Council of Insurance Agents & Brokers Issues Public Comment on Employee Benefits Security Administration Proposed Rule
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For reasons outlined below, the Council urges the Department to make one important clarification to the proposal and explicitly exclude non-cash-value employee welfare plans that do not have an investment component.
By way of background, The Council represents the largest and most successful employee benefits and property/casualty agencies and brokerage firms. Council member firms annually place more than
The Department should add language to the PTE's "Plan" definition to clearly exclude non-cash-value welfare benefit plans that do not have an investment component.
As drafted, the proposal defines "Plan" broadly to include employee welfare benefit plans and employee pension benefit plans./2
Many welfare benefit plans, as you know, offer non-cash-value benefits such as health, life, and disability coverage. These plans do not have an investment component and are not designed to generate income, increase wealth, or serve as a savings vehicle.
In response to comments submitted by The Council and others, the Department clarified in its 2016 final rule on fiduciary "investment advice" that advice pertaining to these welfare plans without an investment component was not intended to be treated as fiduciary advice under ERISA or the Code./3
More specifically, the Department stated, "[It] does not believe that the definition of investment advice in ERISA's statutory text, the Department's 1975 regulation, or the prior [exemption] proposals are properly interpreted or understood to cover a recommendation to purchase group health, disability, term life insurance or similar insurance policies that do not have an investment component."/4
Accordingly, the Department added clarifying language to the definition of "investment property" in the 2016 rule explicitly excluding "health insurance policies, disability insurance policies, term life insurance policies, and other property to the extent the policies or property do not contain an investment component."/5
The 2016 rule was vacated by the
Specifically, we request that the Department revise the definition of "Plan" in the same fashion it clarified its 2016 rule, so that it reads:
"'Plan' means any employee benefit plan described in ERISA section 3(3) and any plan described in Code section 4975(e)(1)(A). The term 'Plan' does not include health insurance policies, disability insurance policies, term life insurance policies, and other property to the extent the policies or property do not contain an investment component."
We appreciate your work on this proposal and your consideration of our comments.
Respectfully submitted,
President
Suite 750
(202) 783-4400
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Footnotes:
1/
2/ See 29 U.S.C. 1002(3).
3/ See,
4/ Id.
5/ Id.
6/ 885 F.3d 360 (5th Cir. 2018).
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The proposed rule can be viewed at: https://www.regulations.gov/document?D=EBSA-2020-0003-0001
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