1. 1 The ERISA Industry Committee Washington Update: February 22, 2012

2. 2 Participation Procedure Procedure for audience participation Audience will be in a “listen-only” mode If you wish to ask a question or make a comment, press *6 on your telephone to “un-mute” your telephone After speaking, please press *6 again to re- enter “listen-only” mode

3. 3 Washington Update Agenda Welcoming Remarks Retirement Update Health Update Concluding Remarks/Questions

4. Retirement – Legislative Update 2012 Congress Congress passes legislation that provides 10 month extension of: –Extension of Payroll Tax Holiday –Extension of Unemployment Benefits –“Doc Fix” –Does NOT include PBGC premium increase

5. Retirement – Legislative Update, cont. Representatives Gerlach (R-PA) & Neal (D-MA) Introduce a Bipartisan “Sense of Congress” Resolution (H. Con. Res. 101) with 106 sponsors (expressing the sense of Congress that current tax incentives for retirement savings are important) ERIC testified before House Education & Workforce Committee hearing on “Examining the Challenges Facing the PBGC and Defined Benefit Plans” on February 2 nd (US Steel testified on behalf of ERIC

6. Retirement – Legislative Update, cont. Senate Transportation bill includes 2 retirement provisions: “interest stabilization” provision (modified from original business community proposal) extension of Section 420 to permit funding of corporate retiree health benefits and retiree life insurance ERIC letter supporting extension of Section 420 provision

7. Obama Administration – FY 2013 Budget Proposal would give PBGC Board authority to adjust variable rate premiums and would increase flat-rate premiums for single- employer sponsors of DB plans Increase DOL enforcement budget to detect worker misclassification Auto IRA Oppose privatization of Social Security

8. Obama Administration – FY 2013 Budget, cont. Reduce itemized deductions and other tax preferences for families earning > $250,000 and individuals earning > $200,000 per year Limits tax rate at which high-income taxpayers could reduce tax liability to maximum of 28% (includes retirement plan contributions)

9. Retirement – Regulatory Update, Department of Labor Service provider final disclosure regulations (under 408(b)(2)) released February 2 nd : –Compliance dates extended for service providers until July 1, 2012 & for plan sponsors until August 30, 2012 (for participant disclosures) –Summary of disclosure/guide requirement NOT included: but DOL “reserved” the section and is working on a separate proposed regulation

10. Retirement – Regulatory Update, cont. Lifetime Income Disclosure & Benefits Statement Project Treasury issued lifetime income guidance Mandate vs Guidance & Snapshot vs Projection DOL states that it hopes to release proposed regulation in June 2012

11. Retirement – Regulatory Update, cont. Definition of Fiduciary Regulations to undergo additional economic analysis DOL states it is still working to re-propose the regulation this year (96-1 likely to be amended) Changes to proposed regulation include: clearer distinction between investment advice & education; “seller’s exception” to only apply to 401(k) (not IRAs) -?? clarification of definition of broker commission - ?? to be accompanied by 2 new PTEs and amendments to existing PTEs

12. Retirement – Regulatory Update IRS & Treasury -IRS/Treasury lifetime income guidance– released February 2 nd : –Spousal annuity requirements –Rollovers to DB plans –Split payments (partial annuitization/partial lump sum –Deferred annuities –ERIC FocusOn Call on proposed regulations and revenue rulings to be held on February 29

13. PBGC PBGC released “statement” on reconsideration of policy on recharacterization of contributions: now will reject amended filings based on recharacterized contributions – ERIC members have expressed concerns on policy As expected, Administration included premium proposal in budget (released Feb 13 th )

14. Health: SCOTUS and the ACA SCOTUS will consider ACA constitutionality –Oral arguments next month 3/26: does the AIA preclude a ruling on the case at this point? 3/27: is the individual mandate constitutional? 3/28: 1) what other provisions can be upheld if the mandate is unconstitutional; and 2) is the expansion of Medicaid constitutional? –Decision probable late June –ERIC FocusOn call April 4 will address what happened during oral arguments –Panel at March 15 Membership meeting

15. President’s budget FY 2013 Opposition to extending 2001/2003 tax cuts for families >$250,000, individuals >$200,000 –Would limit itemized deductions and other tax preferences to 28% Would include exclusion for employer-provided health care Accelerate ACA Innovation Waivers to 2014 Create $5M State Paid Leave Fund $364B targeted reduction in Medicare, Medicaid, and related health programs

16. Uniform Benefit Summaries Final reg released last week Did not carve out exemption for large employers General applicability date: first day of the first open enrollment period beginning on or after 9/23/2012 ERIC FocusOn call March 8

17. Uniform Benefit Summaries, cont. Important changes/clarifications –Notice of modification – required for modification of terms of plan that would affect content of SBC that is not reflected in most recent SBC and that does not occur with renewal –No SBC for excepted benefits Stand-alone dental or vision plans Health FSAs –Stand-alone HRAs generally subject to SBC rules HSAs generally are not subject to SBC rules

18. Uniform Benefit Summaries, cont. Important changes/clarifications –Expansion of time to provide SBC after application for coverage or request 7 calendar days to 7 business days –SBC provided 30 days prior to first day of plan year for automatic renewals –SBC must be provided to beneficiaries Anti-duplication rule –Special enrollees must get SBC within 90 days of enrollment

