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Looking Ahead – ISS 2014 Draft Policies and Proxy Survey Results

Looking Ahead – ISS 2014 Draft Policies and Proxy Survey Results

October 24, 2013

Authored by: benefitsbclp

Looking Ahead – ISS 2014 Draft Policies and Proxy Survey Results

Institutional Shareholder Services (ISS) conducts an annual survey to obtain input on corporate governance issues.  The survey results are considered by ISS in preparing annual updates to its proxy voting policies.  The survey often provides insight into potential ISS policy changes for the upcoming proxy season.

A few weeks ago, ISS released the results of its 2014 proxy voting survey.  ISS received more than 500 responses from institutional investors and corporate issuers located within and outside of the United States.   The 2013-2014 Policy Survey Summary of Results can be accessed here.  This week ISS posted draft 2014 policies for comment here.  The draft policies include proposed changes for U.S. companies to Board Response to Majority-Supported Shareholder Proposals and the ISS Pay for Performance Quantitative Screen.  The comment period will close on November 4, 2013 and ISS anticipates releasing its final 2014 policy updates in November.

Below are highlights of the survey findings and draft policies covering board decision making and executive compensation matters:

1. Board Responsiveness

Last year ISS announced changes to its policy on board responsiveness to majority-supported non-binding shareholder proposals.  The 2014 survey included questions eliciting views on board responsiveness to shareholder mandates and what is a reasonable time-frame for the board’s response.  The survey results included mixed views from investors and issuers as to whether the board should implement a specific action to address the shareholder mandate or should be free

2013 Year-End Qualified Retirement Plan Checklist

2013 Year-End Qualified Retirement Plan Checklist

October 17, 2013

Authored by: benefitsbclp

It’s time to ensure year-end qualified plan deadlines are satisfied. Below is a checklist designed to help employers with this process, including information regarding the U.S. Supreme Court’s recent decision in U.S. v. Windsor regarding the Defense of Marriage Act (“DOMA”) and the impact of this decision on qualified retirement plans.  This checklist addresses both year-end deadlines and January 2014 deadlines which sponsors of qualified retirement plans may wish to begin preparing for now.


  • Cycle C Sponsors.  Individually designed plans are on five-year cycles for renewing their determination letters with the IRS.  For most Cycle C sponsors (i.e., those sponsors with an employer identification number ending in either 3 or 8), the five-year cycle will end on January 31, 2014.  Generally, governmental plans are assigned to Cycle C.  However, governmental plan sponsors may elect Cycle E (i.e., February 1, 2015 to January 31, 2016) by filing their determination letter application in Cycle E rather than in Cycle C.  No election form or notice to the IRS is required if a governmental plan sponsor plans to make this Cycle E election.

Non-governmental Cycle C sponsors (and governmental sponsors who do not plan to elect Cycle E) who have not already renewed their determination letter this cycle should be prepared to submit their amended and restated plans to the IRS by no later than January 31, 2014.  Additional information on timing cycles and determination letters can be found here.

  • 403(b) Plans

IRS Guidance on HRAs, FSAs and EAPs: Plan Amendments May be Required

October 15, 2013


Among the many reforms under the Affordable Care Act (“ACA”) is the prohibition on imposing annual dollar limits on essential health benefits (“Annual Dollar Limit Prohibition”).  In addition, non-grandfathered group health plans must provide certain preventive services without any cost-sharing requirements (“Preventive Services Requirement”).  There has been wide-spread speculation as to how these market reforms would affect health reimbursement arrangements (“HRAs”), health flexible spending accounts (“FSAs”) and other employer reimbursement arrangements.

Health Reimbursement Arrangements

In the preamble to 2010 interim final regulations, Treasury and the Departments of Labor and Health and Human Services (“Departments”) stated that an HRA that is integrated with a group health plan that complies with the Annual Dollar Limit Prohibition, would be acceptable (despite the HRA having an annual dollar limit) since the combined benefit satisfies the Annual Dollar Limit Prohibition.

In 2013 FAQs, the Departments explained that an HRA will not be considered to be integrated with a primary group health plan offered by an employer unless the HRA is available only to employees who are covered under the primary group plan and such group plan satisfies the Annual Dollar Limitation Prohibition.

Notice 2013-54 (“Notice”) provides additional guidance and imposes new requirements on the integration of HRAs with major medical plans. According to the IRS, an employer-sponsored HRA cannot be integrated with individual market coverage. Therefore, an HRA used to purchase coverage on the individual market will violate the Annual Dollar Limit Prohibition.  Not only an HRA but any other type

Check it Out and Check it Off: 2014 Group Health Plan Checklist

Check it Out and Check it Off: 2014 Group Health Plan Checklist

October 14, 2013

Authored by: benefitsbclp

This is cross-posted from our recent client alert.

