IRS loosens employer mandate reporting requirements
Originally posted September 9, 2013 by Gillian Roberts on https://eba.benefitnews.com
In a follow-up to the Obama administration’s July 2 employer mandate delay, the U.S. Department of the Treasury and Internal Revenue Service issued a proposed rule late last week that would make certain reporting requirements in the provision of the Affordable Care Act voluntary. According to a statement by the department, “The regulatory proposals reflect an ongoing dialogue with representatives of employers, insurers, other reporting entities, and individual taxpayers.”
The changes include:
- “Eliminating the need to determine whether particular employees are full-time if adequate coverage is offered to all potentially full-time employees.”
- “Replacing section 6056 employee statements with Form W-2 reporting on offers of employer-sponsored coverage to employees, spouses, and dependents.”
- “Limited reporting for certain self-insured employers offering no-cost coverage to employees and their families.”
“Today’s proposed rules enable us to continue engaging on how best to implement the ACA reporting requirements in a more streamlined and focused manner,” said Assistant Secretary for Tax Policy Mark J. Mazur in the statement. “We will continue to consider ways, consistent with the law, to simplify the new information reporting process and bring about a smooth implementation of those new rules.”
The full statement can be found here and the full rule, with details to provide comments, can be found here.
Proposed rules would ease employers' health plan reporting burden
Originally posted September 6, 2013 by Jerry Geisel on https://www.businessinsurance.com
Newly proposed Internal Revenue Service and Treasury Department health care reform regulations would ease the amount of employee plan coverage information employers would have to report to federal regulators.
Under the proposed rules, released Thursday, employers would not be required to report cost information related to family coverage.
In addition, employers would have to report how much of the premium employees will have to pay for single coverage only.
Limiting that reporting requirement to single coverage is appropriate, the IRS and the Treasury Department said because a health care reform law affordability test applies only to single coverage — not family coverage.
Under that test, if the premium paid by employees for single coverage exceeds 9.5% of household income, the employee is eligible for a federal premium subsidy to purchase coverage in a public insurance exchange. If the employee uses the subsidy, the employer may be liable for a $3,000 penalty.
No penalty is assessed regardless of how much the employer charges for family coverage, making the need to collect such information unnecessary, regulators said.
“Because only the lowest-cost option of self-only coverage offered under any of the enrollment categories for which the employee is eligible is relevant to the determination of whether coverage is affordable — and thus to the administration of the premium tax credit and employer shared responsibility provisions — that is the only cost information proposed to be requested,” according to the proposed regulation, which is scheduled to be published in the Sept. 9 Federal Register.
While regulators have reduced the amount of information to be reported, “it is only limited relief. There still will be a massive amount of work to meet the reporting requirements,” said Rich Stover, a principal with Buck Consultants L.L.C. in Secaucus, N.J.
The proposed rules, though, could pose problems in other areas. For example, employers would be required to report tax identification numbers of employees' dependents.
Employers do not always have such information for every dependent, said Amy Bergner, managing director of human resources in Washington for PricewaterhouseCoopers L.L.P.
White House proposes new employer mandate rules
Originally posted September 6, 2013 by Ricardo Alonso-Zaldivar on https://www.benefitspro.com
WASHINGTON (AP) — The Obama administration on Thursday released new proposals for carrying out a major requirement of the federal health care law that was postponed earlier this summer.
At issue is how to gather information that would allow the government to enforce a requirement that companies with 50 or more workers provide affordable health insurance to their full-time employees. Companies that don't comply would risk fines.
The mandate was supposed to take effect Jan. 1, but in July the White House unexpectedly announced a one-year delay until 2015. Officials said more time was needed to work out information reporting requirements so they would not be too burdensome for businesses. Delaying the mandate also defused a potential political problem for Democrats in next year's congressional elections.
The new proposal from the Treasury Department seeks comment on options to reduce or streamline reporting by employers, insurers and health plan administrators. In some instances, the administration is proposing to eliminate duplicative reports and in other cases, it's asking for less detail.
Business groups said it will take time to sort through the technicalities but praised the administration's effort to find common ground.
