Benesch Benefits Blog 2017-01-01T14:04:19+00:00

Topical and timely news and information on Employee Benefits & Compensation issues

New OregonSaves Retirement Program Impacts Employers With Oregon Employees

August 18th, 2017|0 Comments

By: Joe Yonadi and Nancy Chawla

OregonSaves Retirement Program

On July 1, 2017, OregonSaves Retirement Program (“OregonSaves”) went into effect. OregonsSaves is sponsored by the State of Oregon, and is a state-run automatic Roth Individual Retirement Account (“IRA”) for private-sector employees.

OregonSaves will operate such that employers who do not sponsor a qualified retirement plan will be required to automatically enroll employees into the OregonSaves program, and employees will be required to contribute 5% of their compensation to a Roth IRA account. However, employees will be able to opt-out, or choose a different savings rate. After the employer completes the initial employee registration to set up its employees’ Roth IRA accounts, its ongoing obligations are limited to providing OregonSaves update information to its employees, and to make ongoing payroll deductions. Employers are not required to make contributions under OregonSaves.

All employers in the State of Oregon will have to take an action, whether to enroll employees or file a Certificate of Exemption.[1] The following schedule has been established for employers to register with OregonSaves.



Employers that are not exempted from the OregonSaves program will have to take the following steps:

1.              Register for the program when […]

Benefit Plan Discretionary Clauses Dealt A Blow In California

July 21st, 2017|0 Comments

By: Joe Yonadi and Nancy Chawla

Last month, the Ninth Circuit dealt a blow to discretionary clauses contained within ERISA plans when it held that a California statutory provision that banned discretionary clauses was not preempted by ERISA. Orzechowski v. Boeing Co. Non-Union Long-Term Disability Plan (9th Cir. May 11, 2017).

Almost three decades ago, the U.S. Supreme Court created the rule that a de novo standard of review should apply to a denial of benefits claim unless the ERISA plan provides discretionary authority to the plan administrator. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (1989). If discretionary authority is provided in a plan document, summary plan description, or insurance contract, courts can review the claims denial under an arbitrary and capricious or abuse of discretion standard of review. Both standard of reviews are more favorable than a de novo standard of review.

Boeing’s Plan and Aetna’s Policy

The facts in Orzechowski were that Boeing sponsored a long term disability plan for its employees (the “Plan”). The Aetna long term disability policy granted discretionary authority to Aetna to “review all denied claims, determine whether and to what extent employees and beneficiaries are entitled to benefits, and construe any disputed or doubtful […]

Olay! Olay! Olay! Olay!…No Fiduciary Rule DELAAAAY! No Fiduciary Rule DELAAAAY!

June 1st, 2017|0 Comments

By: Joseph P. Yonadi, Jr. and Shaylor R. Steele

The delays are over, the Fiduciary Rule’s applicability date will not be delayed past June 9, 2017. Accordingly, plan sponsors, and the financial services industry, should be prepared to comply with the rule beginning on June 9, 2017.

However, Secretary Acosta also indicated that the DOL will continue to seek industry and public input on how to revise the bill and eliminate its negative effects on the industry. As of now, it is unclear as to what the Fiduciary Rule will entail with its full implementation date of January 1, 2018; however, based on prior public comments from Secretary Acosta, it may still be likely that substantial revisions are on their way.

On May 22, 2017, the DOL released two pieces of guidance: 1) a Temporary Enforcement Policy, and 2) a Conflict of Interest FAQs. This new guidance comes in the form of transitional guidance and is primarily aimed at the financial services industry relating to its compliance with the rule from June 9, 2017 through January 1, 2018. Noteworthy, is the DOL made it clear that they will not pursue claims against fiduciaries who are acting […]

On Second Thought, DOL Proposes 60-Day Delay to Fiduciary Rule Applicability Date

March 3rd, 2017|0 Comments

By: Joseph P. Yonadi, Jr. and Nancy R. Chawla

On March 1, 2017, the Department of Labor’s (DOL) issued a proposed rule to extend the Fiduciary Rule applicability date by 60 days. The current applicability dates for the Fiduciary Duty Rule and prohibited transaction exemptions are set for April 10, 2017. The extension would move the applicability dates to June 9, 2017.

