PLANSPONSOR - August/September 2019 - 12

Rules & Regulations
state or multi-state metropolitan area, or
in a particular industry nationwide-
to provide retirement plans for their
workers. The DOL says the rule will allow
small- and midsize-plan sponsors to offer
competitive benefits packages similar to
those of larger organizations.
Under the rule, retirement plans may
also be sponsored through professional
employer organizations (PEOs)-thirdparty
human resource (HR) companies
that offer employment-related services to
small and midsize businesses. The DOL
adds that the rule creates a safe harbor
for PEOs that, in part, clarifies how they
qualify to administer retirement plans.
'Infrastructure Fees
Are Necessary'
Fidelity Investments has moved to dismiss
a consolidated lawsuit alleging it receives
" kickback " payments from providers on
its FundsNetwork platform. The suit
combines several filed against the firm
claiming the payments were presented
as infrastructure payments, or so-called
relationship-level fees. It says these would
violate the prohibited transaction rules of
the Employee Retirement Income Security
Act (ERISA) and the statute's fiduciary
rules. Participants in plans sponsored by
clients of Fidelity say the payments are
part of a pay-to-play scheme.
However, in a memorandum in
it services or to any other investor but is
acting in its own interests, Fidelity says.
" This has to be the rule, because if
service providers were deemed fiduciaries
to 401(k) plans when negotiating their
compensation, they would be required to
negotiate with the 'best interests' of the
IRS Notice 2019-45
expands the list
of preventive
care benefits
that ... may be
provided by a
high-deductible
health plan ...
plans in mind, meaning they could not
charge the plans anything more than cost,
and they would have to agree to credit
to the plans any excess compensation
received from third parties. And, if that
were the case, there would be no providers
left in business, " Fidelity argues.
support of its motion to dismiss, Fidelity
argues that it is entitled to negotiate and
collect these fees and that siding with
the plaintiffs in the consolidated lawsuit
would be detrimental to retirement savers.
Fidelity points out that, in similar cases,
courts have dismissed plaintiffs' claims,
holding that there was nothing unlawful
about the payments received because the
provisions of ERISA allow private parties
to recover only for breaches of fiduciary
duties. But when a platform or service
provider negotiates its own compensation
with an arm's length counterparty, it is not
acting as a fiduciary to the 401(k) plans For in-depth coverage of these topics and more, go to plansponsor.com/compliance.
Preventive Care Benefits
Expanded for HDHPs
IRS Notice 2019-45 expands the list
of preventive care benefits that, under
Section 223(c)(2) of the Internal Revenue
Code (IRC), may be provided by a highdeductible
health plan (HDHP) without
the participant first needing to meet the
deductible or having a lower one to meet
than whatever his applicable minimum-
i.e., for either self-only or family.
In prior guidance, the Treasury
Department and the IRS stated that
12 PLANSPONSOR.com August - September 2019
preventive care generally does not include
any service or benefit intended to treat
an existing illness, injury or condition.
However, the agencies say they are aware
that the cost barriers for care have resulted
in individuals who are diagnosed with
certain conditions failing to seek or utilize
effective and necessary care that would
keep their condition from worsening.
The Treasury Department and the
IRS, in consulting with the Department
of Health and Human Services (HHS),
have determined that certain medical care
services received and items purchased,
including prescription drugs, for certain
conditions should be classified as preventive
care for someone with that condition.
Cross-Plan Offsetting
For Health Benefits
A decision from the 8th U.S. Circuit
Court of Appeals and an amicus brief
filed in the case by the Department of
Labor (DOL) further emphasize plan
sponsors' duty to monitor what health
plan providers or third-party administrators
(TPAs) are doing. The lawsuit
was brought by doctors on behalf of
patients against UnitedHealth Group
Inc. According to the court opinion: In
2007, United implemented an aggregate
payment and recovery procedure in which
it began to offset overpayments made to
" out-of-network " providers, even when
the overpayment was made from one plan
and the offset taken from a payment by a
different plan. This is a practice known as
cross-plan offsetting.
In its amicus brief, the DOL said
cross-plan offsetting violates the Employee
Retirement Income Security Act (ERISA)'s
requirement that a plan fiduciary must
act for the exclusive purpose of providing
benefits to the plan's participants and their
beneficiaries; therefore, offsetting constitutes
a prohibited transaction. -PS

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PLANSPONSOR - August/September 2019

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