ERIC Testifies Before PBGC on Reportable Events Proposed Regulations

The ERISA Industry Committee (ERIC) on June 18 testified before a Pension Benefit Guaranty Corporation (PBGC) hearing on the agency’s proposed regulations on reportable events requirements. Mike Francese, a partner in Covington & Burling’s employee benefits practice, testified on behalf of ERIC, where he raised concerns regarding the PBGC’s proposal to modify the rules governing reportable events.

“ERIC strongly supports the current regulatory framework and believes that the PBGC has the tools it needs to protect the system without unduly burdening those employers who choose to continue to sponsor defined benefit plans,” Francese testified.

ERIC’s testimony centered on the following four points:

• It is not necessary to overhaul the existing regulations’ approach to waivers; 
• The proposed regulations essentially eliminate plan funding as a basis for a waiver; 
• The PBGC should focus on the financial soundness of the plan and not the plan sponsor; and 
• The proposed safe harbor for financial soundness of a plan sponsor is unworkable and there is no suitable alternative. 

For more information, ERIC’s press release is available here.

A more detailed description is available for ERIC members and guests here.

To access ERIC’s testimony, click here.

To access ERIC’s comment letter, click here.

 

Treasury and IRS Hear Testimony on the Shared Responsibility Rules

On April 23, 2013, the Treasury Department and Internal Revenue Service (IRS) heard testimony from over twenty groups and individuals about the Shared Responsibility proposed regulations. Panelists from the government included Alan Tawshunsky and Rachel Leiser Levy from the Treasury Department and Stephen Tackney and Kathryn Johnson from the Internal Revenue Service.

The proposed regulations detail the circumstances under which penalties can be imposed on large employers for failing to offer health coverage to at least 95% of their full-time employees (and their dependents) or for large companies that offer health coverage, if it is not affordable and/or does not satisfy the requirements for minimum value.

The hearing included testimony from Alden Bianchi of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. on behalf of The ERISA Industry Committee (ERIC). Mr. Bianchi reiterated a series of recommendations ERIC made to IRS and Treasury in a March 18 comment letter urging the agencies to revise the shared responsibility proposed regulations to better accommodate the implementation challenges and administrative complexities faced by large, multinational companies with diverse workforces. In particular, he emphasized that:

• Employers should be able to treat variable hour and fixed employees differently for purposes of the rules applicable to the proposed regulations’ measurement, stability and administrative periods.
• Hours of service should not be aggregated for an employee across all members of a controlled group.
• The coverage of dependents should be narrowed.
• The maximum administrative period should be extended to 3 months instead of 90 days.
• Special rules are needed for service contract employees.

The individuals from the government noted the following:

• Self-insured plans will qualify as minimum essential coverage.
• With respect to wellness programs, the people least able to afford higher premiums should be able to comply with the requirements.
• They want to avoid churning between employer-provided coverage and the Exchanges.
• Flexibility for employers is only bad if it harms employees.
• They would prefer not to create too many rules regarding shared responsibility.

And the best quote from the hearing was “When you hire someone, all you have are expectations.”

A copy of ERIC’s testimony is available here.
A copy of ERIC’s comment letter is available here.
The proposed regulation is available here.
Copies of comment letters and testimony are available here.