As mentioned in our previous blog post, “To Delay or Not to Delay (the Fiduciary Duty Rule), That is the Question,” the President has directed the DOL to review the new Fiduciary Duty Rule and to consider the issues raised in the President’s February 3, 2017 Memorandum (Memorandum).

The path forward appears to be that under the new proposed rule, there is a 15-day comment period from the date of the proposed rule’s publication in the Federal Register (March 2, 2017), which will end on March 17th. Further, the DOL announced a 45-day comment period attempting to address the concerns outlined in the Memorandum asking whether the Fiduciary Duty Rule, as currently drafted, adversely affects retirement investors.

In order to make sense of any of this, one must essentially make a decision-tree; however, we think there are four potential results that will […]

To Delay or Not to Delay (the Fiduciary Duty Rule), That is the Question

February 28th, 2017|0 Comments

By: Joseph P. Yonadi, Jr. and Shaylor R. Steele

This morning, the Office of Management and Budget (OMB) concluded its review of a proposed regulation entitled “Delay of Applicability Date” that would effectively delay the implementation of the Fiduciary Duty Rule (Rule). However, an odd turn of events took place when the OMB changed the designation of the delay to “economically significant.” This higher designation could potentially mean a longer comment period. The Department of Labor (DOL) is expected to delay the Rule for 180 days. Please stay tuned…

The President’s Memorandum
On February 3, 2017, President Trump issued a Memorandum, directing the Department of Labor to review the new Fiduciary Duty Rule. Most retirement industry spectators, expected the Memorandum to delay the Rule’s April 10 effective date; however, the Memorandum does nothing to officially delay the Rule’s April 10th compliance deadline, it merely directs the DOL to study the Rule and its related exemptions, and, if warranted, to rescind or revise them.

Under the Memorandum, the DOL is directed to consider three economic and legal points: (1) whether the Rule is harmful to investors due to a reduction of Americans’ access to certain retirement products; (2) whether the Rule will adversely affect investors […]

QSEHRA Notice Requirement Deadline Suspended

February 28th, 2017|0 Comments

By: Joseph P. Yonadi, Jr.

In an effort to provide small employers with additional time to furnish the required QSEHRA initial written notice, Treasury and IRS have suspended the deadline until further guidance has been issued that will include a revised notice deadline. For 2017, the first required written notice would have been due on March 13.

Our January 23 blog post apprised you of the 21st Century Cures Act, enacted this past December, that created a Health Reimbursement Arrangement (HRA) for small employers that do not offer a group health plan. The small employer HRA has been given the acronym “QSEHRA.”

We advised that employers with fewer than 50 employees may offer these arrangements if they provide an initial written notice to eligible employees of at least 90 days before the beginning of a year for which the QSEHRA is provided. The written notice must include:

  • a statement of the amount of the eligible employee’s permitted benefit under the
  • a statement that the eligible employee must provide the permitted benefit amount to any health insurance exchange to which the employee applies for advance payment of the premium tax credit;
  • and a statement that an eligible employee may be liable for an individual […]

President Obama Provides a Parting Gift: A Health Reimbursement Arrangement for Small Employers

January 23rd, 2017|0 Comments

Authors: Joe Yonadi and Nancy Chawla

In December 2016, President Obama signed into law the 21st Century Cures Act (Act), giving employers with less than 50 employees a tool to help their employees pay for medical expenses without being subject to the Affordable Care Act’s (ACA) market reform requirements.

ACA Exemption
Beginning January 1, 2017, small employers may offer Qualified Small Employer Health Reimbursement Arrangements (QSEHRA) to employees who purchased health plans in the individual market. Since the Act exempts QSEHRAs from the ACA’s market reform requirements, QSEHRAs are not subject to the ACA’s coverage and cost-sharing requirement

The Mechanics
Small employers must offer a QSEHRA to all eligible employees on the same terms. There are some exceptions as to who is eligible, for example, employees who have less than 90 days of service and part-time and seasonal employees are not eligible employees. Further, the amount of reimbursement may vary depending on the age of the eligible employee or the number of family members covered under the QSEHRA.

