1 The ERISA Industry Committee Washington Update: September 10, 2012

2 Participation Procedure Procedure for audience participation Audience will be in a “listen-only” mode If you wish to ask a question or make a comment, press *6 on your telephone to “un-mute” your telephone After speaking, please press *6 again to re- enter “listen-only” mode

3 Washington Update Agenda Welcoming Remarks Health Update Retirement Update Legal Update Concluding Remarks/Questions

The November Elections: Health November elections –Will one party take control of the White House and Congress??? Impact on ACA could be huge if R’s have total control Significant effect also if just change in White House –Impact on Executive Agencies

Health Regulations: shared responsibility Notice on shared responsibility –Basic intent is to allow mechanism for employers to count FTEs who could be subject to 4980H penalty Safe harbors for counting “variable-rate” and seasonal employees Reliance on safe harbor guidance through 2014 Many remaining questions, especially how soon must we start measuring to avoid 2014 penalty? 5

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Health Regulations: waiting periods Notice : temporary guidance on ACA waiting period rules –In effect through 2014 Plan eligibility provisions based on time limited to 90 days –3 calendar months apparently not OK –Other eligibility provisions generally OK –OK if employee takes longer to elect 7

Health Regulations: reinsurance Transitional reinsurance program –ACA requires contribution from insurers and self- insured plans for three years –Intended to partially offset costs of insurers for insuring high-risk individuals –$12B in 2014 –$8B in 2015 –$5B in 2016 –Big question: how will yearly fee be apportioned? Also reporting concerns

Health Regulations: upcoming Still awaiting guidance on several key issues –Reinsurance –Employer shared responsibility provisions Difference between 4980H(a) and (b) penalties Meaning of parenthetical (and dependents) ERIC comment letter sent 8/27/12 –Minimum value –Affordability –Cadillac tax

Wellness: Broward County 11 th Circuit affirms District Court summary judgment –Broward County wellness program did not discriminate under ADA –County’s wellness program fit into safe harbor provision of ADA Did not have to meet ADA “voluntary” standard –Only applicable in 11 th Circuit Other statutes still apply: GINA, HIPAA, ACA 10

Retirement – Legislative Update August/Sept. political conventions ERIC & other trades send group letter to House of representatives in support of HR 3287 the SEAL Act – to allow flexibility in loan/hardship withdrawal repayments No retirement legislation expected to move prior to November elections

Retirement – Regulatory Update, Department of Labor Participant Disclosure FAQs on brokerage windows: –Release of FAB R modifying & replacing Q&A #30 of FAB (issued on May 7, 2012) with a new Q&A 39 on July 30 –New Q&A 39 states brokerage windows are not DIA for disclosure regulation purposes –Highlights DOL concern for plans that only have a brokerage windows and no DIAs –No specific reference to plan fiduciaries to monitor the underlying investments of a brokerage window

Retirement – Regulatory Update Department of Labor Department withdrawal of Q&A 30 due to variety of factors including: –May 31 st trades’ meeting with DOL –July 3 rd OMB meeting –Letter to Secretary Solis from trades –Hill visits/Kerry letter/Holt letter –Critical press articles

Retirement – Regulatory Update, cont Department of Labor – pending regulatory guidance FAQs on 408(b)(2) disclosure regulations Beneficiary statements & lifetime income (mandate vs safe harbor) Definition of Fiduciary proposed regulation

Retirement – Regulatory Update, cont. Treasury Department/IRS MAP year stabilization rate guidance –Notice & more to come Hybrid plan regulations Separate regulation project on PEP plans

Legal: Michigan Preemption Challenge Self-Insurance Institute of America Inc. v. Snyder, E.D. Mich. State tax on health claim payments –Applies to both insured and self-insured plans Court holds law not preempted by ERISA –Supreme Court precedents seem to the contrary Likely appeal –Possible amicus brief 16

Legal: US Airways v. McCutchen Amicus Brief Supreme Court brief Possible limits on subrogation –Equitable defenses –Override clear/comprehensive plan provisions Key issues in brief –Equity should not overrule plan terms

Legal Committee Re-energized Open to all ERIC members Activities –Evaluation of cases and issues Now examining Michigan preemption case Coordinated with ERIC Health and Retirement committees –FocusOn calls –Meetings 18

Upcoming ERIC calls ERIC FocusOn call on shared responsibility: Wednesday, September 12, 2:00 p.m. EDT Quarterly Benefits Litigation Update: Thursday, September 13, 2:00 p.m. EDT Washington Update conference calls: –Monday, October 1, 11:00 a.m. –Thursday, November 8, 11:00 a.m. –Monday, December 3, 11:00 a.m. ERIC Health Care Reform Task Force –Thursday, October 11, 4:00 p.m. – 5:00 p.m.

Upcoming ERIC meetings Washington Representatives Committee meeting: Monday, September 10, 3:30 p.m. (TODAY) Other Wash Rep Committee meetings –Monday, October 15 –Thursday, November 13 (post-Election Day) –Monday, December 3 ERIC Membership and Committee meetings: October 24-25, 2012

21 To receive ERIC updates If you would like to receive your own copy of our s and notifications of future updates, please let us know by writing to Adreanne Cooper at ERIC In this , please include your contact information or signature block, and please indicate whether you wish to receive information on retirement issues, health issues, legal issues, or all of the

22 For further information Kathryn Ricard, Senior Vice President, Retirement Security Gretchen Young, Senior Vice President, Health Policy Scott Macey, CEO and President ERIC: 202/