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The BenefitsLink Newsletter -
Welfare Plans Edition
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April 16, 2002 - 6,426 subscribers
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(Help BenefitsLink to provide this newsletter at no charge to you -- our sponsors pay our way. Remember to visit them periodically; we try to make sure their products and services will be of interest to you. Thanks! --Editor)

Connecticut Health Plans Get OK to Charge Higher Co-Payments
Excerpt: "Worried that the soaring cost of health insurance may cause small businesses to drop health insurance for their employees altogether, Connecticut regulators have approved the use of higher insurance co-payments." (insure.com)

Texas Lawsuit Filed in Wal-Mart COLI Case
Excerpt: "While many companies buy life insurance on their key officers, so-called 'dead peasant' policies are different because the deaths of low-level employees do not affect a company's financial health. Those kinds of policies are not permitted in Texas anyway because the state Legislature did not want to create an incentive for murder or wagering on human life." (Houston Chronicle)

Erie County ADEA Lawsuit Settles
Excerpt: "Under the settlement, Erie County will pay $350,000; $205,000 to a group of 114 retirees, and the remainder in attorneys' fees. Previous court decisions had ruled that Erie County had violated the ADEA because younger retirees were offered a point-of-service plan, were not restricted to a prescription drug formulary, and paid less for drugs than Medicare-eligible retirees." (Hewitt Associates)

Plan Administrator Met COBRA Obligations by Mailing Election Notice
Ramos v. SEIU Local 74 Welfare Fund (S.D.N.Y. 2002). Excerpt: "[T]he court stated: '... only a good faith attempt to notify is required.' The court considered (1) evidence of the plan's regular COBRA notification procedures; (2) the COBRA coordinator's testimony that the election notice was mailed to the participant's most recent address on file in accordance with the plan's usual practice; and (3) a computer entry in the plan's records ..." (EBIA Weekly)

No Statutory Penalties Awarded to Plaintiff for Failure to Provide COBRA Election Notice
Thompson v. Safeway, Inc. (N.D. Ill. 2002). Excerpt: "[T]he court noted that it had discretion whether to award penalties and that this was a 'procedural violation' for which the employee could recover only if the employer acted in bad faith." (EBIA Weekly)

The Changing Face of Health Insurance: a Briefing on the Future of Health Insurance in America
Excerpt: "What is the future of health insurance in the United States? Will some kinds of managed care - those with limited provider networks, comprehensive coverage and low cost-sharing - become increasingly rare? ... These questions and others were addressed at a luncheon briefing on Friday, April 5, 2002." (California HealthCare Foundation)

Advocates Say Drugmakers Will Be Forced to Curb Prices in Face of Class Action Suits
Excerpt: "A rising number of class action suits being filed by state attorneys general, insurance companies and other purchasers will force pharmaceutical companies to stop anti-competitive practices aimed at blocking generic rivals and maintaining profits, attorneys and advocates predicted ..." (Reuters Health via Medscape; free registration required)

Plan May Pursue ERISA Subrogation/Reimbursement Claim If Participant Still Has Control of Funds
Great-West Life & Annuity Ins. Co. v. Brown (M.D. Ga. 2002). Excerpt: "In the present case (involving the same insurer that was party to the Supreme Court case), a federal district court in Georgia has ruled that the Supreme Court's Great-West decision does not preclude an ERISA subrogation/reimbursement action where the plan participant still has control over recovered amounts to which the plan asserts a right." (EBIA Weekly)

Each Pack of Cigarettes Sold Adds $7 in Medical and Other Costs
Excerpt: "About 22 billion packs of cigarettes are sold in the US each year, costing a total of $157 billion in health-related costs, according to estimates based on 1999 smoking habits." (Reuters Health via Medscape; free registration required)

Are Everyday Problems Becoming 'Diseases'?
Excerpt: "Recent medical advances and the accompanying flood of new drugs for a range of ills threaten to 'medicalize' every human condition and behavior, according to some experts. And, they say, the advent of genetic screening could eventually mean that apparently healthy people will be labeled 'sick' decades before an actual diagnosis." (Reuters Health via Medscape; free registration required)

Asking if Obesity Is a Disease or Just a Symptom
Excerpt: "Some strongly suspect it is a symptom. And losing weight, they say, may be suppressing the symptom but doing little or nothing for the underlying illness ... Moreover, obesity experts add, not every person with the symptom of obesity necessarily has a disease that can increase that person's chances of an early death." (New York Times; free registration required)

Many Employers at Boiling Point Over Continued Healthcare Cost Increases
Excerpt: "Red-faced CFOs and CEOs are bursting into benefit managers' offices, asking what they've done lately to control untenable health benefit costs. The crisis is beginning to speak directly to the bottom line. Businesses can't grow fast enough to afford their benefit costs." (BenefitNews.com)

Clinicians, Insurers Bolster Support for Mammography
Excerpt: "Aetna and CIGNA ... have recommended for years that women ages 40 and up receive mammograms, even though federal researchers say the benefits for women in their 40s are smaller than for those in their 50s." (BenefitNews.com)

Survey: Why Don't More Small Businesses Offer Health Insurance?
Excerpt: "To better understand employer-sponsored health insurance among small firms, the California HealthCare Foundation worked with William M. Mercer, Inc., to develop a survey of California businesses with 2-50 workers. The central objective of the survey was to investigate the characteristics, attitudes, and knowledge level of businesses ..." (California HealthCare Foundation)

