NASBO Releases 2020 State Expenditure Report

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NASBO Releases 2020 State Expenditure Report

On November 20, 2020, the National Association of State Budget Officers (NASBO) released its 2020 State Expenditure Report: Fiscal Years 2018-2020. This annual report examines spending in the various areas of state budgets including: elementary, secondary and higher education; public assistance; Medicaid; corrections; transportation; and other areas. It also includes data on capital spending and revenue sources in state general funds.

Some of the key findings include:

  • In fiscal year 2020, total state spending (including general funds, other state funds, bonds, and federal funds) is estimated to increase 7.8%.
  • Federal funds spending is estimated to increase 14.1%, which is the highest annual growth rate since the Great Recession. The significant increase is mainly due to additional federal aid states received in response to the COVID-19 pandemic, including the Coronavirus Aid, Relief, and Economic Security (CARES) Act and increased Federal Medical Assistance Percentage (FMAP).
  • Spending from the states’ own funds (general funds and other state funds combined, excluding bonds) is estimated to increase 5.1%.
  • The “all other” category is estimated to have the largest gain in total state spending at 12.6%. Many of the top expenditure areas for the CARES Act funds are included in the “all other” category, such as unemployment insurance, public health programs, housing assistance, emergency management, economic relief, aid to local governments, and broadband and other technology upgrades.
  • State general fund revenue is estimated to decrease 0.8%, which is the first decline since the Great Recession.

The report is available here.

Commonwealth Fund Issues Brief on State Trends in Employer Premiums and Deductibles

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Commonwealth Fund Issues Brief on State Trends in Employer Premiums and Deductibles

On November 20, 2020, the Commonwealth Fund issued its brief, State Trends in Employer Premiums and Deductibles, 2010-2019. Since the beginning of the COVID-19 crisis, about 15 million Americans have lost their employer-sponsored health insurance and more coverage losses are expected through 2021. The brief provides a state-by-state analysis of insurance cost for workers regarding premiums and deductibles and as a share of their income from 2010 to 2019, prior to the pandemic. 

The brief indicates that employer plans’ premium contributions and deductibles accounted for 11.5% of median household income in 2019, up from 9.1% in 2010. In 2019, premium contributions and deductibles were 10% or more of median income in 37 states, up from 10 states in 2010. Furthermore, the average deductible for a middle-income household amounted to 4.7% of income in 2019, up from 3.3% in 2010. Overall, for single and family policies, the total cost of premiums and potential spending on deductibles ranged from a low of $5,535 in Hawaii to a high of over $8,500 in nine states.

The brief is available here.

SLGE Examines Local Government and Public Health Collaborations

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SLGE Examines Local Government and Public Health Collaborations

On November 16, 2020, the Center for State and Local Government Excellence (SLGE) released its report, Successful Collaborations Between Local Government and Public Health: Exploring Multisector Partnerships to Improve Population Health. The report examines the collaborative efforts of local government agencies and state and local public health departments to help address the current public health challenges. Specifically, the report provides detailed information for consideration for cross-sector collaborations using the results of a quantitative survey and qualitative case studies in Colorado, Florida and Minnesota.

The report is available here.

IRS Issues Final Regulations Updating RMD Life Expectancy and Distribution Period Tables

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IRS Issues Final Regulations Updating RMD Life Expectancy and Distribution Period Tables

On November 12, 2020, the Internal Revenue Service (IRS) published its final regulations updating the life expectancy and distribution period tables that are used to calculate required minimum distributions (RMDs) from tax-favored employer-provided retirement arrangements, including qualified retirement plans, Internal Revenue Code Section 457 eligible deferred compensation plans, and 403(b) tax-sheltered annuities, as well as individual retirement accounts (IRAs) and annuities.

In November 2019, the IRS issued proposed regulations related to the updated life expectancy tables and uniform lifetime table that would have been applicable to distribution calendar years beginning on or after January 1, 2021. However, under the final regulations, the updated life expectancy tables and uniform lifetime table will apply for distribution calendar years beginning on or after January 1, 2022. The final regulations are effective as of November 12, 2020.

The regulations are available here.

EBRI Finds Worker Satisfaction with Health Benefits Increased During the COVID-19 Pandemic

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EBRI Finds Worker Satisfaction with Health Benefits Increased During the COVID-19 Pandemic

On November 12, 2020, the Employee Benefit Research Institute (EBRI) published its report, Worker Satisfaction with Health Benefits Has Increased During COVID-19 Pandemic. According to the report, the workers that reported they were extremely or very satisfied with their health benefits increased from 49% in 2018 to 55% in 2020. Those extremely satisfied with health insurance costs increased from 9% in 2018 to 16% in 2020 while those very satisfied rose from 13% in 2018 to 24% in 2020. In addition, workers that reported they were extremely satisfied with the costs of health care services not covered by insurance increased from 7% to 14% between 2018 and 2020, and those very satisfied increased from 14% to 24% over the same time period.

The report is available here.

GRS Publishes Research Alert on Maximum Deferral and Threshold Limits for 2020 and 2021

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GRS Publishes Research Alert on Maximum Deferral and Threshold Limits for 2020 and 2021

On November 9, 2020, GRS released its Research Alert, Maximum Deferral and Threshold Limits for 2020 and 2021.  This publication summarizes the Internal Revenue Service’s (IRS) new maximum deferral and threshold limits effective for limitation years beginning on or after January 1, 2021.  The Internal Revenue Code (IRC) establishes a number of limits on retirement plan benefits and contributions.  The limits are located in various sections of the Code and often apply in different ways to private and public-sector plans.  Generally, plans must comply with the limits to maintain their tax-qualified status.

This GRS Research Alert is available here.  

Groom Law Group Summarizes Recent Legislative and Regulatory Changes

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Groom Law Group Summarizes Recent Legislative and Regulatory Changes

On November 3, 2020, the Groom Law Group released its publication, Recent Legislative and Regulatory Changes – Chart of Required and Optional Plan Amendments. In recent years, Congress enacted legislation affecting tax qualified plans, plan sponsors, participants and beneficiaries, including the: 1) Bipartisan Budget Act of 2018; 2) SECURE Act of 2019; and 3) Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020. The Internal Revenue Service (IRS) has also issued regulations and other guidance related to the new laws as well as updated previous regulations.

In this publication, the Groom Law Group has provided a chart of the applicable changes for defined benefit (DB) and defined contribution (DC) plans, respectively. While many of the new rules are currently effective, various rules will need to be addressed with required and optional amendments for qualified plans. Specifically, the charts: 1) describe the key changes; 2) identify the source of the changes and IRS guidance to date; 3) note whether the change is required or optional; and 4) provide the general effective dates.

In most cases, the plan amendment deadline will not be until the 2022 plan year (or the 2024 plan year for governmental and certain collectively bargained plans), but any exceptions are also indicated. Importantly, Groom suggests that plan sponsors should await IRS guidance before amending for the SECURE and CARES Acts. However, terminating plans must be amended by the termination date.

The summary is available here.