The ERISA Industry Committee Washington Update January 9

The ERISA Industry Committee Washington Update: January 9, 2012 1

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 reenter “listen-only” mode 2

Check out the new ERIC website! • www. ERIC. org • All new content: amusing photos of ERIC staff, funny jokes, delicious recipes, insider gossip, and penetrating insights into today’s top benefit stories* *Under construction

Washington Update Agenda • Welcoming Remarks • Outlook for health policy in 2012 – Scott Raab, Policy Advisor to Senate Minority Leader Mitch Mc. Connell (R-KY) • Health Update • Retirement Update • Concluding Remarks/Questions 4

SCOTUS and the ACA • SCOTUS will consider ACA constitutionality – Briefs coming in now – Oral arguments this spring • 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

Wyden-Ryan Medicare proposal • Plan introduced by Sen. Ron Wyden (DOR) and Rep. Paul Ryan (R-WI) – Medicare recipients would get premium support to buy health insurance on federally regulated exchange • Could choose private plan or traditional Medicare • Would start in 2022; no impact on those 55 or over – Premium support level determined by secondlowest cost plan and traditional Medicare

Wyden-Ryan Medicare proposal, cont. • New Medicare plans – Must offer benefits at least as comprehensive as those offered by traditional Medicare – No discriminatory premiums • Must accept all, regardless of age, gender, health – Feds would contribute more money to plans covering sickest seniors • Low-income seniors would receive financial help with OOP costs • New help for catastrophic costs

Wyden-Ryan Medicare proposal, cont. • Wyden “free choice” redux – Small (<101 employees) employers may give employees option of taking cash instead of health coverage • Employees may keep unspent balance, but taxed • Overall cap on Medicare spending: economic growth plus 1%, starting in 2023

Essential health benefits under the ACA • Two roles for EHBs under ACA – Must be offered in Exchange plans – 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

EHBs, cont. • What is a workable definition of EHBs that plans may use to limit benefits that are not EHBs? – Examples: bariatric surgery, in-vitro fertilization – Would a benchmark be useful? – Can we come up with a list of EHBs? • Do we need a definition? – Are dollar limits on non-EHBs something we can live with as long as other limits are available? • Subject of ERIC Focus. On call this Wednesday (1/11)

Reporting cost of health coverage on Form W-2 • New IRS Notice 2012 -9 augments, tweaks, and clarifies earlier guidance • New points addressed include: – EAP, wellness programs, on-site clinics – Separate dental and vision plans – Related employers with common paymaster – Excess reimbursements under 105(h) • Future guidance will be prospective

Medicare claims data • CMS [finally] publishes regulation to permit use of Medicare claims data to analyze provider quality and performance – Specified entities may access standardized extracts of Medicare claims data under Parts A, B, and D to measure provider performance

ERRP – the well is dry! • Employers may not submit ERRP claims with incurred date on or after 1/1/12 • CMS has sent survey to plan sponsors who have received ERRP reimbursements – Survey intends to document use of ERRP funds – Contact Gretchen Young if you have not received one and would like to complete it • ERIC call with CMS on 12/16

Striking news from California • Premiums for employer health insurance plans in CA have risen 153. 5% since 2002 – 5 times rate of inflation • Proportion of state employers offering coverage to workers fell to 63% from 73% over last two years

Retirement – Legislative Update • 2012 Congress Conference to begin next week on extension of payroll tax holiday beyond 2 month extension passed in late December: to include – Extension of Payroll Tax Holiday – Extension of Unemployment Benefits – “Doc Fix”

Retirement – Legislative Update, cont. Immediate Concerns/Opportunities for ERIC Members’ Issues • Inclusion of all/parts of Administration’s proposal on PBGC Premiums • Opportunity to include funding relief in “tax legislation”

Retirement – Legislative Update, cont. “Active Issues for Congress” • • Defined Contribution Plans & Tax Reform (“Sense of Congress” Resolution) Hybrid Plan Lobby Campaign Update House Education & Workforce Committee hearing on “Costs to Sponsor Defined Benefit Plans” tentatively scheduled for early February 2012

Retirement – Regulatory Update, Department of Labor – Service provider final disclosure regulations (under 408(b)(2)) still at OMB (at OMB for Paperwork Reduction Act review) - possibility of extension of April compliance deadline – Definition of Fiduciary Regulations to undergo additional economic analysis – unclear when reproposed regulation will be out (DOL consistently stated early 2012 for anticipated release) (96 -1 likely to be amended)

Retirement – Regulatory Update, cont. • Lifetime Income Disclosure & Benefits Statement Project • ERIC/PSCA held joint conference call on 11/15/11 • ERIC/PSCA met with DOL on 12/8/11 (update) • Proposed regulation expected by mid-2012

Retirement – Regulatory Update IRS & Treasury - IRS/Treasury lifetime income guidance– Treasury guidance to be first out of gate “soon” to be followed by DOL & Treasury joint guidance -ERIC & PSCA to schedule meeting with Treasury & IRS on this issue

PBGC • PBGC released “statement” on reconsideration of policy on recharacterization of contributions: now will reject amended filings based on recharacterized contributions • We expect Administration to include premium proposal in budget (to be released in February)

ERIC Focus. On calls • Completed: – – – SF HCSO (12/7) HRAs under the ACA (12/8) Reporting health care costs on the W-2 (12/13) ERRP call with CMS (12/16) Health care reform task force (1/5/12) • Upcoming: – – – Essential health benefits (1/11/12) Industry Funding Relief Proposal (1/19/12) Health care reform task force (2/2/12) Impact of same-sex marriages (TBD) SCOTUS oral arguments under the ACA (late March) 22

Upcoming ERIC calls and meetings • Next Washington Update call: 2/22/12 • ERIC Membership and Health Policy/Retirement Security Committee meetings: March 14 and 15, 2012 • Try-outs for “ERISA: The Musical” (TBD)

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 please indicate whether you wish to receive information on retirement issues, health issues, or both. 24

For further information • Kathryn Ricard, Senior Vice President, Retirement Security – kricard@eric. org • Gretchen Young, Senior Vice President, Health Policy – gyoung@eric. org • ERIC: 202/789 -1400 25