American Benefits Council
Benefits Byte


June 10, 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.

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Council Comments on DOL's Proposed Guide for Plan Fiduciaries

In June 10 comments to the U.S. Department of Labor’s Employee Benefits Security Administration (EBSA), the Council raised numerous concerns with proposed regulations requiring retirement plan service providers to furnish an explanatory “guide” to plan fiduciaries along with standard information disclosures.

Under Section 408(b)(2) of ERISA (as amended by final regulations issued in February 2012), service providers must disclose certain information – including plan fees – to responsible plan fiduciaries in order for contracts or arrangements between the parties to be considered “reasonable.” The newly proposed regulations would require service providers to furnish “a guide or similar requirement” to “assist fiduciaries, especially fiduciaries to small and medium-sized plans, in identifying and understanding the potentially complex disclosure documents that are provided to them or if disclosures are located in multiple documents.” (For more details, see the Council’s March 11 Benefits Byte.)

The Council’s June 10 comments expressed support for DOL’s efforts to improve transparency, including the requirements established under the 2012 final regulations, but voiced very strong concerns with regard to the new proposal. “The Council is concerned that the guide would result in substantial costs and burdens (which will likely be passed along to plans and participants) while providing only minimal value to plan sponsors and fiduciaries,” the Council’s letter said.

Specifically, the Council’s letter argues:

  • There is no demonstrated need for a plan sponsor “guide” to the 408(b)(2) disclosures. “Feedback from plan sponsors regarding their receipt and use of the 408(b)(2) disclosures is inconsistent with a conclusion that a guide is needed, and the DOL has not offered evidence to the contrary,” the letter said.
  • DOL issued the proposal before gathering information to identify potential problems with the 408(b)(2) regulation and before assessing the significance of any problems relative to the cost of a proposed solution. The Council recommends that DOL withdraw the proposal and issue a request for information.
  • Any benefits of the proposal are far outweighed by the inordinate expense that service providers will face in implementing and updating their guides because the proposal will, in many cases, require the use of manual processes. In particular, the proposal’s “page number locator” requirement was cited as potentially very costly.
  • The very large new costs created by the current proposal will be passed on to large plans and participants, while producing, at best, only marginal benefits for large plans.
  • If DOL moves forward with a guide requirement, any amendment should be implemented on a prospective basis only for newly-entered-into service arrangements, and DOL should address the proposal’s difficult and unclear standards.

The Council received substantial input on this letter from our members, including many plan sponsors, and very much appreciates the feedback. For more information, contact Jan Jacobson, senior counsel, retirement policy, at (202) 289-6700.

Council Weighs in on Provider Nondiscrimination under PPACA

In formal comments submitted on June 10, the Council responded to a recent regulatory request for information (RFI) on the provider nondiscrimination provisions under the Patient Protection and Affordable Care Act (PPACA)

Under Section 2706(a) of the Public Health Service (PHS) Act, added by PPACA, “a group health plan and a health insurance issuer offering group or individual health insurance coverage shall not discriminate with respect to participation under the plan or coverage against any health care provider who is acting within the scope of that provider’s license or certification under applicable state law.” The PHS Act does not require “that a group health plan or health insurance issuer contract with any health care provider willing to abide by the terms and conditions for participation established by the plan or issuer,” and nothing in the PHS Act prevents “a group health plan, a health insurance issuer, or the Secretary [of Health and Human Services] from establishing varying reimbursement rates based on quality or performance measures.”

In April 2013, the U.S. departments of Treasury, Labor, and Health and Human Services (the departments) issued Frequently Asked Questions (FAQ) Part XV, confirming that the provision applies to non-grandfathered group health plans and health insurance issuers for plan years beginning on or after January 1, 2014. The FAQ also clarified that until further guidance is issued, plans and issuers “are expected to implement the requirements of Section 2706(a) using a good faith, reasonable interpretation of the law.” (For more details, see the Council’s March 12 Benefits Byte story on the RFI.)

The departments issued the RFI on March 12, seeking comments “on all aspects of interpretation, including, but not limited to access, costs, other federal and state laws, and feasibility.”

The Council’s letter noted that “Section 2706(a) has significant implications for plan sponsors, as it directly impacts their ability to design and administer plans that best meet their needs and those of their employees. Employers face increased challenges designing and implementing affordable, high quality health benefit plans given other PPACA provisions that limit flexibility in plan design, including limitations on cost sharing and the 40 percent excise tax on high cost health coverage.”

The Council believes the prior FAQ strikes an appropriate balance between nondiscrimination protections and operational flexibility, making additional guidance unnecessary at this time. However, in the event that the departments issue guidance in the future, such guidance should affirm that Section 2706(a):

  • Does not mandate any specific benefits or services be covered by a plan or policy.
  • Does not impose an “any willing provider” requirement on plans and issuers and clarify that the prohibition on discrimination applies to participation as opposed to contracting.
  • Allows plans and issuers to use reasonable medical management techniques in providing covered benefits and services without running afoul of the non-discrimination prohibition.
  • Does not govern provider reimbursement rates, which may be subject to quality, performance, or market standards and considerations.

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.

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).