the Senate passed S. 2511 by unanimous consent on September 16 and the measure was previously approved by the Senate Health, Education, Labor and Pensions (HELP) Committee on July 23 (as we reported in the July 23 Benefits Byte). The measure is now under consideration in the House of Representatives. The Council is urging the House to act on the measure before the end of the year.

Under current law, if an employer with a pension plan shuts down operations at a facility – and, as a result of that shutdown, more than 20 percent of the workers who were plan participants are separated from employment – the employer is required to provide the Pension Benefit Guaranty Corporation (PBGC) with short-term financial guarantees in the form of a bond or escrow amount based on the plan's unfunded termination liability. In the past few years, PBGC has enforced this provision in a manner that goes beyond the original Congressional intent. This has given rise to significant compliance challenges and large unexpected liabilities for many companies that engage in normal business transactions (such as the sale of a very small business unit or the consolidation of small operations at different facilities).

S. 2511 will:

  • Ensure that there is no 4062(e) event unless there is a substantial shutdown of operations at a facility relative to the size of the entire employer.
  • Ensure (subject to certain exceptions) that there is no 4062(e) event unless employees lose their jobs, as opposed to going to work for another employer.
  • Significantly reduce the scope of an employer’s liability if there is a 4062(e) event.

The legislation will apply to most prior transactions as well as all future transactions (it does not apply to prior transactions where an agreement has been entered into with the PBGC). It is intended to return enforcement to its original purpose, which is to provide a tool for PBGC when a true cessation of operation is signaling a spiraling down of the company’s financial condition.

The Council worked closely with the sponsors of S. 2511, Senate HELP Committee Chairman Tom Harkin (D-IA) and ranking Republican member Lamar Alexander (R-TN), during the drafting and refinement of the measure. The first letter is to Senators Harkin and Alexander, commending their bipartisan leadership with respect to the Senate’s passage of the measure and outlining the value of the legislation to plan sponsors.

The second letter is to House Committee on Education and the Workforce Chairman John Kline (R-MN) and ranking Democratic member George Miller (D-CA) and House Committee on Ways and Means Chairman Dave Camp (R-MI) and ranking Democratic member Sander Levin (D-MI). The letter expresses the urgent need to return Section 4062(e) to its original purpose and the Council’s strong support of S. 2511.

The Council has been extremely concerned that PBGC's enforcement represents a misinterpretation of ERISA and Council staff have met numerous times with PBGC officials on the matter and submitted comments, including a recent letter to the PBGC Board of Directors.

A summary memorandum, prepared by Davis & Harman LLP, is available on the Council website, providing a more detailed description of the issue and the key provisions of S. 2511 as introduced. The Council hosted a Benefits Briefing webinar on April 24 to discuss the current enforcement challenges. (Click here for a digital playback of the session.)

For more information, contact Lynn Dudley, senior vice president, global retirement & compensation, or Diann Howland, vice president, legislative affairs, at (202) 289-6700.

CMS Updates HPID Application Process to Eliminate Approval by Authorizing Official  

The Department of Health and Human Services (HHS) and the Centers for Medicare and Medicaid Services (CMS) have posted an updated quick reference guide and Health Plan ID User Manual to help in obtaining a health plan identifier (HPID). The updated documents reflect changes to the HPID application process that eliminates the requirement that HPID applications be approved by an “Authorizing Official.”    

As we reported in the September 29 Benefits Byte, health plans that are “controlling health plans” (a definition added by prior final regulations implementing 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. CMS has also provided a dedicated CMS website with information on the application process and links to HPID frequently asked questions (FAQs).  

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). The HPOES has been updated to reflect that the HPOES no longer requires the Authorizing Official to approve applications prior to HPID or Other Entity Identifier (OEID) assignment.

For more information, contact Kathryn Wilber, senior counsel, health 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.

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