American Benefits Council
Benefits Byte


July 21, 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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FINAL REMINDER: Make Sure You are Receiving the New Version of the Benefits Byte

As you may have noted over the past few weeks, you have been receiving two versions of the Council’s Benefits Byte newsletter. This is because we are transitioning to a new third-party e-mail provider and Benefits Byte format. (Click here to see what both versions look like.) This will be the final Benefits Byte sent via the old system.

If you are not receiving the “new” version of the Benefits Byte, it may be caught behind your company’s firewall or “spam” filter. If that is happening, it is very important you take action by contacting your technical support staff or by consulting the following Real Magnet Whitelisting Information.

If you need additional assistance, please have your technical support staff contact Jason Hammersla, director, communications, at (202) 289-6700.

Possible New Life Expectancy, Economic Assumptions Could be Reason for Overdue Social Security and Medicare Trustees' Reports

A delay in the issuance of the Social Security and Medicare trustees’ reports may be the result of changing life expectancy or economic assumptions.

The Social Security Act requires the Board of Trustees to report to Congress on the status of the Social Security and Medicare Trust Funds no later than April 1 of each year. That deadline has rarely been met over the last decade, but this year’s Trustees reports are especially late. Only once before have the reports been delayed past May, and that was in 2010 when the Social Security and Medicare actuaries were struggling to change their assumptions to reflect the Patient Protection and Affordable Care Act. Social Security Administration and Congressional sources indicate that this year’s Trustees reports could be issued by the end of July. The reports, of course, are critically important in terms of measuring the long-term financial solvency of the Social Security and Medicare programs. 

The contents of the Trustees reports are always carefully guarded prior to release and this year is no exception. There is no clear indication why the 2014 reports are past due. The explanation for the delay could be innocuous, but the Council will monitor the situation to see if the Social Security actuaries make significant changes in their assumptions that affect the projected insolvency dates of the Social Security and Medicare Trust Funds. Last year’s reports projected depletion of the Disability Insurance (DI) Trust Fund in 2016, the Old Age Survivor Insurance (OASI) Trust Fund in 2035 and the Medicare Hospital Insurance (HI) Trust Fund in 2026.

Perhaps the most significant change that may be under consideration relates to the life expectancy assumptions used by the Social Security actuaries. Late last year, the Congressional Budget Office (CBO) stopped using the life expectancy projections previously used by the Social Security Trustees. The CBO concluded that Social Security and Medicare beneficiaries were going to live substantially longer (and draw down more benefits) than the Social Security actuaries assumed in preparing their 2013 (and previous) reports. In a September 2013 posting explaining the change, CBO highlighted that the Technical Panel on Assumptions and Methods of the Social Security Advisory Board (a panel of independent demographers, actuaries, and economists) recommended changes in Social Security’s life expectancy assumptions each time it had met since beginning as far back as 1999.

Even if the Social Security actuaries modify their life expectancy assumptions, those effects could be offset by other changes in assumptions, such as accelerated economic growth or a projection that more individuals will work longer before starting Social Security benefits. Still, longer life expectancy assumptions will in any event remain a significant factor in measuring the long-term financial solvency of both the Social Security and Medicare programs. Earlier this month, CBO released its 2014 Long-Term Budget Outlook. In analyzing Social Security, the Outlook specifically mentions that CBO’s demographic assumptions not only assume longer life expectancy, but also assume that future increases in life expectancy will be greater for people with higher lifetime earnings (i.e., individuals who will, as a result of those higher earnings, receive greater than average Social Security benefits). CBO estimates that the OASI Trust Fund will be exhausted three years earlier than projected in the most recent Social Security Trustees report, a result that is at least in part attributable to CBO’s different longevity assumptions.

For more information, contact James Klein at 202-289-6700.

CMS to Continue Webinar Series on Reinsurance Contributions

The U.S. Department of Health and Human Services (HHS) Centers for Medicare and Medicaid Services (CMS) will host a second round of webinars on the topic of required Transitional Reinsurance Program (TRP) contributions under the Patient Protection and Affordable Care Act (PPACA).

Under PPACA, during the first three years that state health insurance exchanges are operational (i.e., 2014 through 2016), health insurance issuers and plan administrators (on behalf of self-insured group health plans) will be assessed a per-enrollee fee to finance the three-year transitional reinsurance program. The fee is $63 per covered life for 2014.

HHS and CMS released guidance on the process for making TRP contributions in May, previewing "a streamlined process for the collection of reinsurance contributions" through This issuance was followed by an initial series of webinars to provide an overview of policy and operations for reinsurance contributions.

CMS has announced a second round of webinars to provide an overview of how a contributing entity can submit its annual enrollment count and make reinsurance contributions through The new webinars will be held on the following days and times:

  • Monday, July 28, 2014, 2-3:30 p.m. ET
  • Wednesday, July 30, 2014, 2-3:30 p.m. ET
  • Wednesday, August 6, 2014, 2-3:30 p.m. ET

Registration will be on a first-come, first-serve basis, limited to three participants per organization. Registration will be limited to selecting only one of the event dates. See the official announcement for more information.

For more information on TRP issues, 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).