"Retailers are not interested in being overly burdened by bureaucratic red tape or time-wasting, duplicative reporting requirements," Neil Trautwein, the top health policy official for the National Retail Federation, said in a statement.
The information reported by employers and insurers is also critical in enforcing the law's central requirement that virtually all Americans carry health insurance starting Jan. 1. That so-called individual mandate has not been delayed and remains in full force.
The Treasury Department said it will be soliciting feedback on its proposals through early November, and will use the comments to develop final rules.
Although the one-year delay of the employer coverage requirement remains in effect, the administration says it hopes employers will voluntarily begin reporting information next year to smooth the transition in 2015.
IRS Issues Proposed PPACA Rules on Employer-Information Reporting
Originally posted September 6, 2013 by Stephen Miller on https://www.shrm.org
On Sept. 5, 2013, the U.S. Department of the Treasury and the Internal Revenue Service issued two proposed rules intended to streamline the information-reporting requirements for certain employers and insurers under the Patient Protection and Affordable Care Act (PPACA or ACA).
The PPACA requires information reporting under Internal Revenue Code (IRC) Section 6055 by self-insuring employers and other health coverage providers. And under IRC Section 6056, information reporting is required of employers subject to the employer "shared responsibility" provisions, also known as the employer mandate—meaning those with 50 or more full-time equivalent workers, who must provide coverage for employees working an average of at least 130 hours per month (or 30 or more hours per week) looking back at a standard measurement period of not less than three but not more than 12 consecutive months—or pay a $2,000 penalty for each full-time worker above a 30-employee threshold. The shared-responsibility mandate, which was set to take effect in January 2014, has been delayed until January 2015.
One proposed rule, “Information Reporting of Minimum Essential Coverage,” pertains to IRC Section 6055, while the other proposed rule, “Information Reporting by Applicable Large Employers on Health Insurance Coverage Offered Under Employer-Sponsored Plans,” pertains to IRC Section 6056.
“These reporting requirements serve distinct purposes under the ACA,” Timothy Jost, a professor at the Washington and Lee University School of Law in Virginia, explained in a commentary about the proposed rules posted on the journal Health Affairs’ blog. “The large-employer reporting requirement is necessary to determine whether large employers are complying with the employer-responsibility provisions of the ACA and will also help identify individuals who are ineligible for premium tax credits because they have been offered coverage by their employer. The minimum-essential-coverage reporting requirement will assist the IRS in determining whether individuals are complying with the ACA’s individual-responsibility requirement and also whether they are eligible for premium tax credits because they lack minimum essential coverage.”
Once the final rules have been published, employers and insurers will be encouraged to report the specified information in 2014 (when reporting will be optional), in preparation for the full application of the reporting provisions in 2015.
“The absence of these rules was the reason given by the IRS for delaying the employer mandate until 2015,” Jost noted. “The IRS is encouraging voluntary reporting by employers and insurers, subject to the requirements for 2014, and should have no trouble getting the final rules in place for mandatory reporting in 2015.”
Statutory Requirements
Specifically, the PPACA calls for employers, insurers and other reporting entities to report under IRC Section 6055:
- Information about the entity providing coverage, including contact information.
- A list of individuals with identifying information and the months they were covered.
And under IRC Section 6056:
- Information about the applicable large employer offering coverage (including contact information for the company and the number of full-time employees).
- A list of full-time employees and information about the coverage offered to each, by month, including the cost of self-only coverage.
Proposed Reporting Options
The proposed rules describe a variety of options to potentially reduce or streamline information reporting, such as:
- Replacing Section 6056 employee statements with Form W-2 reporting on offers of employer-sponsored coverage to employees, spouses and dependents.
- Eliminating the need to determine whether particular employees are full time if adequate coverage is offered to all potentially full-time workers.
- Allowing organizations to report the specific cost to an employee of purchasing employer-sponsored coverage only if the cost is above a specified dollar amount.
- Allowing self-insured group health plans to avoid providing employee statements under Sections 6055 and 6056 by furnishing a single substitute statement.
- Allowing limited reporting by certain self-insured employers that offer no-cost coverage to employees and their families.
