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The BenefitsLink Newsletter -
Welfare Plans Edition
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November 21, 2001 - 6,595 subscribers
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Kaiser Permanente Health Plan's Web Site Wins First Prize
Excerpt: " Kaiser Permanente's www.kaiserpermanente.org took the first place 'Platinum' award for Best Health/Health Care Content. The Web site also won second place honors in two categories taking 'Gold Awards' for Best Overall Internet Site and Best Interactive Site. Kaiser Permanente's site was selected from more than 700 entries and over 100 healthcare organizations." (Business Wire via Excite News)

Keeping Workers and Cutting Costs Top Employers' Benefits Wish List
Excerpt: "Despite a less-than-robust economy and corporate downsizing, a new survey says that more than three-quarters of employers, or 78 percent, listed 'employee retention' as their top benefits objective in 2001." (insure.com)

Increased Spending on Drugs Is Linked to More Advertising
Excerpt: "The 50 most-advertised prescription medicines contributed significantly last year to the increase in the nation's spending on drugs, according to a study.... Increases in the sales of the 50 drugs that were most heavily advertised to consumers accounted for almost half the $20.8 billion increase in drug spending last year, according to the study." (New York Times; free registration required)

Cost of Sick Days Important for Calculating Health Spending
Excerpt: "Most studies measuring the cost of national healthcare systems do not give an accurate picture because they fail to take into account lost production due to sick employees, according to a leading German economic institute." (Medscape; free registration required)

A Perfect Storm: the Confluence of Forces Affecting Health Care Coverage (PDF)
29 pages; November 2001. Excerpt: "The confluence of powerful economic forces, fueled by the terrorist attacks of September 11, have unleashed a 'perfect storm' that could increase dramatically the number of uninsured people in the U.S.-- with as many as 6 million people in total losing their coverage in 2001 and 2002." (Joel E. Miller, National Coalition on Health Care)

Ama Pushing To Curb HMOs' Control Over Care
Excerpt: "U.S. health insurers have so much market concentration that they dictate contract terms to many doctors, according to a study by the American Medical Association that may fuel the group's push for antitrust intervention." (Fort Worth Star-Telegram)

Bush Open to Health Coverage Subsidy for Jobless
Excerpt: "President Bush probably would agree to a Democratic plan to help unemployed workers pay for health insurance if Congress included it in an economic stimulus plan that's within his price range, Health and Human Services Secretary Tommy Thompson said Tuesday." (USA Today)

Health Organizations May Miss HIPAA Deadline For Electronic Transactions, Survey Suggests
A survey recently conducted by Phoenix Health Systems (PHS) reports that the health care industry is unlikely to meet the Oct. 16, 2002, deadline for compliance with the electronic transaction provisions of the Health Insurance Portability and Accountability Act (HIPAA). The Department of Health and Human Services issued final regulations implementing the electronic transaction provisions in August 2000. (Spencernet)

Consumers Face Higher Costs As Health Plans Seek to Control Drug Spending
Excerpt: "[P]lans have moved rapidly to three tier benefit packages that offer broader drug choices but shift more costs to consumers. The move to three-tier pharmacy benefits appears to have slowed drug-spending growth for some plans-- at least for the short term-- but raises questions about the cost and quality of pharmaceutical care for consumers." (Center for Studying Health System Change)

Drugs To Cost More for Patients
Excerpt: "Popular prescription medications will cost consumers more money in the next year as health insurance companies use a new strategy that passes more drug costs on to patients. Nearly every major health insurance company in Colorado is implementing or already uses a tier structure that charges escalating co-payments for medications." (Denver Post)

Analysis: COBRA Liability in Mergers and Acquisitions
Excerpt: "In January, the Internal Revenue Service issued final regulations under the Consolidated Omnibus Reconciliation Act of 1985, as amended providing detailed guidance on COBRA liability in asset transfers and stock sales. The regulations are effective for all transactions that occur on or after January 1, 2002." (Haynes and Boone, LLP)

