Employee Retirement Income Security Research Articles

Implementation Of New Mexico's 'No Behavioral Health Cost Sharing' Law: A Qualitative Study.

Out-of-pocket spending is a long-standing challenge for privately insured people. New Mexico passed the first US law prohibiting private insurers from applying cost sharing to behavioral health treatment, effective January1, 2022. We examined the perceptions of key informants, including clinicians, insurers, and state officials, about implementing the No Behavioral Health Cost Sharing law to explore how it might affect downstream outcomes such as spending and access. The law was viewed favorably and implemented without much difficulty. Clinicians noted widespread positive impacts, particularly for those needing intensive treatment. However, they worried about workforce capacity and the exclusion of people covered under self-insured employer plans, which are exempt from state regulation under the Employee Retirement Income Security Act (ERISA) of 1974. Insurers found the law to be in alignment with their organizational goals, but they expressed concern about the administrative burden caused by increased reviews of claims, and some were monitoring for unintended consequences (for example, waste and fraud) that could lead to increased premiums. Engagement strategies were needed to inform eligible members and facilitate enrollment in eligible plans. The law provides a potential model for states to improve access to behavioral health care, but impacts may be limited by factors such as workforce, awareness, and federal ERISA constraints.

ERISA at 50: BLS tracks the evolution of retirement benefits

While the Bureau of Labor Statistics has studied employee benefits, including retirement plans, for at least 100 of its 140-year history, more detailed information has been available during the last half century, coincident with the passage of the Employee Retirement Income Security Act. This article follows the many changes to Bureau of Labor Statistics retirement income studies and shows the challenges of providing statistics on such a varied and frequently evolving topic.

Pension funding gaps: do mandated external governance mechanisms matter?

PurposeThis study aims to examine whether and how the experience of specialized external governance mechanisms mandated by the Employee Retirement Income Security Act of 1974 – the actuary and auditor – affect pension plan funding.Design/methodology/approachThis study uses data from annual pension plan regulatory reports (Form 5500), Form 10-K filings, Form DEF 14A filings (company proxy statements) and publicly available data sources. The hand-collected data include information related to the pension plan’s actuary and auditor and various pension plan data disclosed in the company’s financial statement footnotes.FindingsThe author finds that more experienced actuaries and auditors are associated with better funded pension plans, especially when the company has higher financial risk or lower board independence. Additional analyses indicate that companies with more experienced actuaries and pension plan auditors are more likely to make higher annual pension plan contributions and hold fewer Level 3 fair value assets.Originality/valueThe dearth of pension plan governance research generally focuses on whether and how internal governance mechanisms affect pension plan funding. To the best of the author’s knowledge, this is the first empirical study of the relationship between external pension plan governance mechanisms and pension plan funding.

The US Supreme Court and Future of Financing Dialysis Care.

The US Supreme Court and Future of Financing Dialysis Care.

The Massachusetts Infertility Insurance Mandate: not nearly enough

To assess the impact of statutory federal and state exceptions to the state law mandating insurance coverage for the diagnosis and treatment of infertility. Population-based cross-sectional study comprised of reproductive-age women (defined herein as 20-44 years of age) who resided in Massachusetts during the 2016-2019 interval. Statutory exemptions to the benefits afforded by the Massachusetts Infertility Insurance Mandate were identified in the Massachusetts General Laws as well as in the United States Code. Not applicable. Publicly available, deidentified, population-level data pertaining to state-based reproductive-age women (aged 20-44 years) were procured for the 2016-2019 interval. Data sources included the Massachusetts Census Bureau, Massachusetts Center for Health Information and Analysis, US Department of Defense, and US Office of Personnel Management. None. The proportion of state-based reproductive-age women who constitute beneficiaries of the Massachusetts Infertility Insurance Mandate after accounting for the applicable state and federal statutory exemptions that limit its impact. Public health plans (Medicare, MassHealth [state Medicaid], TRICARE, and the Federal Employees Health Benefits Program) are exempted from the Massachusetts Infertility Insurance Mandate by dint of federal or state statute. Self-insured employer-sponsored health plans are exempted from the Massachusetts Infertility Insurance Mandate by dint of the federal Employee Retirement Income Security Act. It follows that only 26.2%-36.0% of state-based reproductive-age women comprised eligible beneficiaries of the Massachusetts Infertility Insurance Mandate over the 2016-2019 interval. Contrary to commonly held views, multiple statutory exemptions to the Massachusetts Infertility Insurance Mandate render a significant proportion of state-based reproductive-age women ineligible for its cognate benefits. We propose herein that the Essential Health Benefit categories of the Affordable Care Act be expanded by the US Congress to include infertility care services.