- Permitting health insurance issuers to forgo reporting, under Section 6055, on individual coverage offered through a government-run health care exchange, or marketplace (set to launch in October 2013), because that information will be provided by the marketplace.
- Permitting health insurance issuers, employers and other reporting entities, under Section 6055, to forgo reporting the specific dates of coverage (instead reporting only the months of coverage), the amount of any cost-sharing reductions, or the portion of the premium paid by an employer.
According to Jost, the IRS is attempting to avoid duplication and collecting unnecessary information. “Large employers need only report the employee’s share of the lowest-cost monthly premium for self-only coverage, since a determination as to whether employer coverage is affordable for adjudicating eligibility for premium tax credits is based on the cost of self-only, rather than family, coverage,” he wrote. “Entities that must report minimum essential coverage can report birthdates, rather than Social Security numbers, for dependents if they are unable to secure the Social Security numbers after reasonable efforts.”
The IRS is soliciting comments on the Section 6055 and 6056 proposed rules through Nov. 8, 2013. The agency will take the public comments into account when developing final reporting rules on further simplifications.
Separately, the process to challenge an insurance exchange's finding that an employer's plans are unaffordable or fail to provide minimum essential coverage (thereby triggering penalties against the employer) is presented in a final rule published in the Federal Register on Aug. 30, 2013, by the U.S. Department of Health and Human Services.
Be Prepared For Fall Open Enrollment Changes
Originally posted September 3, 2013 by Amy Gallagher on https://www.golocalworcester.com
The healthcare reform law requires employers to notify employees of available health exchange options by October 1. That means employees will face new health plan choices - and decisions - during open enrollment this year.
Education is Key
With new options comes the need for more education. And that doesn't just mean the health exchange option notice employers are required to provide, which is likely to confuse employees.
Since employees will get to choose between employer-sponsored plans or those offered by the exchanges for the first time, employers should make an extra effort with their communication plans for this fall's open enrollment. And employees should step up their participation in the process as well.
Employee questions...and answers
Employers should provide informative, detailed materials that will enable employees to evaluate their choices and make the best decisions. When reviewing open enrollment resources, employees should follow these five steps:
1. Review the benefits and costs of the employer-sponsored plan. Understand what the employee’s share of the cost is in dollars - an amount that's deducted pre-tax from your paycheck at whatever tax bracket you fall in. For example, an employee who pays $250 monthly of a $500 total monthly individual plan cost will have a deduction (assuming a 30% tax bracket) around $175 monthly.
2. Compare the employee costs above to an individual plan offered through a state-run exchange.Employees who are Rhode Island residents may visit www.HealthSourceRI.com and those who reside in Massachusetts can go to www.mahealthconnector.com for details. Keep in mind that employees who purchase an individual plan through the exchange must pay the full cost of the plan unless you qualify for tax credits to offset, or eliminate, the cost.
3. Determine tax credit by using an online tool and estimating family income for 2014 (before taxes), telling the age of the oldest adult in the family, and entering the total number of adults and children in the household. Generally, employees may be able to get a subsidy if they are single and make up to $45,960, or are a family of four and earn up to $94,200. The exact amount of the subsidy is determed by size of family and level of income, so the less someone makes, the more they will receive.
4. Employees who receive the subsidy should subtract the earned tax credits from the total cost of the exchange plan to determine their total premium cost. Then compare this amount to what you would pay for an employer-sponsored plan.
5. Last, all employees must understand that, starting January 1, 2014, they are mandated to be insured.Whether through an employer or exchange plan, it’s up to you to get coverage, or pay penalties at tax time.
Does out-of-pocket delay actually apply to you?
Originally posted September 3, 2013 by Tristan Lejeune on https://ebn.benefitnews.com
Yet another Affordable Care Act delay is in the spotlight: limits on out-of-pocket spending.
According to the law, starting in 2014, health plan participants will be spending no more than $6,350 in total out-of-pocket costs for individuals and $12,700 for family plans. That cap on out-of-pocket spending has been delayed until 2015, however, if an employer is using two separate vendors for its medical and pharmacy benefits. Sandy Ageloff, southwest health & group benefits leader for Towers Watson, says the rule only applies “to nongrandfathered plans” and emphasizes that the delay only applies to those who split their services.