Health Care Company To Help LTV Retirees
Excerpt: "Former LTV Steel workers currently without benefits are joining forces and have come up with a plan. They have established the Retired Steel Worker Benefit Plan and Trust.... The plan is open to pre-65-year-old and non-Medicare eligible retirees and former employees. Americana says the cost-per-month is much less than what some might have to pay for [COBRA coverage]." (WFMJ (Youngstown, Oh.) via MSNBC.com)

Former Employees of LTV Steel to Create VEBA Health Plan
Press release. Excerpt: "Former employees of LTV Steel have banded together to establish a Voluntary Employee Beneficiary Association (VEBA) called The Retired Steelworkers Benefits Plan and Trust. The VEBA will make available health and other benefits to eligible former employees and retirees of LTV Steel Corporation." (Business Wire via Yahoo! Finance)

Overview: Proposed Modifications to HIPAA Privacy Rules-- Implications for Plan Sponsors
Excerpt: "The most significant proposed modification -- elimination of the consent requirement -- has little impact on group health plans because group health plans were never required to obtain a written consent in order to use or disclose protected health information for treatment, payment or health care operation." (The Segal Company)

Study: Psychiatrist Referrals Drop in Highly Managed Plans, But Outcomes Improve
Excerpt: "Whether they saw a psychiatrist or other professional, patients in more highly managed plans and primary-care offices were more likely to have improved, the study found.... [David Grembowski, study director] attributed the improvement of depressive symptoms among patients being seen in managed-care offices to the increased likelihood that the clinic would have clinical guidelines designed to improve quality of care." (The Seattle Times)

Study Says Loosening Managed Care Restrictions May Improve Doctor-Patient Relationship
Excerpt: "Restrictions that require patients to select a primary care physician or obtain authorization for specialty care referrals were associated with a low patient-practitioner relationship rating in a study ..." (Johns Hopkins University Bloomberg School of Public Health via EurekAlert.org)

The Case For More Active Policy Attention To Health Promotion
Excerpt: "Following a brief review of the determinants of population health-- genetic predispositions, social circumstances, environmental conditions, behavioral patterns, and medical care-- this paper explores some of the factors inhibiting policy attention and resource commitment to the nonmedical determinants of population health and suggests approaches for sharpening the public policy focus to encourage disease prevention and health promotion." (Health Affairs)

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

Final Regulations Expand Electronic Delivery to All ERISA Title I Disclosures
Excerpt: "The DOL this week issued a final regulation significantly expanding the circumstances in which all ERISA plans (pension plans and all types of welfare plans) may use electronic delivery methods to furnish documents and other information required under ERISA Title I. The new regulation is effective October 9, 2002, regardless of plan year.... Details of this new regulation are set out below." (EBIA Weekly)

Overview: Voluntary Fiduciary Correction Program Made Permanent by PWBA
Excerpt: "Here are the highlights of the program.... Participant notice requirements dropped.... Multiple applicants permitted.... Missing individuals who are entitled to corrective distributions.... Restoration of lost earnings for participant-directed accounts.... De minimis distributions.... Self-correction option rejected." (TRI Pension Services)

Overview: IRS Fine-Tunes Golden Parachute Regulations
Excerpt: "The new proposed regulations continue to allow the use of the [stock option valuation] factors described in the 1989 proposed regulations. In addition, they direct the Commissioner to provide methods for valuation of stock options through published guidance, which the Commissioner did with the concurrent release of Rev. Proc. 2002-13. It allows several valuation methods, including a simplified safe harbor approach modeled after the Black-Scholes valuation method." (Watson Wyatt)

'Top-Hat' Retirement Plans Increase in Popularity
Excerpt: "[T]he reach of top-hat plans has extended down the ladder. Though the plans were supposed to benefit only the highest-ranking company officers -- people with incomes in the high six figures -- some companies now make them available to workers earning much less, sometimes with salaries in the $65,000 to $85,000 range.... The percentage of Fortune 1000 companies that offer deferred-compensation plans, or top-hats, surged from about 10% in the 1980s to more than 86% in 2001 ..." (K.C. Swanson on TheStreet.com)

Opinion: CEO's Actions on Stock Options Belie His Words
Excerpt: " The 'win-win deal' to which [Cypress Semiconductor Corp.'s chief executive officer, T.J. Rodgers] refers only works if the options aren't repriced. If they are, employees can make money long before shareholders see any of the green." (Graef Crystal, on Bloomberg.com)

Underwater Stock Options Swamp Firms
Excerpt: "An array of prominent [Chicagoland] public companies ... find themselves in a double bind. A big chunk of the stock options they've paid to executives and employees have become worthless as stock prices have fallen. At the same time, these companies have already floated such a large percentage of their outstanding shares in the form of stock options - a figure known as 'overhang' - that they risk incurring the wrath of shareholders if they give away any more of the company." (Crain's Chicago Business)

Newly Posted or Renewed Job Openings - Post a Help Wanted Ad
Sr. Benefits Specialist for Towers Perrin
in CT
401(k) /Pension Administrator for Great Lakes Pension Administrators, Inc.
in MI
Pension Administrator for Fast Growing Firm
in MA
Employee Benefits Division Manager for Peak Benefit Advisors, Inc. - DENVER, Colorado
in CO
401(k)/DC Administrator for Werntz & Associates, Inc.
in LA

Newly Posted Conferences (Post Yours!)
The Future of 401(k) Plans after Enronin PA on May 16, 2002
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Copyright 2002 BenefitsLink.com, Inc., but you may freely distribute this email newsletter in whole. This newsletter is edited by David Rhett Baker, J.D.