Benefits January 30, 2018

HDHPs Appeal to Millennials and Higher-Income Employees

An analysis also finds Millennials were especially eager to adopt health savings accounts (HSAs), nearly doubling their HSA participation from 2017.

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There is a continued shift toward consumer-directed health care, with the rate of employers offering at least one high-deductible health plan (HDHP) increasing more than 20% since 2016, according to Benefitfocus’ third annual “State of Employee Benefits” report.

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The firm says this growth primarily stems from employers offering HDHPs alongside traditional health plans, reflecting the increased commitment among employers to offer more choice to employees. With respect to enrollment, the data indicates that employees’ health plan preference and benefits needs differ by demographic criteria, making plan diversity critical.

According to the report, there is mounting evidence that HDHPs are more appealing to employees with higher incomes. On average, employees enrolled in HDHPs for 2018 earn 7% more than employees enrolled in preferred provider organizations (PPOs)—a percentage difference more than twice what it was last year. This trend is consistent across all age groups. However, Millennials selected HDHPs at more than twice the rate of the most senior members of the workforce.

Participation in health savings accounts (HSAs) among employees in HDHPs grew by more than 60% percent, from roughly 50% in 2017 to 81% in 2018—with dramatic increases observed across every age group. Millennials were especially eager to adopt these accounts, nearly doubling their HSA participation from 2017. Employee contributions are up year over year—4% for single coverage and 3% for family coverage.

Benefitfocus’ State of Employee Benefits research represents an analysis of actual benefits enrollment data, aggregated anonymously across our large-group (1,000+ employees) customer base. The report may be downloaded from here.
Compliance January 30, 2018

Supreme Court Asked to Weigh In on Two Claims Regarding Denial of Benefits

A beneficiary of a deceased pension plan participant has filed both a fiduciary violation claim and a claim for benefits, which she argues present distinct injuries and should both be considered.

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The U.S. Supreme Court has been asked to review a case in which a retirement plan beneficiary filed both a violation of fiduciary duty claim and a claim for benefits, which an appellate court said could not both be considered.

In the case of Jennifer Strang v. Ford Motor Company General Retirement Plan, et al., Strang says the 6th U.S. Circuit Court of Appeals held that an Employee Retirement Income Security Act (ERISA) claimant is barred from alleging a claim for breach of fiduciary duty under ERISA section 502(a)(3) whenever that claimant also has the opportunity to allege a claim for benefits under ERISA section 502(a)(1)(B).

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However, Ford attorneys argue that rather than concluding that a plaintiff can never bring a fiduciary-breach claim under Section 502(a)(3) when a claim for benefits is available under Section 502(a)(1)(B), the 6th Circuit simply applied its well-established rule that a fiduciary-breach claim under Section 502(a)(3) must be “based on an injury separate and distinct from the denial of benefits.” The appellate court determined that the surcharge claim based on “Ford’s withholding of the election forms” constituted the “same injury” as the ensuing denial of benefits because “the remedy sought is the same: the $463,254.78 difference between what Strang received and what she would have received had John Strang’s distribution election been effective.”

But, in her argument in support of petition for writ of certiorari, Strang says she did allege distinct wrongdoing by the plan. “A fiduciary breaches its duty when it deliberately prevents an ERISA plan participant from making a proper claim for benefits,” the argument for the petition says. Strang alleges that John Strang repeatedly asked for the correct forms for electing a lump-sum distribution of his pension benefits, but Ford never provided them. It is because of this fiduciary breach by Ford that John Strang was denied benefits for not using the proper forms. Strang claimed that Ford’s refusal to provide John Strang with proper election forms upon request was the injury giving rise to the breach of fiduciary duty claim, distinct from the subsequent denial of benefits.

Strang says the 6th Circuit regarded her claims as the same injury strictly because they would result in granting the same relief—recovery of lost plan benefits. “It does not matter that Ms. Strang posited a different theory based on Ford’s deliberate effort to prevent John Strang from making a proper election, because ‘the nature of the defendant’s wrongdoing’ is deemed irrelevant in the Sixth Circuit,” the argument says.

Citing cases in other circuits, Strang’s attorneys represent there is a split between the 6th Circuit and other circuits regarding this issue. They also suggest, citing case law, that while it would be appropriate to reject additional equitable relief after awarding a claim for benefits, it is inappropriate to dismiss the claim for breach of fiduciary duty at the pleading stage simply because it seeks the same relief as the benefit claim.

What makes it seem the Supreme Court may take up this matter is that it has asked the Solicitor General to file a brief in this case expressing the views of the United States.

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