19. Uniform Benefit Summaries, cont. Important changes/clarifications –SBC need not be automatically provided for benefit package in which participant or beneficiary is not enrolled But must be given within 7 business days of a request –SBCs need not provide premium or cost of coverage information –Minimum essential value and minimum coverage statements only required for SBCs given for coverage beginning on or after 1/1/2014

20. Uniform Benefit Summaries, cont. Important changes/clarifications –Phased approach to coverage labels 2 now, possibly more later (up to six) –Pregnancy and serious/chronic medical conditions –“Best effort” approach for describing plan terms –Expat plans: instead of SBC, may provide contact info for questions about coverage But must follow SBC rules for coverage inside US

21. Uniform Benefit Summaries, cont. Important changes/clarifications –SBC may be provided as stand-alone document or with SPD If with SPD, must be intact and prominently displayed at beginning; must nonetheless conform with SBC timing rules

22. Uniform Benefit Summaries, cont. Important changes/clarifications –Electronic delivery For those already covered, may be provided electronically in compliance with DOL rules For those eligible but not enrolled: may be provided electronically if format is readily accessible and paper copy provided free If form is Internet posting, must advise in paper form (postcard) OR email that documents are available on Internet, provide URL, and advise of availability of paper copy

23. Uniform Benefit Summaries, cont. Important changes/clarifications –Uniform glossary Must be made available upon request within 7 business days SBC must include an internet address for glossary, contact phone number to obtain paper copy, and disclosure that paper copies are available upon request –Internet address may be plan’s or government’s

24. Essential health benefits under the ACA Two roles for EHBs under ACA –Must be offered in individual and small-group plans –Large plans may limit dollar value of non-EHBs HHS permits states to set benchmarks from: –One of the three largest small group plans in the state; –One of the three largest state employee health plans; –One of the three largest federal employee health plan options; or –The largest HMO plan offered in the state’s commercial market

25. EHBs, cont. New FAQ from HHS largely address state issues –But #10 states that large plans may use a definition of EHBs authorized by HHS Includes all benchmark options –Also states that HHS will use enforcement discretion to work with plans that make a good faith effort to apply an authorized definition of EHBs

26. EHBs, cont. Draft ERIC comment letter – asking for YOUR comments by noon, 2/24 –Developed by ERIC EHB task force –Circulated 2/17 –Main points: Continue to allow large plans to use good faith discretion Create “safe harbor” for filters –Still awaiting reg on minimum actuarial value

27. FAQ on auto enrollment, shared responsibility, waiting periods Auto enrollment – guidance will not be ready to take effect by 2014 Shared responsibility – Departments will issue proposed reg coordinating SR and waiting periods –FAQ do not address 2 big SR questions – family coverage and boundary between penalties

28. FAQ, cont. Coordination of penalty and waiting period –No employer penalty for no coverage first 3 months after date of hire –Employers will often have six months to determine whether a new hire is an FTE Waiting period –90-day period begins when employee otherwise eligible for coverage under terms of plan

29. FAQ, cont. Misc.: new proposed reg will be issued based on previous guidance –W-2 wages as an affordability safe harbor –Employers may use a “look-back/stability period safe harbor” method for determining full-time employees

30. ERRP – show us the money! Employers may not submit ERRP claims with incurred date on or after 1/1/12 Payments made by ERRP as of 1/19: $4,725,399,211.43 Reimbursement requests will now be held in the order of receipt, pending the availability of funds

31. The intersection of ACA and politics Certain women’s preventive health services must be provided by group health plans at no cost to participants –Includes all FDA-approved contraceptives –Applicable to plan years starting on or after 8/1/12 for non-grandfathered plans –Narrow exemption for religious employers Granted extra year to comply New wrinkle: contraception may be provided via side policy funded by insurers

32. Wellness Recently circulated letter to EEOC in follow up to meeting last year Issue: spousal incentives –Statutory justification –Need for guidance to come nationally, not locally, from EEOC Second letter from ERIC will urge EEOC not to adopt a “no incentives” policy for wellness programs under the ADA

33. ERIC FocusOn calls Completed: –Essential health benefits (1/11) –Industry Funding Relief Proposal (1/19) –Health care reform task force (2/16) Upcoming –Treasury guidance on lifetime income (2/29) –Uniform benefit summaries (3/8) –SCOTUS oral arguments under the ACA (4/4) –Impact of same-sex marriages (TBD) 33

34. Upcoming ERIC calls and meetings Next Washington Update call: 3/21/12 ERIC Membership and Health Policy/Retirement Security Committee meetings: March 14 and 15, 2012

35. 35 To receive ERIC updates If you would like to receive your own copy of our emails and notifications of future updates, please let us know by writing to Adreanne Cooper at ERIC (acooper@eric.org.) In this email, please include your contact information or signature block, and indicate whether you wish to receive information on retirement issues, health issues, or both.acooper@eric.org

36. 36 For further information Kathryn Ricard, Senior Vice President, Retirement Security –kricard@eric.orgkricard@eric.org Gretchen Young, Senior Vice President, Health Policy –gyoung@eric.orggyoung@eric.org ERIC: 202/789-1400