In another round of rulemaking related to the Dodd-Frank Wall Street Reform and Consumer Protection Act, the SEC proposed a rule that would require certain executive officers to pay back incentive compensation tied to accounting-related metrics in the event of an accounting restatement. Specifically, the proposed rules require publicly-traded companies to adopt clawback policies and publish those policies as an exhibit to their annual report. If there is an accounting restatement, the company’s recovery policy would require an executive to pay back certain excess incentive compensation for the three years before the date that the company is required to prepare the accounting restatement. The rule covers incentive compensation paid to “executive officers,” which the rule defines as the president, principal financial officer, principal accounting officer, certain vice presidents, and other employees who perform policy-making functions.

Contents of the Final Rule

For group health plans, the final SBC rule clarifies that a plan administrator may outsource to another party its responsibility to provide the SBC to plan participants. In doing so, the plan administrator is required to monitor that party’s performance and take steps to correct any noncompliance as soon as practicable. The final rule also includes a safe harbor that allows plan administrators to avoid unnecessary duplication when using multiple insurance products in the same group health plan. Specifically, rather than requiring the plan administrator to provide multiple SBCs, the final rule allows a plan administrator to synthesize all of the insurance products (or self-insured products, as the case may be) into one SBC.

Changes to the Form and Content of the SBC

Perhaps most importantly, the agencies are taking steps to shorten the SBC in response to plan sponsor feedback. The December 2014 proposed regulations were released in tandem with an updated draft SBC template that will shorten the length and limit the amount of required information in the SBC. Public comments on the new template and results from consumer testing are still pending. Accordingly, an updated template will not be finalized until early 2016 and will be effective for plan years beginning on or after January 1, 2017.

These final rules will have limited impact on group health plans. The major changes to the form and content of the SBC template will not be released until 2016; accordingly, plan sponsors will be able to continue to use the 2013 SBC template and rely on the associated guidance until then.