Retirement plan sponsors: Pension Protection Act plan restatement process

Man's Hands Signing DocumentBeginning in April 2014, all ERISA-compliant Defined Contribution Plans (i.e. 401(k) and 403(b)) are required to be restated to include all legally mandated changes and amendments that have been enacted over the last 5-6 years. This restatement process must be completed by April 30, 2016. For the majority of Retirement Plan Service Providers, and Third party Administrators (TPAs), the process will be fairly simple; they will combine the Plan Provisions in the existing document with any changes that have occurred since 2009 to create a new document.

However, a Retirement Plan put in place several years ago may no longer be the best fit for the Plan Sponsor (Employer) or the Employees/Plan Participants. Is this the right time to consider some Plan design changes (e.g. add the Roth (after-tax) contribution feature; automatic enrollment / automatic escalation; Safe Harbor employer matching contributions; loans; changes in eligibility; changes in the vesting schedule, etc.)? Rather than accepting the original plan provisions, Plan Sponsors should use this Restatement process as an opportunity to complete a holistic review of their existing Plan.  Read more…

GAAP vs. IFRS laws: Is convergence on the horizon?

global_revenueFollowing a May 28th conference between two of the world’s largest accounting regulatory agencies, members from both groups issued new joint standard they hoped would help smooth out discrepancies between the U.S.’s Generally Accepted Accounting Principles (GAAP) and the International Finance Reporting Standards (IFRS). While the leaders aimed to create a middle ground that combined the GAAP’s specific protocols (there are currently over 100 specific rules for various transactions and industries) with the IFRS’s broader scope of regulations, SEC officials remain skeptical about the success of a global set of accounting standards. Reports say the new global rules would aim to make it harder for companies to lie about their revenues to investors, and would take effect in 2017. Read more…

More all-payer claims databases could mean more transparency

computers_techOver the past several years, many states have begun using all-payer claims databases (APCDs) to help create more  transparency throughout the health care industry. Similar to the Health Care Cost Institute’s new online consumer health care portal, APCD’s are designed to shed light on the price differences that various health care providers (doctors, hospitals, health care systems) charge for the same procedures. They require all commercial insurance carriers within a state to submit claims data and prices paid for services, and typically include medical, dental, pharmacy and mental health claims from all providers in the state. The data uses codes (rather than individual names and addresses) for privacy protection about specific patient claims, and business claims are kept private by providing only the median prices paid to providers for each service. The information helps consumers make decisions about where they go for treatment, and can also be used by insurers and large employers to design cost-effective benefit plans. In addition, state officials have used APCD’s to help develop health care policies and measure results. Eleven states (including Massachusetts) already have these systems in place, while 19 are currently developing APCD’s and another 21 more have introduced laws to create them.  Read more…

Mounting claims expenses bring changes to MLI policies

ProfessionalLiabilityIn the last two years, Management Liability Insurers have shifted their underwriting guidelines for privately-held organizations by  increasing rates, retention levels and a reduction in coverage and total limits offered. Wage and hour defense cost sub-limits have also been reduced or removed entirely, and some carriers are not renewing policies based on industry, asset size of risk, financial condition and loss experience.

While there are still Management Liability Insurers willing to write these accounts, the marketplace appears to be reaching a point where this capacity will no longer be utilized to offer terms that the industry has become accustomed to seeing in recent years.

Why is this happening?
Based on conversations with several Management Liability Insurers, there are several reasons:  Read more…

As TRIA expiration lingers, work comp carriers show their own “go forward” strategy

capitol_wc2Amid growing concern over TRIA/TRIPRA’s expiration on 12/31/14 and the government’s long-term commitment to a Federal  Backstop program, many Worker’s Compensation carriers have are thinking ahead when it comes to renewals and securing new business.

When Congress extended TRIA in 2007, it also revised the definition of “acts of terrorism” to include domestic terrorism. Domestic Terrorism has three components:

  • All acts of terrorism outside the scope of the Act or the Foreign Terrorism Premium with an aggregate workers compensation losses in excess of $50 million.
  • Earthquake: The shaking and vibration at the surface of the earth resulting from underground movement along a fault plane or from volcanic activity where aggregate workers compensation losses from the single event are in excess of $50 million.
  • Catastrophic Industrial Accident: Any single event resulting in aggregate workers compensation losses in excess of $50 million.

Read more…

SEC to FINRA: Toughen up standards, penalty fines are too low

wall_street_fineFINRA, the Financial Industry Regulation Authority, came under fire recently to toughen its sanctions and enforcement actions against financial firms and Wall Street executives. The Wall Street journal recently reported that during a 5 year period through 2013, FINRA trailed the SEC in the number of fines issued against financial firms and individuals. The report found that compared to the SEC, which imposed fines of $1million or more 259 times through 2013, FINRA issued only 55, an average of less than once per month. The analysis also showed that the SEC’s largest penalties reached upwards of $300 million, while FINRA’s fines amounted to just $12 million. Following the report, SEC commissioners urged FINRA employees to update and strengthen the standards used to determine financial punishments against Wall Street wrongdoers. Penalties must have a significant impact and send a strong enough message, the commissioners said, to hold perpetrators responsible and discourage unlawful actions. Read more…

Control groups for benefit plans – Are you included?

benefitsHistorically, employers have been able to provide different levels of medical benefits to their employees without much regard for what other companies in the same control group offered. The onset of PPACA, however, has caused employers to reexamine how benefits are handled in their control groups in order to ensure they are in compliance with the new regulations. Many have found it more efficient to partner with other control groups, a process determined by underwriting rules based on a percentage of shared ownership.  For purposes of PPACA’s employer mandate, there are three types of control group situations in which several companies can partner together and are therefore considered one employer. Doing so requires them to include all employees within the control group in the 50 (or 100) employee count threshold. Read more…

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