On June 22, 2017, Senate Republicans released a draft of the Better Care Reconciliation Act (BCRA), their much-anticipated version of the legislation to “repeal and replace” the Affordable Care Act (ACA). Despite rumors of a re-write of the American Health Care Act that passed in the House of Representatives by a narrow vote on May 4, the BCRA largely mirrors the structure and certain key measures of the House version (see our previous alert dated May 5, 2017). On the other hand, the BCRA has already been criticized by the more vocal opponents of the ACA in the Senate for not going far enough to eliminate measures established under the ACA. The Senate could vote on the BCRA as early as next week, but given the uncertainty surrounding its success, it is likely to undergo amendments prior to then. This alert provides an overview of key provisions of the BCRA and how, as drafted, it would affect aspects of the ACA.
In an article published by Employee Benefit News, Bass, Berry & Sims attorney Doug Dahl provided guidance for employers who now must comply with the Department of Labor’s (DOL) fiduciary rule. After months of delay, the rule went into effect on Friday, June 9, 2017, and provided guidance on who is considered a fiduciary under the new rule. Doug outlined the actions that employers and other plan sponsors should consider, such as identifying whether advisors are fiduciaries or have conflicts of interest, communicating plan details and watching IRA rollovers to ensure plan providers are not recommending specific plans or investments. However, not all plans are created equal. “The smaller a plan is, the more likely [it is] that you’re going to have conflicted advice under the new rule,” said Doug. “The key is knowing who the company’s investment fiduciaries are and making sure they are complying with the responsibilities they have toward the retirement plan and its participants.”
The full article, “What Employers Should Do To Ensure Fiduciary Rule Compliance,” was published on June 11, 2017, by Employee Benefit News and is available online.
Bass, Berry & Sims attorney Doug Dahl commented on the Department of Labor’s (DOL) new fiduciary rule that will impact how and when an individual is treated as a fiduciary under ERISA if that person provides investment advice. While many expected a further delayed applicability, parts of the new rule will take effect June 9, 2017. Because of the new regulations, “some advisors may decide to exit the retirement planning sector of the financial industry or they may close up shop altogether rather than deal with lawsuits and enforcement issues,” said Doug.
In an article published by InvestmentNews, Bass, Berry & Sims attorney Doug Dahl provided insight on a recent district court ruling which allowed allegations that using multiple record-keeping firms in 403(b) retirement planning breaches fiduciary duty to continue. With many other prominent institutions involved in similar litigation, this particular lawsuit targets Emory University, and the decision to move forward could potentially impact the success of similar claims in those other cases. The plaintiffs claim that using multiple record-keeping systems burdens participants with fees because it is cost prohibitive and doesn’t adequately leverage assets to drive lower pricing. “This is a relatively new, or at least a newly successful, claim,” said Doug. While the article notes that it is still unclear whether there is anything necessarily wrong with the use of multiple service providers, Doug adds “I think the fact that the claim continued is definitely noteworthy.”
The full article, “Use of Multiple Record Keepers Could Hurt Defendants in 403(b) Lawsuits,” was published by InvestmentNews on May 19, 2017, and is available online.
In an article published by SHRM online, Bass, Berry & Sims attorney Doug Dahl discussed protected genetic information and wellness program design. The article outlines recent legislation proposed by the House Education and Workforce Committee that intended to clarify differences between the wellness program rules under several federal statutes and regulations. The bill subsequently stalled in the House of Representatives because many opponents believe the legislation allowed businesses to use the genetic information employees provided through wellness programs in negative ways.
While the definition of genetic information is broad, as Doug points out in the article, “[t]he disease of a family member, including a spouse or adopted child, and how it is manifested is considered genetic information. Obesity is the primary issue many wellness programs are designed to help. Heart health is another focus, as are smoking cessation and mental health issues.”
The full article, “Bill to Harmonize Wellness Program Requirements May Have Stalled,” was published by SHRM online on April 20, 2017, and is available online.
In an unsurprising move, the Department of Labor (DOL) postponed the applicability date of the fiduciary rule on April 4 for an additional 60 days. The new applicability date for the rule is June 9, 2017, although the DOL may choose to push that date back even further. The extra time was added just days before the fiduciary rule was set to go into effect and gives the DOL additional time to consider revisions. The agency was ordered to re-evaluate the rule by President Trump back in February.
Noted healthcare observer/thought leader Paul Keckley – who provided private-sector input on the Affordable Care Act – breaks down the “need to know” facts of its potential successor, the American Health Care Act, and discusses some of the big bets it makes about the future.
The full article, “The American Health Care Act: What You Need to Know and What You Need to Watch,” was published by The Keckley Report on March 13, 2017 and is available online.
Bass, Berry & Sims attorney Doug Dahl authored an article discussing the various ways in which employers seek to decrease risk associated with defined benefit pension plans and what HR and benefit professionals should know about the process. As Doug points out in the article, once an employer decides to engage in a de-risking strategy, HR and benefit professionals who understand de-risking and the importance of communication throughout will be in a good position to help their employers navigate the process.
The full article, “Pension De-Risking: What is It and Why is It So Popular?,” was published in the April 2017 issue of HR Professionals and is available online.
The Internal Revenue Service (IRS) recently issued updated audit guidelines for its agents regarding the substantiation requirements for hardship withdrawals from 401(k) and 403(b) plans. This guidance is welcome news for plan sponsors who rely on third party administrators to process participants’ requests for hardship withdrawals, as it relaxes previous IRS guidance which (1) required plan sponsors to obtain and store copies of the actual source documents (e.g., medical bills, cancelled checks, etc.) that established a participant’s request for a hardship withdrawal and (2) did not permit participant self-certification of hardship withdrawal requests.
Earlier this month, the Department of Labor (DOL) proposed a 60-day delay of the April 10, 2017 effective date of its (much debated) fiduciary rule. The fiduciary rule – a vestige of the Obama Administration – was thought to be bound for the chopping block once President Trump took office. However, the proposed rule has only thus far been delayed, concerning many in the industry that: (1) there may be a gap period during which the fiduciary rule becomes law before a delay is published, or (2) the DOL could decide to simply leave the fiduciary rule in place.