“So the biggest piece of the legislation,” Ageloff says, “is that compliance is still required for Jan. 1, 2014 if the benefit plan – whether it’s a self-funded employer plan or a fully insured carrier program – is using a single vendor for the administration of both medical and pharmacy. The nuance comes in when you have multiple vendors, you get a one-year deferral in total compliance. You still have to comply in pieces, but you don’t have to comply in total.”
The number of plans that maintain their grandfathered status in the face of ACA continues to shrink, but Ageloff estimates that 35% or 40% of large employers use different vendors and thus have the extra year. Complicating things, she says, is that “a number of carriers actually have, behind the scenes, carved out that relationship with a pharmacy vendor,” so two can masquerade as one. Figuring out compliance may require more than just a phone call to your provider.
“For example, if you look at Anthem Blue Cross Blue Shield, they have a subcontracted relationship with ESI to manage their pharmacy benefits,” Ageloff says. “Same is true of a lot of other broad-based medical insurance carriers. So the health plans themselves are taking different interpretations on whether the full mandate for 2014 applies to them, or if they get the deferral. So that’s complicating this. As an employer, if I say, I use Anthem BCBS as either my [third-party administrator] or I’m buying an insured product from them, I’m relying on them to tell me how they interpret their own program. So that’s creating some challenges, particularly for self-funded employers who control their own plan design.”
The National Business Group on Health Vice President of Public Policy Steve Wojcik says, like the employer mandate delay, the out-of-pocket postponement was done to allow systems to catch up to what is required of them in terms of processing and accounting. And, like the employer mandate delay, he says it’s good news.
“It means that employers and their plans have another year to consolidate and coordinate,” Wojcik says. “In many cases the issue is that the PBM handles the pharmacy benefit separately and the medical expenses are handled through the health plan, so a lot of times their systems don’t talk with one another, and then the patient or plan member doesn’t have up-to-the-minute information on where they stand toward their out-of-pocket limit.”
Wojcik says “by and large, most people don’t approach their out-of-pocket limits in a year, so for most people, it’s not going to affect them.” For those who do – usually those with chronic conditions or highly expensive pharmacy needs or both – “it will just be another year before they get relief.”
All Legal Same-Sex Marriages Will Be Recognized for Federal Tax Purposes
Originally published on https://www.treasury.gov
Ruling Provides Certainty, Benefits and Protections Under Federal Tax Law for Same-Sex Married Couples
WASHINGTON — The U.S. Department of the Treasury and the Internal Revenue Service (IRS) today ruled that same-sex couples, legally married in jurisdictions that recognize their marriages, will be treated as married for federal tax purposes. The ruling applies regardless of whether the couple lives in a jurisdiction that recognizes same-sex marriage or a jurisdiction that does not recognize same-sex marriage.
The ruling implements federal tax aspects of the June 26th Supreme Court decision invalidating a key provision of the 1996 Defense of Marriage Act.
“Today’s ruling provides certainty and clear, coherent tax filing guidance for all legally married same-sex couples nationwide. It provides access to benefits, responsibilities and protections under federal tax law that all Americans deserve,” said Secretary Jacob J. Lew. “This ruling also assures legally married same-sex couples that they can move freely throughout the country knowing that their federal filing status will not change.”
Under the ruling, same sex couples will be treated as married for all federal tax purposes, including income and gift and estate taxes. The ruling applies to all federal tax provisions where marriage is a factor, including filing status, claiming personal and dependency exemptions, taking the standard deduction, employee benefits, contributing to an IRA, and claiming the earned income tax credit or child tax credit.
Any same-sex marriage legally entered into in one of the 50 states, the District of Columbia, a U.S. territory, or a foreign country will be covered by the ruling. However, the ruling does not apply to registered domestic partnerships, civil unions, or similar formal relationships recognized under state law.
Legally-married same-sex couples generally must file their 2013 federal income tax return using either the “married filing jointly” or “married filing separately” filing status.