Following the same statutory roadmap as an health reimbursement arrangement designed under Sections 105 and 106 of the Internal Revenue Code (Code), a QSEHRA may only be funded by an employer and not by employee salary reduction contributions. […]

A New Year’s Eve Surprise…Court Enjoins the HHS From Enforcing the ACA’s Prohibition of Discrimination on the Basis of “Gender Identity” and “Termination of Pregnancy”

January 13th, 2017|0 Comments

Authors: Joe Yonadi and Nancy Chawla

On December 31, 2016, the U.S. District Court for the Northern District of Texas issued a nationwide preliminary injunction preventing the Department of Health and Human Services Office of Civil Rights (HHS) from enforcing Section 1557 of the Patient Protection and Affordable Care Act (ACA) that prohibits discrimination on the basis of “gender identity” and “termination of pregnancy.” See Franciscan Alliance, Inc. v. Burwell, No. 7:16-cv-00108-O (N.D. Tex. Dec. 31, 2016).

Practical Impact of Injunction
The injunction is limited to blocking the enforcement of gender identity (i.e., transgender services) and termination of pregnancy provisions required under the ACA regulations.  HHS has announced that the rest of the Rule will remain intact, including the Rule’s notice requirements.

Even though HHS enforcement has been temporarily brought to a halt, the injunction is preliminary, and may be appealed.  In addition, group health plan sponsors that are contemplating health plan design changes should keep in mind that the EEOC has taken the position that sex discrimination includes gender identify for purposes of Title VII.  Thus, this injunction has no effect in the event of an EEOC investigation.  Like so many pending regulatory issues, it may be best to wait and see the […]

5th Circuit Upholds Strict Pleading Standard in BP Stock Drop Case

September 29th, 2016|0 Comments

Author: Shaylor Steele and Joe Yonadi

BP sponsored an investment and savings plan which contained an ESOP component comprised of BP stock as an investment option for participants.  On June 24, 2010, plaintiff-investors sued BP due to the sharp decline in BP stock after the Deepwater Horizon drilling rig explosion that caused a massive oil spill.  Plaintiffs alleged the following:  (1) that the plan fiduciaries breached their duties of prudence and loyalty by allowing the plans to acquire and hold overvalued BP stock; (2) breached their duty to provide adequate investment information to plan participants; and (3) breached their duty to monitor those responsible for managing the BP Stock Fund.

The District Court held plaintiffs failed to overcome the Moench presumption and dismissed their claims; however, plaintiffs appealed and while their appeal was pending, the Supreme Court issued Dudenhoeffer which discarded the Moench presumption stating that such a presumption of prudence is not set forth under ERISA, and further creating a much more difficult standard that “to state a claim for breach of the duty of prudence on the basis of inside information, a plaintiff must plausibly allege an alternative action that the defendant could have taken that would have been consistent […]

IBM Stock Drop Case Illustrates Heightened Post-Dudenhoeffer Pleading Standard

September 27th, 2016|0 Comments

Authors:  Shaylor Steele and Joe Yonadi

On September 7, 2016 the U.S. District Court for the Southern District of NY dismissed separate lawsuits challenging IBM’s stock drop under both ERISA and the federal securities laws.  In Jander v. IBM (S.D.N.Y. Sept 7, 2016), the Court clearly outlines the heightened Dudenhoeffer pleading standard where the plaintiff’s must allege:  (1) an alternative action that the defendant could have taken that would have been consistent with the securities laws, and (2) that a prudent fiduciary in the same circumstances would not have viewed as more likely to harm the stock fund than to help the stock fund.

The facts in Jander set forth that IBM provided an ESOP as one of its investment options.   IBM’s stock price dropped 17% when it announced that it was taking a $2.4 billion write-down in connection with selling its microelectronic business to another company.   There is a factual argument the write-down should have occurred earlier under Generally Accepted Accounting Principles.  As such, Plaintiffs brought a claim under Section 502 of ERISA alleging that IBM failed to prudently and loyally manage the Plan’s assets, and failed to adequately monitor the Plan’s fiduciaries especially once they learned that IBM’s stock price […]