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Increases in Medicare Advantage (MA) enrollment, coupled with concerns about overpayment to plans, have prompted calls for change. Benchmark setting in MA, which determines plan payment, has received relatively little attention as an avenue for reform. In this study we used national data from the period 2010-20 to examine the relationships among unobserved favorable selection, benchmark setting, and payments to plans in MA. We found that unobserved favorable selection in MA led to underpayment to counties with lower MA penetration and overpayment to counties with higher MA penetration. Because the distribution of MA beneficiaries has shifted over time toward counties that were overpaid, we estimate that plans were overpaid by an average of $9.3 billion per year between 2017 and 2020. Changes to risk adjustment in benchmark setting could likely mitigate the impact of favorable selection in MA.

To combat adverse selection, governments increasingly base payments to health plans and providers on enrollees' scores from risk-adjustment formulae. In 2004, Medicare began to risk-adjust capitation payments to private Medicare Advantage (MA) plans to reduce selection-driven overpayments. But because the variance of medical costs increases with the predicted mean, incentivizing enrollment of individuals with higher scores can increase the scope for enrolling \"overpriced\" individuals with costs significantly below the formula's prediction. Indeed, after risk adjustment, MA plans enrolled individuals with higher scores but lower costs conditional on their score. We find no evidence that overpayments were on net reduced.

Benefits distributed from a defined benefit plan in excess of a participant's Code Section 415 limit, then, cannot be corrected by plan amendment. Because the plan amendment approach has limited applicability, the more common correction is the return of overpayment method. [...]EPCRS provides the contribution credit correction method. [...]some amount of the minimum funding requirement in future years was increased as a result of the overpayment. [...]SECURE 2.0 added Section 206(h) to the Employee Retirement Income Security Act of 1974, as

We measured the personalities, values, and preferences of more than 19,000 people who ranged in age from 18 to 68 and asked them to report how much they had changed in the past decade and/or to predict how much they would change in the next decade. Young people, middle-aged people, and older people all believed they had changed a lot in the past but would change relatively little in the future. People, it seems, regard the present as a watershed moment at which they have finally become the person they will be for the rest of their lives. This \"end of history illusion\" had practical consequences, leading people to overpay for future opportunities to indulge their current preferences.

Among the more welcome provisions were those related to repairing plan errors, including: (1) an expansion of plan sponsors' ability to self-correct plan errors under the Internal Revenue Service (IRS) Employee Plans Compliance Resolutions System (EPCRS); (2) acceptance of loan self-correction as correcting any prohibited transaction issues under the Department of Labor (DOL) Voluntary Fiduciary Correction Program (VFCP); (3) permanent continuation of a safe harbor method for correcting certain deferral failures under EPCRS; and (4) changes to the fiduciary requirements for correcting plan overpayments. [...]recovery is not required from a plan fiduciary, unless the fiduciary's breach of duty caused the overpayment. Limits on Recovering Overpayments The new law imposes limits on a plan's ability to seek recovery of overpayments from participants or beneficiaries who were not culpable in the overpayment, if the plan seeks to so do: * No interest or other additional amounts (for example, collection fees) may be sought. * If the plan seeks to recover the overpayment by reducing future annuity payments, (i) the reduction must stop after the overpayment is recovered; (ii) no more than 10 percent of the overpayment may be recovered in any calendar year; and (iii) annuity payments cannot be reduced below 90 percent of their regular amount. * Efforts to recoup overpayments cannot be made by threats of litigation or through a collection agency, unless certain requirements are met. * Overpayments to a participant cannot be recouped from the participant's beneficiaries. * Recoupment of overpayments cannot be sought if the first overpayment occurred more than three years before the participant is first notified in writing of the error, except in the case of fraud or misrepresentation by the participant. * Participants from whom recoupment is sought must be entitled to contest the recoupment through appropriate claims procedures.

[...]the relief generally permits a qualified plan to allow participants to retain inadvertent benefit overpayments without the employer needing to make a corrective payment to the plan (or adopt a plan amendment). [...]certain overpayments are treated as eligible rollover distributions, so that amounts placed in an individual retirement account (IRA) or another qualified plan can remain there. [...]this Notice does not impact the plan sponsor's obligation to make contributions to a plan to meet the minimum funding standards under Code Sections 412 and 430 or to prevent or restore an impermissible forfeiture in accordance with Code Section 411. [...]the plan sponsor must still observe any limitations imposed on it by Code Sections 401(a)(17) and 415, and the plan may enforce these limitations using any method approved by the Secretary of Treasury for recouping benefits previously paid or allocations previously made in excess of the limitations. [...]the following provisions of EPCRS are modified or are no longer applicable with respect to an inadvertent benefit overpayment: * Definition of Overpayment. [...]subject to the exception described in Q&A-6 of the Notice: * If an inadvertent benefit payment is rolled over from an originating plan to a second plan and recoupment of all or a portion of the inadvertent benefit payment is sought, then the amount that is sought and transferred back to the originating plan is treated both as an eligible rollover distribution from the originating plan and as an eligible rollover distribution transferred back to the originating plan. * The portion of an inadvertent benefit overpayment for which recoupment is sought that is not returned to the originating plan is not treated as an eligible rollover distribution.