PBGC Provides Premium, Filings Relief for Hurricane Harvey Victims

If IRS adds additional disaster areas in connection with its own filing extensions, any person responsible for meeting a PBGC deadline that is located in those additional areas will also be granted relief.

Following up on a previous announcement, the Pension Benefit Guaranty Corporation (PBGC) has shared more detail about its intent to waive certain penalties and extend certain filing deadlines in response to the hurricane disaster in Texas and Louisiana.

Technically speaking, this disaster relief announcement provides relief relating to PBGC deadlines to “designated persons.”  A “designated person” is defined as “any person responsible for meeting a PBGC deadline (e.g., a plan administrator or contributing sponsor) that is located in the disaster area for which the Internal Revenue Service (IRS) has provided relief in TX-2017-09, in connection with filing extensions for Form 5500 series returns, or cannot reasonably obtain information or other assistance needed to meet the deadline from a service provider, bank, or other person whose operations are directly affected by the severe storms and flooding from Hurricane Harvey that began on August 23, 2017, in Texas.”

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In TX-2017-09, the IRS provides relief in connection with filing extensions for Form 5500 series returns as a result of the disaster for taxpayers who reside or have a business in the disaster area. The relief generally extends from August 23, 2017, through January 31, 2018. As laid out by PBGC, the disaster area consists of Aransas, Bee, Brazoria, Calhoun, Chambers, Fort Bend, Galveston, Goliad, Harris, Jackson, Kleberg, Liberty, Matagorda, Nueces, Refugio, San Patricio, Victoria and Wharton Counties.

If IRS adds additional areas in connection with those filing extensions, any person responsible for meeting a PBGC deadline that is located in those additional areas will also be a designated person, PBGC confirms.

PBGC also clarifies that this disaster relief announcement “does not cover every situation in which PBGC disaster relief may be warranted. For example, it does not capture every person that might experience difficulty in meeting a PBGC deadline for reasons relating to the severe storms and flooding from Hurricane Harvey that began on August 23, 2017, in Texas. It also does not grant specific disaster relief for all filings. For example, it does not provide relief for certain filings that involve particularly important or time sensitive information where there may be a high risk of substantial harm to participants or the PBGC insurance program, e.g., notices of large missed contributions under section 302(f) of ERISA (Form 200), advance notices of reportable events under ERISA section 4043, and annual financial and actuarial information from certain controlled groups under ERISA section 4010.”

Those persons affected by the severe storms and flooding from Hurricane Harvey that began on August 23, 2017, in Texas who need relief from PBGC that is not covered by this disaster relief announcement should contact PBGC as soon as reasonably possible. To request case-by-case relief, contact Diane Morstein at PBGC by calling 1‑800‑736‑2444, extension 4136, or 202‑326‑4136; sending an e-mail to practitioner.pro@pbgc.gov; or “writing to Diane Morstein, Pension Benefit Guaranty Corporation, Suite 610, 1200 K Street, NW, Washington, D.C.  20005‑4026, Re: “Disaster Relief Announcement 17-09”.

Claiming disaster relief 

Other information shared by PBGC suggests that if the plan administrator of a plan is a designated person, PBGC will, for purposes of assessing any late payment or late information penalty, treat as timely any premium filing required to be made for the plan beginning on or after August 23, 2017, and on or before January 31, 2018, if the filing is made by January 31, 2018. Thus, for any such filing, PBGC will waive the applicable penalty, but not the applicable interest charges.

Concerning single-employer plan terminations, if the plan administrator of a plan that is terminating in a standard termination is a designated person, any of the following plan termination deadlines for the plan that fall on or after August 23, 2017, and on or before January 31, 2018, are extended to January 31, 2018:

  • The deadline for filing the standard termination notice (Form 500). This automatically extends the deadline for providing notices of plan benefits to participants and beneficiaries because that deadline is the date when the standard termination notice is filed.
  • The deadline for completing the distribution of plan assets.
  • The deadline for filing the post-distribution certification (Form 501) without penalty. This automatically extends the deadline for filing missing participant information and certifications without penalty and for paying missing participants’ designated benefits to PBGC without interest.

If the plan administrator of a plan that is terminating in a distress termination is a designated person and the deadline for filing the distress termination notice (Form 601) falls on or after August 23, 2017, and on or before January 31, 2018, that deadline is extended to January 31, 2018. 

PBGC goes on to explain that regulations on annual financial and actuarial information reporting require annual financial and actuarial information reporting in certain cases by contributing sponsors (and their controlled group members) maintaining plans with large underfunding or certain missed contributions or funding waivers. PBGC will grant relief where appropriate on a case-by-case basis for these reports.

The deadline for requesting review of a PBGC determination under PBGC’s regulation on rules for administrative review of agency decisions is generally 45 days (for an appeal) or 30 days (for a request for reconsideration) after the date of the determination. If a designated person is aggrieved by a PBGC determination, and the deadline for filing an appeal or a request for reconsideration of the determination falls on or after August 23, 2017, and on or before January 31, 2018, that person’s deadline for filing the appeal or request for reconsideration is extended to January 31, 2018.

