Compliance March 20, 2015

Hearing Witness Says ACA Hasn’t Helped Small Employers

The ACA’s potential benefits for small employers have not materialized five years into enactment, a spokesperson for the National Federation of Independent Business told a Senate committee.
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The cost of health insurance is the most critical issue facing small business owners, and is the main reason owners do not offer employer-sponsored health insurance or discontinue providing the benefit, Holly Wade, director of Research and Policy Analysis at the National Federation of Independent Business (NFIB), said during a hearing before the Senate Finance Committee about the Patient Protection and Affordable Care Act (ACA).

She added that small businesses offering health insurance annually confront the arduous task of adjusting profit expectations, insurance plans, cost-sharing and other mechanisms to help absorb often erratic changes in total premium costs.

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Wade noted that the NFIB Research Foundation recently published the second of a three-part health insurance longitudinal survey titled, “Small Business’s Introduction to the Affordable Care Act Part II,” which found that the ACA exacerbates market turmoil evidenced by large numbers of policy cancellations, shifting renewal dates to obtain better rates, changes in employer cost-sharing, and adoption of different, though not necessarily more desirable, health insurance plans.

Small business owners have also encountered repeated delays and confusion over major components of the law including the Small Business Health Options Program (SHOP) exchange marketplaces, the small business health insurance tax credit, the employer mandate and financial reimbursement options, according to Wade.

Currently, only a few states have fully operational SHOP exchange marketplaces and for those states that do, they are finding little interest among small employers or their insurance agents. Wade said the NFIB survey found just 13% of small employers visited the HealthCare.gov website to look for individual insurance, 4% for business insurance and 8% for both.

Wade noted that the law prohibits employers from reimbursing or otherwise providing financial support to employees in order to help them pay for individually purchased insurance plans. However, the NFIB survey found that about 18% of small employers offered this benefit last year, and they are now in violation of the law.

“The ACA’s potential benefits for small employers have not materialized five years into enactment. Instead, the small employer experience more often consists of increased levels of uncertainty and frustration related to changes in the small group health insurance market and rules associated with the employer mandate,” Wade concluded.

More testimony from the hearing can be found here.

Compliance March 19, 2015

BNY Mellon Settles Foreign Exchange Trading Suit

The agreement with retirement plan customers is part of a larger settlement.
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The Bank of New York (BNY) Mellon has agreed to repay $84 million to employee benefit plan customers that the Department of Labor (DOL) says were victimized through the bank’s “standing instruction” foreign exchange trading program.

An investigation by the department’s Employee Benefits Security Administration (EBSA) found that, for most standing instruction foreign currency exchange transactions with customers, including retirement plans, the bank assigned nearly the worst prices at which currencies had traded in the market during all or part of a day. At the same time, the bank was leading its clients to believe that it was pricing their transactions in a more favorable manner.

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The department concluded that the bank misrepresented and failed to disclose to clients how it was pricing the transactions and that the bank had engaged in a deliberate, prolonged effort to conceal its pricing methods. The department determined that the bank’s failure to work prudently and solely in the interest of the plans, its dealings with plan assets to benefit itself, and its misrepresentations and failures to disclose its activities were all breaches of the bank’s fiduciary duties to the plans and violated the Employee Retirement Income Security Act (ERISA).

The “standing instruction” foreign currency exchange program is a service that the bank offered to customers who needed to exchange currencies on a regular basis. For clients who used this program, the bank automatically exchanged the currencies at a rate and time that the bank, in its sole discretion, determined.

The department’s investigation found that the bank habitually assigned its “standing instruction” customers rates that were close to the worst rates that the currencies had traded previously during the day. In addition, the department found that the bank gave certain “standing instruction” clients better rates than were offered to virtually all of its other plan customers. Such favoritism is prohibited by ERISA.

The agreement was reached as part of a larger settlement that resolves private lawsuits against the bank as well as suits brought by the U.S. Department of Justice and the New York State Attorney General. BNY Mellon has agreed to pay $714 million to resolve the federal and state governments’ cases.

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