Individuals who were in same-sex marriages may, but are not required to, file original or amended returns choosing to be treated as married for federal tax purposes for one or more prior tax years still open under the statute of limitations.
Generally, the statute of limitations for filing a refund claim is three years from the date the return was filed or two years from the date the tax was paid, whichever is later. As a result, refund claims can still be filed for tax years 2010, 2011, and 2012. Some taxpayers may have special circumstances (such as signing an agreement with the IRS to keep the statute of limitations open) that permit them to file refund claims for tax years 2009 and earlier.
Additionally, employees who purchased same-sex spouse health insurance coverage from their employers on an after-tax basis may treat the amounts paid for that coverage as pre-tax and excludable from income.
How to File a Claim for Refund
Taxpayers who wish to file a refund claim for income taxes should use Form 1040X, Amended U.S. Individual Income Tax Return.
Taxpayers who wish to file a refund claim for gift or estate taxes should file Form 843, Claim for Refund and Request for Abatement.
For information on filing an amended return, go to Tax Topic 308, Amended Returns athttps://www.irs.gov/taxtopics/tc308.html or the Instructions to Forms 1040X and 843. Information on where to file your amended returns is available in the instructions to the form.
Future Guidance
Treasury and the IRS intend to issue streamlined procedures for employers who wish to file refund claims for payroll taxes paid on previously-taxed health insurance and fringe benefits provided to same-sex spouses. Treasury and IRS also intend to issue further guidance on cafeteria plans and on how qualified retirement plans and other tax-favored arrangements should treat same-sex spouses for periods before the effective date of this Revenue Ruling.
Other agencies may provide guidance on other federal programs that they administer that are affected by the Code.
For Revenue Ruling 2013-17, click here.
For Frequently Asked Questions, click here.
For registered domestic partners who live in community property states, click here for Publication 555, Community Property.
Treasury and the IRS will begin applying the terms of Revenue Ruling 2013-17 on September 16, 2013, but taxpayers who wish to rely on the terms of the Revenue Ruling for earlier periods may choose to do so (as long as the statute of limitations for the earlier period has not expired).
IRS Recognizes All Same-Sex Marriages for Pretax Benefits
Originally posted by Stephen Miller on https://www.shrm.org
Under a new Internal Revenue Service ruling, employees who pay for employer-provided health insurance for their same-sex spouse may treat these costs as excludable from federal income taxes, even if they live in a state that doesn't recognize their marriage. State income taxes are another matter, however.
The U.S. Department of the Treasury and the IRS ruled on Aug. 29, 2013, that same-sex couples who were legally married will be treated as married for federal tax purposes, including the pretax treatment of a spouse's health insurance coverage, in all 50 states and the District of Columbia. Revenue Ruling 2013-17 applies, in other words, regardless of whether the couple now live in a state that recognizes same-sex marriage or a state that does not recognize same-sex marriage.
The ruling implements federal tax aspects of the Supreme Court's June 26 decision in United States v. Windsor, which invalidated a key provision of the 1996 Defense of Marriage Act.
Revenue Ruling 2013-17 applies to all federal tax provisions in which marriage is a factor, including filing status, claiming personal and dependency exemptions, employee benefits, and claiming the earned income tax credit or child tax credit.
The ruling covers same-sex marriages entered into in one of the U.S. jurisdictions where such marriages are recognized as legally valid (sometimes referred to as the "state of celebration," as opposed to a couple's state of residency), as well as legal marriages performed in a foreign country. However, the ruling does not apply to registered domestic partnerships, civil unions or similar formal relationships recognized under state law.
Employee Benefits Affected
Under the ruling, same-sex couples will be treated as married for all federal tax purposes. Those who purchased same-sex spouse health insurance coverage from their employer on an after-tax basis may treat the costs of that coverage as pretax and excludable from income (for federal income tax purposes; state income taxes may still apply).
"Same-sex spouses legally married anywhere no longer are taxed on health benefits coverage for their spouses and can pay premiums pretax, even if they live in a non-recognition state such as Florida, Texas, etc. This is a huge development and a relief for these employers and employees," Todd Solomon,a partner in the employee benefits practice group of McDermott Will & Emery LLP in Chicago, told SHRM Online.