Sufficient Income and Sustainable Withdrawal Rates for Retirement

Since the passage of the Employee Retirement Income Security Act of 1974 (ERISA), numerous companies from throughout the United States have chosen to change from providing “Defined Benefit” pension plans to providing “Defined Contribution” pension plans. Successful retirement planning is an iterative process that requires the management of many variables. Some are random and unpredictable in scope and magnitude and others are choices we make as our retirement objectives change. It’s essential that changes be incorporated expeditiously to minimize adverse outcomes. One can begin the process by estimating the annual income required to support one’s “retirement lifestyle” if retirement occurred today. Then extrapolate that income to the planned retirement date based upon the expected rate of inflation. A “modified four percent rule” can then be used to estimate the portfolio value required to support 30 or more years in retirement. The financial planner and client should go through this process at least every two years or when major events suggest a change is required. To assist the planner, this paper extends the Four Percent Rule in the following ways: Time in retirement is 16 – 40 years in 2-year increments with an asset allocation range is 0% to 100% stocks in 15 equal steps.

Rethinking the Risk of Defined Contribution Plans

In response to pension funding failures and concern that abuses in the private pension system were denying benefits to many workers, Congress passed the Employee Retirement Income Security Act of 1974 (ERISA). ERISA has several specific objectives: to ensure that workers receive pension benefits after they satisfy certain minimum requirements, to ensure that sufficient funds are set aside to pay promised pension benefits, to ensure that workers receive adequate information about their employee benefit plans, and to set higher standards of conduct for those managing employee benefits and pension funds. ERISA has been successful in accomplishing many of its goals. Today employees vest earlier, more plans are adequately funded, and plan participants are more knowledgeable about their retirement benefits. Moreover, since the passage of ERISA, increased participation and contribution rates in private pension plans have caused the average income of retired individuals to be comparable to that of the rest of the population.