With 2014 just around the corner, numerous mandates under the Patient Protection and Affordable Care Act, as amended (“PPACA”) are about to become effective.  Below is a checklist of upcoming PPACA mandates that employers must implement in 2014, as well as a list of existing enrollment and annual notice requirements that group health plan sponsors should consider during open enrollment.

Additionally, with the recent decision of the U.S. Supreme Court in U.S. v. Windsor overturning part of the Defense of Marriage Act (“DOMA”), group health plan sponsors should take into account the impact of this decision on their plans.  As such, a brief summary of relevant DOMA considerations are provided below.

For a refresher on the PPACA mandates which became effective this year, please see our 2013 group health plan checklist here.

I. Requirements That Apply to All Group Health Plans (Whether Grandfathered or Not)

Beginning with the dates specified below, a group health plan subject to PPACA must comply with the following requirements, regardless of its status as a “grandfathered health plan”:

  • Annual limits will no longer be permitted on essential health benefits.

Currently, annual limits on “essential health benefits” cannot exceed $2 million.  Effective for plan years beginning on or after January 1, 2014, group health plans may not establish annual dollar limits on such benefits for any participant or beneficiary.  However, this prohibition does not prevent a group health plan from excluding all

The Second Circuit Considers Attorney’s Fee Award under ERISA in Settlement Context

In Hardt v Reliance Standard Life Ins. Co., 130 S. Ct. 2149 (2010) , the United States Supreme Court rejected the “prevailing party” standard for awarding attorney’s fees under ERISA.  Instead, a party moving for an attorney’s fee award must demonstrate “some degree of success on the merits.”   But what exactly does this standard mean?  Although not required, a favorable court judgment will qualify while a “trivial success” or a  “purely procedural victory” will not pass muster.  But how will these terms be interpreted and how will the standard be applied to the myriad of potential litigation outcomes which fall somewhere in the gray area in between?

The Second Circuit Court of Appeals recently applied this standard in the context of a voluntary settlement in Scarangella v. Group Health, Inc.  This case involved a claim for medical benefits under an ERISA plan which was insured by Group Health Insurance, Inc. (“GHI”) and administered by Village Fuel.  After substantial medical expenses were incurred by the wife of Nicholas Scarangella, a Village Fuel employee, GHI made a determination that Scarangella and his family did not satisfy the eligibility requirements.  GHI denied reimbursement and purported to retroactively rescind the policy.  Scarangella filed an action for benefits under ERISA against Village Fuel and GHI.  The two defendants filed cross claims for restitution which were dismissed by the District Court on the grounds that money damages are not available under ERISA because they are not equitable in

Tell Us What You Think! Employee Benefits Group Communications Survey

October 3, 2013


Over the last two years, the Bryan Cave Employee Benefits & Executive Compensation Group has been focusing on how to best communicate with you – our valued clients and friends. In addition to our traditional Client Alerts, we’re now reaching out in other ways by sending monthly compliance reminder emails, maintaining this active and vibrant blog ( and utilizing a variety of social media platforms including Twitter and LinkedIn, to bolster our visibility and connect with more people.

We’d like to hear from you about what you like, don’t like and what mediums you think serve you the best in keeping up in today’s highly regulated environment. To that end, we’ve prepared a quick survey (it should take no more than 5 minutes to complete) where you can provide us feedback on our group’s communication platform. We sincerely value your opinion and hope that you’ll take a few minutes to give us your thoughts.

To access the anonymous survey, please click here.

If you have questions, please contact us. Thanks very much for your input!


IRS Guidance on Same-Sex Spouses Trickles In – Methods for Employment Tax Refunds

Yesterday, the IRS released guidance giving employers two additional methods to correct overpayments of employment taxes for 2013 and prior years. [Note: This guidance only pertains to the overpayment of FICA taxes; employees will have to file a claim directly with the IRS for income tax refunds].

This guidance follows on the tail of Revenue Ruling 2013-17, released Aug. 29, which provided that the IRS would recognize all legally married same-sex couples (using a “state of celebration” approach). Now, since the IRS recognizes these marriages retroactively, same-sex spouses may file refund claims for prior open tax years (e.g. 2010, 2011, 2012). Additional discussion on this guidance may be found here.

In the past, if an employer provided health coverage or fringe benefits to a same-sex spouse, the benefits were taxable to the employee and employers had to withhold and pay employment taxes with respect to these benefits because the marriage was not recognized by the IRS. If these benefits would have been excluded from tax had the IRS recognized same-sex marriages, any tax overpayments may now be refunded.

Under the general correction method for FICA tax overpayments, the error may be corrected during the reporting period by simply reimbursing the employee (i.e. no additional IRS forms need to be filed). However, for quarters in which employers have already submitted Form 941, employers must (i) repay or reimburse the employee in the amount of the overcollection, (ii) get confirmation that the employee has not made (or will not make)

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