Cap on Benefits for One Type of Disability Does Not Violate ADA
Schultz v. Alticor/Amway Corp. (W.D. Mich. 2001). Excerpt: "The participant, who suffered from hearing and mobility disabilities, claimed that the lifetime cap under his employer's medical plan for employees with hearing problems was discriminatory because the plan did not include the same cap on benefits for other types of disabilities. The court dismissed the participant's claim ..." (EBIA Weekly)

Plan Not Required to Disclose "Usual and Customary Charges"
DeBartolo v. Blue Cross/Blue Shield of Illinois (N.D. Ill 2001). Excerpt: "The most interesting aspect of this lawsuit was the physician's claim for statutory penalties under ERISA, alleging that the plan administrator had failed to provide a schedule of the plan's 'usual and customary charges' to the physician upon request.... [The court held that] 'usual and customary charges' was not one of the types of information required to be disclosed under ERISA Section 104(b)(4)." (EBIA Weekly)

Extra Pay for Certain Employees' Dependent Health Coverage Is Not ERISA-Protected Benefit
Bilow v. Much Shelist Freed Denenberg Ament & Rubenstein (7th Cir. 2001). Excerpt: "[Plaintiff] alleged that the law firm where she worked had violated ERISA in several ways in connection with a 'gross-up program' provided to firm partners and that the firm had terminated her employment, in violation of ERISA Section 510, when she complained about the violations. The gross-up pay at issue was additional compensation paid to partners who elected dependent coverage under the firm's health plan." (EBIA Weekly)

Court Puts FMLA Regulation On Permanent Leave
Excerpt: "DOL regulations provide that once an employer has given a notice of eligibility, it cannot later challenge an employee's FMLA eligibility. The purpose of the Department's regulation is to ensure that employees are able to make plans to care for a sick family member or for themselves without worrying that an employer will later renege on granting leave. The court, however, struck down the regulation as inconsistent with congressional intent." (Nixon Peabody LLP)

Employees Who Retired Due To Disability Not Protected By the ADA, Seventh Circuit Rules
The Seventh Circuit U.S. Court of Appeals has ruled that former employees who retired due to total disability were not entitled to the protection of the Americans with Disabilities Act (ADA) because they could not 'perform the essential functions' of their jobs. The ruling came in Morgan, et al. v. Joint Administration Board, Retirement Plan of the Pillsbury Company and American Federation of Grain Millers (No. 00-3859). (Spencernet)

(Following items are in both editions of the BenefitsLink Newsletter)


Overview: FICA/FUTA Taxes for ISOs and ESPP Options
Excerpt: "In February 2001, the IRS announced that it intended to treat the exercise of incentive stock options (ISOs) and stock options under IRC Section 423 employee stock purchase plans (ESPP Options) as producing wages subject to FICA/FUTA taxes by both the employee and employer. Now, the IRS has issued notice of proposed regulations for this. Previously, employers and employees believed that exercise of an ISO or ESPP Option triggered no tax and no tax withholding." (Kilpatrick Stockton LLP)

Overview: IRS Proposes Revised Employment Tax Rules for Stock Options (PDF)
Excerpt: "Last week, the IRS issued proposed regulations and two notices addressing the employment tax, federal income tax withholding, and Federal income tax reporting consequences of the purchase of stock pursuant to the exercise of 'statutory' stock options ... and of certain dispositions of stock acquired with these options." (Sutherland Asbill & Brennan LLP)




Newly Posted or Renewed Job Openings (Post Yours!)
401(k) Daily Valuation Administrator for Ingham Group in Miami, Fl
in
FL
Part-time Employee Benefits Recordkeeper for Berry, Dunn, McNeil & Parker
in
ME
Qualified Plan Administrator for Lane Gorman Trubitt, L.L.P.
in
TX
401(k) Plan Administrator for Strategic Retirement Solutions, L.C.
in
VA

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Copyright 2001 BenefitsLink.com, Inc., but you may freely distribute this email newsletter in whole. This newsletter is edited by David Rhett Baker, J.D.