Class Action Win Gives Doctors Appeals Rights for Repayments

Class Action Win Gives Doctors Appeals Rights for Repayments

UBH to Reimburse Beneficiaries, Pay Penalties

Back to table of contents Previous article Next article ProfessionalFull AccessUBH to Reimburse Beneficiaries, Pay PenaltiesMark MoranMark MoranSearch for more papers by this authorPublished Online:15 Oct 2021https://doi.org/10.1176/appi.pn.2021.11.28AbstractA Department of Labor investigation found that United Behavioral Health reduced rates for mental health professionals, overcharged beneficiaries for services, and subjected them to utilization review and denials of care.iStock/Kiyoshi TannoUnited Behavioral Health (UBH)/UnitedHealthcare Insurance Co. will pay $13.6 million to beneficiaries and $2,084,249 in penalties related to investigations and a lawsuit brought against UBH by the U.S. Department of Labor (DOL) and the office of the New York State Attorney General.An investigation by DOL’s Employee Benefits Security Administration found that since 2013, United had reduced reimbursement rates for out-of-network mental health services provided by psychologists, thereby overcharging participants for those services. The managed care company especially flagged mental health patients for utilization review, resulting in many denials of payment for those services.United’s actions violated the Mental Health Parity and Addiction Equity Act of 2008, which prohibits health plans governed by the Employee Retirement Income Security Act (ERISA) from imposing treatment limitations on mental health and substance use disorder benefits that are more restrictive than the treatment limitations they impose on medical and surgical benefits.Investigators also found United failed to disclose sufficient information about these practices to plans and their participants and beneficiaries. In the settlement, United agreed to cease the violations, improve its disclosures to plan participants, and commit to future compliance.“Protecting access to mental health and substance use disorder treatment is a priority for the Department of Labor—and something I believe in strongly as a person in long-term recovery,” said U.S. Secretary of Labor Marty Walsh in a statement. “This settlement provides compensation for many people who were denied full benefits and equitable treatment. We appreciate [New York] Attorney General Letitia James and her office’s partnership in investigating, identifying, and remedying these violations.”In a statement, James said United’s violations were especially egregious in light of the great need for treatment during the opioid epidemic and the COVID-19 pandemic.“In the shadow of the most devastating year for overdose deaths and in the face of growing mental health concerns due to the pandemic, access to this care is more critical than ever before,” she said. “United’s denial of these vital services was both unlawful and dangerous—putting millions in harm’s way during the darkest of times. There must be no barrier for New Yorkers seeking health care of any kind, and I will always fight to protect and expand it. I thank Secretary Walsh for his partnership on this important matter.” ■Information about the DOL lawsuit is posted here. ISSUES NewArchived

Development of AGA’s Policy Agenda During the COVID-19 Pandemic

Development of AGA’s Policy Agenda During the COVID-19 Pandemic

Unbelievable: ERISA's Broken Promise [ver. 4.0; August 2021

A central but generally neglected objective of federal regulation of pension and welfare benefit plans was to improve overall economic efficiency by providing workers with accessible and reliable information on which to base their career and financial planning. Simple dissemination of plan terms and financial data (full disclosure) cannot achieve that objective because few workers are equipped with the skills needed to evaluate the costs and benefits of complex retirement saving or health care programs. For that reason ERISA, the Employee Retirement Income Security Act of 1974, requires curated disclosure of plan-related information: it must be presented a format that is both understandable to the average plan participant and sufficiently complete to empower workers to make best use of the program. The length and complexity of most employee benefit plans creates tension between understandability and completeness, calling for tradeoffs to achieve optimal disclosure. As implemented ERISA’s understandability standard has been jettisoned by plan sponsors seeking protection from liability for failing to tell workers enough. Required plan summaries became unreadable, but plan sponsors could get away with that, both because there was no administrative or judicial enforcement of the understandability standard, and because they could tout the advantages of their benefit plans to workers by means of unregulated informal communications. The demise of understandability is only half the story. Federal courts also degraded the reliability of mandatory disclosures by finding that the obligation to provide reasonably accurate and complete information is enforceable only in a suit for appropriate equitable relief. In consequence, disclosure defects are often presented as estoppel claims, which triggers search for individual detrimental reliance, and translates into widespread under-enforcement of the reliability standard. This article explores the policy dimension of ERISA disclosure law and chronicles the decay of the equilibrium Congress envisioned. From the perspective of workers it is a saga of disappointment, disillusionment, and defeat. The new balance serves the interests of federal courts (reduced caseload) and some employers (increased flexibility), but likely contributes to the increasing standardization of employee benefit plans, decreasing their utility as instruments of workforce management. Far worse, it abandons ERISA’s goal of improved economic performance through better-informed career and financial planning. Yet those costs are not immutable: employers’ liability exposure could be recalibrated by regulation to revive understandability and approach optimal disclosure.

