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DOL Delays Claims Procedures for Disability Benefits

The DOL has now officially delayed until April 1, 2018 its regulations that amend the claims review and appeal procedures applicable to ERISA-covered employee benefit plans providing disability benefits. Such regulations were originally scheduled to apply to disability benefit claims filed on or after January 1, 2018. We previously commented on the DOL’s proposal to delay these regulations here. The delay gives the DOL time to consider additional comments and data, reassess the impact of the new claims procedures, and revise the regulations as deemed appropriate. Employers should thus expect to receive additional guidance from the DOL before the April 1 effective date. View the final regulations that provide for the delay.

DOL Files Suit Against Macy’s for Alleged Health and Welfare Plan Violations

The DOL recently filed suit against Macy’s and two of its third party administrators (“TPAs”) alleging violations of ERISA’s fiduciary rules and related offenses with respect to the payment of out-of-network (“OON”) healthcare claims, as well as against Macy’s for alleged violations of HIPAA’s wellness rules and ERISA’s fiduciary rules. The applicable SPD indicated that the amount payable for services received from OON providers would be based on the lesser of the provider’s actual charge or the average charge for similar services by providers in the participant’s geographic area, while the TPAs actually determined the reimbursement amounts based on a percentage of the Medicare Allowable Rate. In addition to penalties, the DOL’s complaint requests that the court require the plan to reprocess all OON claims during the applicable time period in a manner consistent with the then written terms of the plan. Many employer-sponsored health plans have similar issues regarding… Continue Reading

DOL Announces Enforcement Policy on Arbitration Limitation in the Exemptions

As currently drafted, following the transition period, the Exemptions will be unavailable to any fiduciary whose contract with a retirement investor includes a waiver or qualification of the investor’s right to bring or participate in a class action or other representative action in court. In FAB 2017-03, the DOL announced a policy limiting enforcement of this provision in the Exemptions. Specifically, the DOL announced that it will not pursue a claim against any fiduciary or treat any fiduciary as being in violation of the Exemptions solely because the contract between the fiduciary and the investor includes an arbitration agreement that prevents the investor from participating in class action litigation. FAB 2017-03 is available here.

DOL Proposes to Extend Transition Period for Fiduciary Rule Exemptions

The DOL recently published a notice (the “Notice“) proposing to extend the “transition period” currently in effect for the Best Interest Contract Exemption and the Principal Transactions Exemption (the “Exemptions“), which were issued in connection with the DOL’s new plan fiduciary definition. During the transition period, fiduciaries may rely on the Exemptions by adhering to the “Impartial Conduct Standards” (i.e., an advisor must give prudent advice that is in retirement investors’ best interest, charge no more than reasonable compensation, and avoid misleading statements). The other conditions applicable to the Exemptions will not become effective until the transition period ends. The Notice proposes to extend the transition period, which is currently scheduled to end on January 1, 2018, through July 1, 2019. The Notice also proposes a delay in the effective date of certain amendments to Prohibited Transaction Exemption 84-24 until July 1, 2019. The Notice is available here.

DOL Issues Additional FAQs on New Fiduciary Rule

The DOL recently released a set of FAQs related to its new plan fiduciary definition and related exemptions (the “Final Rule”). Specifically, the FAQs clarify that service providers who are required to provide ERISA Section 408(b)(2) notices to retirement plan sponsors, which disclose the service provider’s fees and services, are not required to update those notices to state the service provider is now a fiduciary until the date when fiduciary status must first be disclosed under the Final Rule’s Best Interest Contract and Principal Transaction Exemptions, which is currently January 1, 2018. (Please note that on August 9, 2017, the DOL filed a motion with the court presiding over the ongoing litigation concerning the Final Rule’s validity, stating that the DOL intends to further delay the effective date of the Best Interest Contract and Principal Transaction Exemptions for an additional 18 months.) In addition, the FAQs clarify that communications regarding… Continue Reading