"However, state taxation of benefits may continue to be quite complex, although it remains to be seen how states will treat this," Solomon added. "On the flip side, the guidance may not be welcome for employers who currently do not offer same-sex partner benefits because now they are legally required to offer benefits to same-sex spouses in all states" (see box below).
Treasury and the IRS intend to issue streamlined procedures for employers who wish to file refund claims for payroll taxes paid on previously taxed health insurance and other benefits provided to same-sex spouses. Treasury and IRS also intend to issue further guidance on cafeteria plans and on how qualified retirement plans and other tax-favored arrangements should treat same-sex spouses for periods before the effective date of Revenue Ruling 2013-17.
Other agencies may provide guidance on federal programs they run that are affected by the Internal Revenue Code, Treasury said.
Are Employers Obligated to Provide Equal Treatment?
Are employers located in states that do not recognize same-sex marriage now required to grant access to health care benefits to the spouses of employees in legal same-sex marriages (entered into elsewhere), if they grant health benefits to spouses in opposite-sex marriages?
"This is an open question, and only time and legal challenges—which there are certain to be—will tell," commented Todd Solomon of McDermott Will & Emery LLP.
Employers are not "required" to offer medical plan coverage to same-sex spouses the way they are required to offer a qualified joint and survivor annuity (QJSA) and a qualified preretirement survivor annuity (QPSA) in a pension plan because there are no similar statutory benefit mandates in the welfare plan context, Solomon explained. However, "employers that do not cover same-sex spouses will be very vulnerable to discrimination claims, in particular sex discrimination under Title VII. State and local discrimination claims are also possible, but private sector employers can likely argue that these claims are preempted by ERISA. But ERISA does not preempt Title VII."
While Title VII does not protect against sexual orientation discrimination, Solomon pointed out that guidance from the Equal Employment Opportunity Commission suggests that it might interpret this type of exclusion of same-sex spouses as sex discrimination, and therefore "an employer denying coverage to a same-sex spouse will be at risk for having to defend a costly sex discrimination lawsuit."
Retroactive Application and Refund Claims
The IRS set a prospective effective date for the ruling of Sept. 16, 2013. Legally married same-sex couples must file their 2013 federal income tax return using either the “married filing jointly” or “married filing separately” filing status.
For prior tax years still open under the statute of limitations, individuals who were in same-sex marriages may opt to file original or amended returns choosing to be treated as married for federal tax purposes. Generally, the statute of limitations for filing a refund claim is three years from the date the return was filed or two years from the date the tax was paid, whichever is later. As a result, refund claims can still be filed for tax years 2010, 2011, and 2012. Some taxpayers may have special circumstances (such as signing an agreement with the IRS to keep the statute of limitations open) that permit them to file refund claims for tax years 2009 and earlier.
With respect to retroactivity for prior years, "employers are still in wait-and-see mode until the IRS issues further guidance," said Solomon. "What we know is that employees and employers have the right—but not the obligation—to file for refund claims on past taxes paid on same-sex spouse benefits in open tax years—typically 2010, 2011, and 2012."
"Employers can expect to get requests from employees for corrected Form W-2s from these prior years," Solomon noted. "But what is not clear yet is how to handle cafeteria plan participation and tax reporting for prior years and whether adjustments need to be made. The IRS will be issuing more guidance on this issue as well as the retroactive impact of the guidance on retirement benefits that have or in many cases have not been paid to same-sex spouses."
Along with Revenue Ruling 2013-17, the IRS released two related sets of frequently asked questions and answers:
- Answers to Frequently Asked Questions for Individuals of the Same Sex Who Are Married Under State Law.
- Answers to Frequently Asked Questions for Registered Domestic Partners and Individuals in Civil Unions.
The IRS ruling "assures legally married same-sex couples that they can move freely throughout the country knowing that their federal filing status will not change,” Treasury Secretary Jacob J. Lew noted in a released statement.