Impact investing

We show that investors derive nonpecuniary utility from investing in dual-objective Venture Capital (VC) funds, thus sacrificing returns. Impact funds earn 4.7 percentage points (ppts) lower internal rates of return (IRRs) ex-post than traditional VC funds. In random utility/willingness-to-pay (WTP) models investors accept 2.5–3.7 ppts lower IRRs ex ante for impact funds. The positive WTP result is robust to fund access rationing and investor heterogeneity in fund expected returns. Development organizations, foundations, financial institutions, public pensions, Europeans, and United Nations Principles of Responsible Investment signatories have high WTP. Investors with mission objectives and/or facing political pressure exhibit high WTP; those subject to legal restrictions (e.g., Employee Retirement Income Security Act) exhibit low WTP.

Recent wave of 403(b) litigation offers insight for educational institutions and fiduciaries

Colleges and universities have seen a wave of class‐action lawsuits concerning IRS Code Section 403(b) plans. Between 2016 and 2019, a well‐known retirement‐plan litigator sued about 20 universities — including Johns Hopkins University, the Massachusetts Institute of Technology, New York University, and the University of Pennsylvania — and their fiduciaries under the Employee Retirement Income Security Act. The lawsuits share similar allegations about the acts and omissions of fiduciaries and target retirement‐plan features common among universities. For example, the lawsuits allege the universities breached their fiduciary duties by (1) imprudently managing the selection of record‐keeping vendors, resulting in excessively high fees; (2) offering too many investment options, allegedly confusing employees; (3) failing to monitor the performance of and to timely remove expensive, underperforming investments; and (4) failing to avoid conflicts of interest between plans and record‐keepers. These lawsuits highlight the importance of educating plan sponsors and their fiduciaries about their responsibilities and litigation risks.

It Is Still Not Easy Being Green for Exchange-Traded Funds

An earlier foray into the performance of environmental, social, and governance exchange-traded funds depicted extremely low risk-adjusted returns achieved at the cost of considerable additional systematic risk. This updated analysis of environmental, social, and governance exchange-traded funds indicates that they are finally beginning to show improvement in their performance. Their risk-adjusted performance is palpably better, and their contribution to systematic risk, less perceptible. They are also doing better in terms of alpha, although in some cases the alpha contribution is neither high nor dependable. Altogether, although this moderately improved market picture could be adequate for most individuals who want to invest with their conscience, it remains unclear whether it is enough to generate a meaningful commitment from those who, under the Employee Retirement Income Security Act, are mandated to act in the best financial interests of 401(k) plan participants. <b>TOPICS:</b>Exchange-traded funds and applications, ESG investing, mutual fund performance <b>Key Findings</b> • ESG ETFs are now competitively priced and should no longer be considered a product for which investors pay a premium. Yet, their market continues to be highly concentrated, and its footprint remains trivial in relation to the overall ETF market. • ESG ETFs have measurably improved in terms of their contribution to systematic risk (beta) and the excess return they bring above and beyond the SPY (alpha), the fund against which their performance was evaluated. • ESG ETFs show modest returns, lagging behind the SPY, so it remains to be seen whether this is enough to generate a meaningful commitment from those with a fiduciary responsibility to invest in the best financial interests of their plan participants.

Groundbreaking Court Ruling Against Insurer Offers Hope in 2020

Groundbreaking Court Ruling Against Insurer Offers Hope in 2020

Legal setback doesn't deter patient from parity fighting UnitedHealth Group

A federal judge in California this month dismissed a young adult's class‐action complaint against UnitedHealth Group and several of its affiliates and subsidiaries for alleged violations of the Employee Retirement Income Security Act (ERISA), but the young man and his counsel see the latest development as merely a speed bump in their pursuit of claims against the major insurer.

The Role and Importance of Individual Retirement Accounts

What are now called “traditional IRAs” (Individual Retirement Accounts) were created by the Employee Retirement Income Security Act of 1974. Roth IRAs were added in 1997. Employer-sponsored Simplified Employee Pensions–IRAs were added in 1978 and Savings Investment Match Plans for Employees–IRAs (and 401(k)s) in 1996. Together IRAs hold $8.8 trillion in assets, one third of the total $27.1 trillion in all retirement plans. This article examines the role and importance of IRAs in the U.S. retirement system and the development of the different types of IRAs and their interaction with each other.