The DOL’s Expanded Fiduciary Rule Applies to Health Savings Accounts

The DOL’s final fiduciary rule (the “Final Rule”) went into effect on June 9, 2017 after several delays. The Final Rule clarifies when a person who provides investment advice becomes a fiduciary to a plan for purposes of ERISA and the Internal Revenue Code. Under the Final Rule, the term “plan” explicitly includes health savings accounts (“HSAs”). While employers typically have little direct HSA involvement beyond engaging an HSA service provider (e.g., a trustee or custodian) and forwarding payroll contributions, the Final Rule does raise issues for employers to consider: Employers should review the products and services offered by their HSA service provider to HSA participants and determine if the service provider is a fiduciary as defined in the Final Rule. If applicable, the employer should consider including an affirmative acknowledgement in its HSA provider services agreement to the effect that such provider is a fiduciary under the Final Rule… Continue Reading

DOL Confirms June 9, 2017 Effective Date for the Fiduciary Rule

The DOL has announced that its new fiduciary duty rule and related prohibited transaction exemptions (the “PTEs”) will go into effect on June 9, 2017, although certain provisions in the PTEs will not become effective until after a “transition period” that ends on January 1, 2018. On May 22, 2017, the DOL published Field Assistance Bulletin 2017-02, in which it announced a temporary enforcement policy whereby it will not pursue claims during the transition period against fiduciaries who are working diligently and in good faith to comply with the new fiduciary duty rule and the PTEs. The DOL also released a series of Conflict of Interest FAQs clarifying the standards that apply under the PTEs during the transition period. View Field Assistance Bulletin 2017-02. View the FAQs.

DOL Final Rule Implements 60-Day Delay of New Fiduciary Duty Rule

The DOL recently published final rules that implement a 60-day delay in the effective date of the new fiduciary duty rule and related exemptions that the DOL proposed last March. Both the DOL and IRS previously announced enforcement relief from the new fiduciary duty rule in the event the DOL did not publish these final rules prior to April 10, 2017 (the enforcement relief is now moot since the final rules were published prior to that date). The final rules confirm that the new fiduciary duty rule’s effective date has been pushed back from April 10, 2017 to June 9, 2017. The 60-day delay is intended to give the DOL time to reconsider the fiduciary duty rule and to determine whether it may adversely affect the ability of individuals to gain access to retirement information and financial advice. View the final rules.

DOL Announces Enforcement Relief from Fiduciary Rule

The U.S Department of Labor (“DOL“) recently published Field Assistance Bulletin 2017-01 (“FAB 2017-01“), in which it announced a temporary policy for enforcement of its new fiduciary duty rule and related exemptions (the “Fiduciary Rule“). On March 2, 2017, the DOL proposed regulations to delay the effective date of the Fiduciary Rule from April 10, 2017 to June 9, 2017. In response to concerns expressed by financial service institutions that uncertainty about whether the effective date of the Fiduciary Rule will actually be delayed could result in investor confusion and marketplace disruption, the DOL indicated in FAB 2017-01 that (1) in the event that it issues a final rule after April 10, 2017 to delay the effective date of the Fiduciary Rule, it will not initiate an enforcement action based on non-compliance with the rule during the “gap” period between April 10, 2017 and the date that the delay is… Continue Reading

DOL Delays New Fiduciary Duty Rule

In proposed regulations recently released, the DOL delayed the effective date of its new fiduciary duty rule and related exemptions by 60 days, from April 10, 2017 to June 9, 2017. The DOL’s announcement follows a presidential memorandum issued on February 3, 2017, directing the DOL to reconsider the new fiduciary duty rule to determine whether it may adversely affect the ability of individuals to gain access to retirement information and financial advice. The 60-day extension is intended to give the DOL time to collect information and to consider comments it receives related to issues raised in the presidential memorandum before the rule and exemptions become effective. For additional information on the fiduciary duty rule in its current form, please see our blog post. View the proposed regulations.

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