Importantly, the disaster relief relating to premium deadlines also applies to multiemployer plans. For other multiemployer deadlines, under PBGC’s regulations governing multiemployer plans, various persons are subject to deadlines for making filings with PBGC, issuing notices to persons other than PBGC, and taking other actions. If the person responsible for meeting the deadline is a designated person, and the deadline falls on or after August 23, 2017, and on or before January 31, 2018, PBGC will neither assess a penalty under ERISA section 4302 nor take any other enforcement action with respect to any failure to comply with the deadline during the period ending on January 31, 2018.

Links to many of the forms mentioned above are available in the PBGC relief announcement, available in full online here

Creating a Better Open Enrollment Experience

Leaders from Mercer discuss strategies to enhance the open enrollment season for both employers and employees.

A recent survey revealed issues employees have with open enrollment season, including material too difficult to understand and not enough time to make benefits decisions.

In a webcast, Mercer discussed ways to make the open enrollment period better for employees and employers alike.

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Tyler Harshey, a Mercer actuary focusing on employer and consumer preferences, based in Chicago, first pointed out that passive enrollment maintains the status quo for employees and is easy. If employers like what employees are choosing, and they haven’t made benefit changes, they may want to do a passive enrollment.

However, an active enrollment increases employee participation in their benefits decisions, he said. It is effective when an employer has made changes to benefits; it helps keep employee and dependent information current and it reminds employees of all the employer’s offerings. “Health savings account (HSA) and flexible spending account (FSA) funding elections are annual decisions, so why not pair this active decision making with medical benefits,” Harshey said.

He also suggested employers should consider the order in which benefits are presented. All benefits should be presented in one place, but employers should present medical, dental, vision, HSA and FSA benefits first then life, accident and disability insurance and voluntary benefits last. “In the Mercer Marketplace, we’ve found order matters,” Harshey said. “Employers can see more enrollment in certain plans if they change the order of presentation a bit.”

According to Harshey, choice helps different segments of the workforce. Mercer found among those younger than age 30, 20% are not confident in being able to afford out-of-pocket expenses, and among those age 60 and older, 15% are not confident. In addition, 35% of younger participants prefer to pay higher premiums in exchange for lower out-of-pocket costs, as do 55% of older participants. By salary, employees making $110,000 or more are more confident in being able to afford out-of-pocket costs, but still half prefer a higher premium.

Mercer also found that whether an employer offers three, four or five health benefit options, a significant number of employees enroll in each option, though there is still a skew toward richer benefits. But, according to Harshey, offering more than that could result in diminishing returns.

Offering Decision Support

Harshey suggested employers use decision support tools to help employees—online educational content, phone consultations, cost calculators—but, he said, one-on-one face time is the best. “Keep it simple and quick to use, personalize the experience and embed support tools within the enrollment flow so employees have them at the moment they need them,” he said. “Employees are more likely to use embedded tools than if the tools are on other sites and employees are given a link.” Mercer suggests well-placed videos and text, provider search tools or formulary search tools to decide between two networks or whether medications are on a provider’s formulary. In addition, Harshey said, Mercer uses “robo-advisers” which gather demographic data from individuals to come up with recommendations.

Cindy Schrader, a member of Mercer’s Total Health Management Practice in Philadelphia, suggested employers offer cost transparency tools to help employees become sophisticated shoppers of health benefits. A Mercer survey found 72% of large employers plan to offer high-deductible health plans (HDHPs) by 2019, but only half of all consumers knew where to go to get cost and quality data.

During open enrollment, employers should help employees understand what is shoppable—medical services and pharmacy costs—and employers should show employees how to navigate tools and use the information. Schrader suggested employers should test drive tools before choosing what to offer employee. They should be easy to access and easily understandable.

In addition, she said some employers are giving employees reasons to use the tools. “Employers are embracing loyalty rewards for employees who use the tools,” Schrader said.

Communication Should Be Year-Round

David Slavney, a member of Mercer’s Workforce Change and Communication Practice in St. Louis, Missouri, said health should be a year round conversation.” Health decisions happen outside open enrollment season,” he points out.

As for the cost and quality transparency tools Schrader discussed, she said employers should leverage communication channels that have the ability to personalize data. Employers can use vendors to prompt messaging, based on an employee’s health data.

Plan sponsors can also help employees prepare for conversations with their health care providers. “Make sure they understand their benefits, deductibles and co-pays; pull together a list of questions about certain proposed treatments and illnesses as well as potential treatment alternatives,” Schrader said. “And remind employees of the available tools and resources to help them and their doctors make informed treatment decisions.”

Slavney said communications must simplify the complex. Employers should break communications down to smaller pieces—not a 15-minute video, but a two- or three-minute video. In addition, information should be meaningful and relevant. Employers should segment the employee audience to target messages. “Think about how to break information into chunks to point out things relevant to particular participants. Help them think, ‘If I do this, this will happen, and if I don’t, this will happen,’” he said.

According to Slavney, now is the time to accelerate communications toward digital approaches. Many vendors use mobile applications, and employers should not just tell participants to get a certain app, but tell them how it will help them. He added that employers should use text messaging opportunities, contending that employees react more to texts than emails.

Slavney said traditionally employers have looked at open enrollment as an event just repeated each year, but he encouraged employers to think about their strategy and be experimental, then learn from their experiments to inform future decisions.

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