Now is the Time to Designate Proxy Advisors as Fiduciaries Under ERISA

Now is the time to designate proxy advisors as investment advice fiduciaries under the Employee Retirement Income Security Act of 1974 (ERISA). Such a designation is not only necessary to correct long standing concerns, but also to make sure voting recommendations are in compliance with the sole objective required by ERISA, shareholder wealth maximization (SWM). Utilizing voting recommendations that do not have SWM as their objective, e.g., utilizing Environmental, Social, and Governance (ESG) objectives, would be in direct conflict with the fiduciary duties of an ERISA plan manager when managing the shareholder voting rights of a plan. Being designated an investment advice fiduciary under ERISA would require proxy advisors, like plan managers, to be constantly guided by fiduciary principles in the creation of their voting recommendations for ERISA plans. These fiduciary principles include making decisions solely in the interest of the participants and beneficiaries of the plans with the exclusive purpose of providing benefits to them, and the application of the prudent man standard to proxy advisor actions. The investment advice fiduciary designation would also require proxy advisors to consider, without exception, SWM as the fiduciary objective when creating voting recommendations for ERISA plan managers. This means that ESG objectives cannot creep into these voting recommendations. To explain why this is so, a substantial portion of this Article is devoted to explaining how ESG interacts with the fiduciary duties of ERISA.

Unbelievable: ERISA’s Broken Promise

A central but generally neglected objective of federal regulation of pension and welfare benefit plans was to improve overall economic efficiency by providing workers with accessible and reliable information on which to base their career and financial planning. Simple dissemination of plan terms and financial data (full disclosure) cannot achieve that objective because few workers are equipped with the skills needed to evaluate the costs and benefits of complex retirement saving or health care programs. For that reason ERISA, the Employee Retirement Income Security Act of 1974, requires curated disclosure of plan-related information: it must be presented a format that is both understandable to the average plan participant and sufficiently complete to empower workers to make best use of the program. The length and complexity of most employee benefit plans creates tension between understandability and completeness, calling for tradeoffs to achieve optimal disclosure. As implemented ERISA’s understandability standard has been jettisoned by plan sponsors seeking protection from liability for failing to tell workers enough. Required plan summaries became unreadable, but plan sponsors could get away with that, both because there was no administrative or judicial enforcement of the understandability standard, and because they could tout the advantages of their benefit plans to workers by means of unregulated informal communications. The demise of understandability is only half the story. The federal courts have also degraded the reliability of mandatory disclosures by finding that the obligation to provide reasonably accurate and complete information is enforceable only in a suit for appropriate equitable relief. In consequence, disclosure defects are often presented as estoppel claims, and the necessary showing of individual detrimental reliance translates into widespread under-enforcement of the reliability standard. This article explores the policy dimension of ERISA disclosure law and chronicles the decay of the equilibrium Congress envisioned. From the perspective of workers it is a saga of disappointment, disillusionment, and defeat. The new balance may serve the interests of federal courts (reduced caseload) and some employers (increased flexibility), but it also likely contributes to the increasing standardization of employee benefit plans, decreasing their utility as instruments of workforce management. Far worse, it abandons ERISA’s goal of improved economic performance through better-informed career and financial planning.

An Actuarial Perspective on Pension Plan Funding

The Pension Benefit Guaranty Corporation (PBGC) was established by the Employee Retirement Income Security Act (ERISA) to provide insurance guarantees for qualified pension plans insufficiently funded to provide accrued vested benefits. The PBGC’s annual reports on the liabilities for plans it has taken over and the agency’s assets show that the Single Employer Program has seen this net position vary from a surplus of almost $10 billion in 2000, to a deficit of over $29 billion in 2012. The PBGC uses a proprietary Pension Insurance Modeling System to model future scenarios for their obligations. This paper offers observations on future pension plan funding and how this could affect the PIMS model, based on the current environment, and how the agency might respond to change.