3 obstacles on the road to retirement readiness
Originally posted August 28, 2013 by Robert C. Lawton on https://ebn.benefitnews.com
Participants can be their own worst enemies. Shlomo Benartzi, a leading authority on behavioral finance, has identified the following three obstacles that plan sponsors need to overcome to propel participants successfully down the road to retirement readiness:
1. Inertia
Plan sponsors are probably most familiar with employee inertia. The incorporation of "auto" features — auto-enrollment, auto-escalation and auto re-enrollment — into 401(k) plans, along with the addition of professionally managed investment options like target-date funds, can successfully address employee inertia. Vanguard and The Newport Group report that approximately one-third of the 401(k) plans they administer have auto features. Experts believe that within three to five years the majority of 401(k) plans will adopt these plan design elements.
2. Loss aversion
Loss aversion may be characterized as valuing the avoidance of loss over the accrual of gains. In other words, participants are more afraid of losing money than they are of not having enough money (as a result of investing too conservatively). In order to overcome this obstacle plan sponsors need to offer target-date funds. Most experts believe that 75% to 85% of all plan participants should be invested in target-date funds. When left on their own, participants tend to invest too conservatively to keep pace with inflation, or they are prone to attempt to market time, resulting in significant losses.
Model or lifestyle portfolios aren't a solution here since employee inertia comes into play. Both of these types of professionally managed investment options require a positive employee election to move to more conservative options over time. Target-date funds do not require any employee interaction since the investment manager adjusts the risk level of the portfolio as time goes by.
3. Myopia
Myopia is the hardest factor to overcome. Participants have a tendency to focus on immediate, short-term goals rather than planning for their future. Many participants view the process of saving as difficult and not worthwhile. For example, they may feel that they will be too old to ever enjoy their savings, or they may believe they will pass away before they are able to retire. Regardless of the reason, participants are not eager to fund a future they have a difficult time envisioning. Employee education is the only effective tool to fight myopia.
Plan sponsors who adopt these plan design, investment and employee education elements have a much better chance of seeing their participants achieve retirement readiness.
FMLA extended to same-sex couples
Originally published August 30, 2013 by Elisabeth Blattner-Thompson, Diane A. Thompson, Brian D. Pedrow and Mary Cate Gordon on https://ebn.benefitnews.com
The U.S. Department of Labor on Aug. 9 issued a revised fact sheet to provide guidance on Family and Medical Leave Act protections for same-sex couples. The guidance follows the U.S. Supreme Court’s decision in United States v. Windsor, which struck down Section 3 of the Defense of Marriage Act and fundamentally changed how the federal government treats same-sex marriages.
According to The Wall Street Journal, which quoted an internal memorandum from Labor Secretary Thomas Perez, the extension of FMLA coverage is but one of many steps that the agency will take to properly implement the Windsor decision. On the same day, the Social Security Administration announced that it will now process and pay out spousal retirement claims for same-sex spouses.
Under the revised DOL fact sheet, a "spouse" means a "husband or wife as defined or recognized under state law for purposes of marriage in the state where the employee resides, including 'common law' marriage and same-sex marriage." This definition comports with the FMLA regulations, which define "spouse" based on the legal definition of marriage in the state of the employee's residence.
The DOL's FMLA "spouse" definition does not cover situations in which an employee in a same-sex marriage resides in a state that does not recognize same-sex marriage, but was married or works in a state that does recognize such marriages. If the DOL wishes to expand the "spouse" definition, it will be unable to do so through fact sheets or interpretive guidance, but instead must act through a public notice-and-comment rulemaking process.
The fact sheet contains links to earlier DOL regulatory materials, which refer to other FMLA leave benefits available to same-sex couples. For example, under a 2010 administrator's interpretation, an employee may take FMLA leave for a child being raised with a same-sex partner, regardless of whether the same-sex relationship is legally recognized, to bond with the new child or to care for a child with a serious health condition. In another example, an employee who was raised by same-sex parents may take leave to care for a non-adoptive or non-biological parent on the basis of an in loco parentis relationship. In both cases, the right to take leave arises from the in loco parentis relationship, not from the existence of a legally valid same-sex marriage.