New Laws, Regs Affect Comp and Benefits Plans
Healthcare reform, pension plan fee disclosures increase employer costs, headaches
By Lesia Winiarskyj
In today’s soft labor market, compensation and benefits might seem like a non-issue. But as small business hiring inches upward and the competition for talent heats up, rewards strategies have taken on renewed significance for human resources and financial professionals.
In addition, sweeping legislative and regulatory changes demand a clear understanding of new healthcare and pension plan administration mandates, tax credits, nondiscrimination, and reporting and filing requirements: and a host of other developments
At CBIA’s recent 2011 Compensation & Benefits Conference, legal, accounting, and public policy experts shared insights and information about the impact these and other variables will have on Connecticut businesses.
The Politics of Healthcare Reform
A major topic at the conference was the Patient Protection and Affordable Care Act (PPACA), or federal healthcare reform, enacted in March 2010.
Jason Martiesian, vice president of state government affairs for UnitedHealth Group, acknowledged lingering and widespread uncertainty about healthcare reform, which public opinion polls consistently show is the second-biggest concern for voters looking ahead to the 2012 elections, right behind jobs and the economy. Though November’s midterm election results: a Republican-controlled House and Democrat-controlled Senate: are sure to have an influence, Martiesian indicated that it’s too early to tell exactly what the federal government’s role will be in delivering employer-based health coverage.
Lynn Sorrentino, CBIA’s vice president of insurance marketing, gave an overview of some of Connecticut’s own hotly contested healthcare reform efforts, namely, proposals to establish a state-run healthcare exchange, pooling, new coverage mandates, and SustiNet, a plan that would have the state compete as a health insurer against the private market in a way that would put the taxpayer-funded general fund at significant risk.
Beyond the PPACA
Employers’ legal and fiduciary obligations with regard to group health plans extend far beyond the PPACA. They are, in fact, governed by a virtual alphabet soup of state and federal laws and regulations.
Bruce Barth and Melanie Hancock, partners at Robinson & Cole LLP, provided a detailed review of recent and upcoming rules, penalties, and tax provisions related to employee medical coverage and wellness plans. Topics included changes to the HIPAA privacy rules, coverage for dependent college students under Michelle’s Law, and the impact of the Genetic Information Nondiscrimination Act of 2008 (GINA) on employer-sponsored wellness programs and health risk assessments.
Many of the changes discussed require employers to not only review their plan documents, administrative policies, and procedures for compliance, said Barth, but also retrain their HR personnel and issue new employee communications. The learning curve can be steep, he noted, and mistakes are often costly. Missed filing deadlines, for example, can set companies back $100 per employee per day.
To add to the complexity, some rules apply to certain plans but not others, many are preempted by federal laws or include grandfathering plans, and some apply only to organizations of a certain type or size, exempting all others.
Not Just Healthcare”_
Healthcare isn’t the only arena where Congress is making far-reaching changes. The U.S. Department of Labor, in an effort to make fees more transparent to plan sponsors and participants, has instituted rules on how fees are disclosed for 401(k) and 403(b) plans, also known as defined contribution plans.
This is the DOL’s most significant step yet when it comes to fee transparency, said Richard Sych, president of Hooker & Holcombe Inc. Changes to defined contribution plan disclosures, he noted, will have a substantial impact on employers.
Though the new regulations aim to make it easier for fiduciaries to determine the reasonableness of fees and spot potential conflicts of interest, their complexity poses a considerable challenge for plan administrators. Sych advised plan sponsors to expect even greater participation in (and thus greater regulation of) defined contribution plans in the years ahead.
Lesia Winiarskyj is a writer/editor at CBIA. She can be reached at firstname.lastname@example.org.
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