Mental Health Parity Law Passes on Coattails of Economic Stabilization Act
After more than a decade of discussion, Congress has finally enacted legislation to mandate full parity for mental health and substance abuse benefits. The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act became law on October 3 when President Bush signed the Emergency Economic Stabilization Act, a broad bill aimed at stabilizing U.S. financial markets. |
Presidential Campaign Proposals Suggest Changes Ahead for Employer Health Plans
During their months on the presidential campaign trail, Sens. Barack Obama (D-Ill.) and John McCain (R-Ariz.) have outlined competing visions for a reformed U.S. health care system. Both candidates aim to increase the number of Americans with health coverage, reduce costs and improve quality, but they take different approaches. Sen. Obama would create a new national plan, expand existing public programs and impose mandates. Sen. McCain opposes mandates and instead proposes tax changes and market reforms. Pension Funding Improves for 2007
Pension funding has been much in the news during the last decade and over the last several years, most of the news has been positive. A Watson Wyatt analysis of defined benefit plan funding for the FORTUNE 1000 shows that plan funding improved again in 2007, and many pensions ended their fiscal year with significant surpluses. Funding received a boost from favorable asset returns and an increase in interest rates during 2007. Legislation to Restrict Commodity Investments Could Affect Pension Funds
The skyrocketing price of oil and gasoline was a key issue for Congress during its summer session. At the beginning of 2008, a barrel of crude oil cost close to $100, and a gallon of gasoline averaged about $3.05. By June, the average motorist was paying more than $4 per gallon for gas, prompting Congress to take a closer look. One discussion focused on whether speculation in the commodity markets is fueling higher prices. DOL Proposes New Disclosure Requirements for 401(k) Fees and Expenses
The U.S. Department of Labor (DOL) has proposed new disclosure rules, which are intended to help 401(k) plan participants make informed retirement savings decisions. Under the proposal, companies offering 401(k) and other participant-directed individual account plans would have to disclose summary information, including fee and expense information, for all investment options under the plan. IRS Gives Plan Sponsors More Time to Self-Correct Errors
The IRS has updated the Employee Plans Compliance Resolution System (EPCRS), giving sponsors of defined benefit and defined contribution plans more time to self-correct operational errors. The new rules take effect Jan. 1, 2009, but sponsors may apply them after Sept. 2, 2008. Social Security, Medicare and Americans’ Confidence in Their Retirement Future
Academics, policymakers and the media have been sounding alarms about shortfalls ahead for Social Security and Medicare for some time now. And many Americans have taken their warnings to heart, according to Watson Wyatt’s 2007 U.S. Survey of Older Employees’ Attitudes Toward Lump Sum and Annuity Distributions From Retirement Plans. Roughly 61 percent of older workers — those 50 to 64 years old — are not confident of receiving unreduced Medicare benefits, and 52 percent are not confident of receiving unreduced Social Security benefits, according to the survey. IRS Restricts “Pension Selling”
The IRS has ruled that transferring a qualified plan to an unrelated taxpayer for any purpose other than transferring assets, operations or employees violates the exclusive benefit rule. The ruling shuts down the practice of "selling" a company’s pension and threatens certain completed transactions. SSA Unveils New Social Security Benefit Estimator
The Social Security Administration (SSA) recently unveiled its revamped Social Security benefit estimator on its Web site. The new online calculator allows users to vary the inputs. For example, people can instruct the calculator to base its estimates on higher (or lower) future earnings and different retirement ages. These options should enable users to arrive at more accurate estimates as well as to consider the financial effects of different scenarios, such as retiring earlier or later, or taking a few years off work. IRS Finalizes Mortality Tables for DB Plans
The IRS has finalized the regulations proposed in 2007 regarding the mortality assumptions used to determine present values for minimum funding purposes for defined benefit (DB) pension plans under the Pension Protection Act of 2006. IRS Releases HSA Comparability Guidance
The IRS has proposed regulations on the health savings account (HSA) comparability requirements under the Tax Relief and Health Care Act of 2006. The regulations also explain the penalties for making contributions that are not comparable, which include a 35 percent excise tax. SEC Proposes to Adopt International Accounting Standards
On Aug. 27, the Securities and Exchange Commission (SEC) voted unanimously to propose a road map for shifting U.S. companies from U.S. Generally Accepted Accounting Principles (U.S. GAAP) to International Financial Reporting Standards (IFRS). The move to a global accounting language is intended to improve the comparability and transparency of financial reporting worldwide. It will also have important implications for U.S. employers in how they account for employee benefit and stock plans. Pension Freezes Continue Among the FORTUNE 1000, Albeit at a Slower Pace
From 2007 to 2008, the proportion of defined benefit (DB) plan sponsors in the FORTUNE 1000 that had a frozen plan increased by five percentage points, according to a recent Watson Wyatt study. The rate of annual increase in the total number of sponsors of frozen DB plans climbed sharply from 2004 to 2006 — when it peaked — and has declined since then. IRS Releases Guidance on International Benefit Transfers
The IRS has released guidance addressing the tax treatment of benefit transfers from either a U.S.-qualified plan to a non-U.S.-qualified foreign plan, or from a plan qualified under both U.S. and Puerto Rico law (a “dual-qualified” plan) to a plan qualified only under Puerto Rico law. The IRS considers both of these transfers to be taxable distributions. House Approves ADA Amendments Act
On June 25, the House passed the ADA Amendments Act of 2008 by a vote of 402-17. The act would overturn U.S. Supreme Court decisions that have narrowed the range of disabilities that qualify for protection under the Americans with Disabilities Act (ADA). It would also establish that mitigating measures — such as hearing aids — do not affect the determination of disability. If the act passes, it will increase the number of workers who qualify for ADA protection.
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