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The BenefitsLink Newsletter -
Welfare Plans Edition
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April 22, 2002 - 6,426 subscribers
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Are You Getting the Best Benefit From Your Benefits?
Excerpt: "Employees undervalue their benefits for many reasons including: employers communicate the value of the benefits poorly, the employees have little or no choice in benefits packages or options, and the employees misunderstand the market value of benefits." (About.com)

What Are the Filing Requirements for Cafeteria Plans and their Component Benefits?
Excerpt: "Under IRS Notice 2002-24, your cafeteria plan itself no longer needs to file either a Form 5500 or an attached Schedule F to satisfy the Code Section 6039D filing requirement.... However, annual Form 5500s are still required (unless exemptions apply) for any component ERISA plans that are subject to the Form 5500 requirement under ERISA Title I." (EBIA Weekly (Question of the Week))

IRS Discusses No-Refunds Rule for Transportation Fringe Benefit Plans
Excerpt: "EBIA Comment: This Information Letter caught our eye because it's a useful summary of the carryovers permitted (but no refunds) feature of qualified transportation fringe plans." (EBIA Weekly)

Possible Deal on Health Benefits for Trade-Displaced Workers Could Mean Broader Uninsured Assistance
Excerpt: "The Senate this week is expected to take up legislation that would provide health coverage and other benefits to U.S. workers displaced by international trade ..." (KaiserNetwork.org)

Insurer's Denial of LTD Benefits For Anxiety and Depression Was Reasonable: Third Circuit
The Third Circuit U.S. Court of Appeals has held that an insurer's decision to deny long term disability benefits to an insured who suffered from anxiety and depression was reasonable. The case is Cimino v. Reliance Standard Life Insurance Company and PHN Packaging Systems, Inc. (No. 01-1888). (Spencernet)

Insurer's Decision Upheld Despite De Novo Review; Payments Treated as Bonuses Under LTD Calculation
Perugini-Christen v. Homestead Mortgage Co. (7th Cir. 2002). Excerpt: "[Plaintiff] Perugini negotiated a compensation package under which she was to receive fifty percent of the branch profits in addition to her annual salary. Perugini worked under this compensation plan until she became disabled ... Under [defendant] Reliance's benefits plan, Perugini's benefits were to be based on her covered monthly earnings." (U.S. Court of Appeals for the Seventh Circuit via FindLaw.com)

Denial of Benefits Improper for Correction of Child's Misshaped Head; Not Cosmetic, Court Says
Bynum v. Cigna Healthcare of North Carolina, Inc. (4th Cir. 2002). Excerpt: "While CIGNA is correct that, as Plan Administrator, its definition [of 'cosmetic'] must be accepted by a court absent an abuse of discretion ... CIGNA nonetheless abused its discretion by failing to define this crucial term prior to its denial of Katrina's Claim." (U.S. Court of Appeals for the Fourth Circuit via FindLaw.com)

Private Lawsuits Follow Settlement of Government Allegations of Overcharges for Drugs
Excerpt: "Other lawsuits have also been filed in the aftermath of the ... settlement [against TAP Pharmaceutical Products for sales and marketing prices involving its drug Lupron] based on alleged manipulations of the [Average Wholesale Price]. These include a class action suit filed by the Teamsters Health and Welfare Fund of Philadelphia (an employee benefit plan) against a pharmaceutical manufacturer on behalf of all those who relied on the AWP in paying for certain cancer drugs" (Medscape; free registration required)

Plan's Denial of Coverage for Breast Cancer Treatment Under Experimental Clause Overruled
Reed v. Wal-Mart Stores, Inc. (E.D. Mich. 2002). Excerpt: "The court held that the meaning of experimental and/or investigational as used in the plan was ambiguous, based on the dictionary definitions of the terms but also based on the evidence of the plan's own medical experts who identified a least two competing meanings for the terms." (EBIA Weekly)

Insurer Not Required to Provide Requested Documents Because It Was Not Plan Administrator
Ross v. Rail Car America Group Disability Income Plan (8th Cir. 2002). Excerpt: "During the period of correspondence between the employee and the [long-term disability] insurer, the employee requested copies of documents related to the policy amendments. In his later lawsuit, the employee sought to recover statutory penalties ..." (EBIA Weekly)

Staggering Increases in Public Health Care Costs Coming in 2003
Excerpt: "Although CalPERS isn't able to estimate how much of the insurance increase will be passed on to members, both working and retired, it did say out-of-pocket expenses for some members will rise by as much as 50 percent. CalPERS has already implemented a tiered-pricing prescription drug plan and in 2001 increased office visit co-pays from $5 to $10 to try to offset increases, but it wasn't enough." (insure.com via International Foundation of Employee Benefit Plans)

CalPERS Fact Sheet on the 2002-2003 Health Care Environment (PDF)
Excerpt: "Today's marketplace dynamics show national policy makers that the way in which society has chosen to provide health care to citizens is in peril. A larger public policy debate that includes how to properly fund Medicare and Medicaid and the uninsured is needed immediately." (California Public Employees' Retirement System)

One Possibility for Surviving Soaring Insurance Costs: Forming a Captive Insurance Company
Excerpt: "The insured pays its captive a premium to absorb the risk of loss and puts capital in reserve to cover any losses. The advantage of a captive is not only generally lower costs, but it offers its corporate owner a way to gain greater control over its risk exposures by providing a financial incentive to reduce loss--that is, if losses are reduced the captive will make a profit for its owner--the insured." (American Institute of Certified Public Accountants)

Witness List and Written Testimony to HELP Committee on Changes to Proposed Medical Privacy Regs
April 16, 2002. Includes statements of Claude Allen, Department of Health and Human Services; Janlori Goldman, Georgetown University; Sam Karp, California Healthcare Foundation; Richard Harding, M.D., American Psychiatric Association; and John C. Clough, M.D., Cleveland Clinic Foundation. (U.S. Senate; Health Education Labor and Pension Committee)

Opinion: Tiered Pricing Plans Have Both Benefits and Disadvantages
Excerpt: "A new insurance product called a 'tiered pricing' plan seeks to change the way consumers use their insurance by making health care purchases more like all other purchases. The plan works like this: Beneficiaries can choose to use any physician, hospital or provider in the plan but they will be charged higher co-payments if they pick a more expensive provider. This pattern should be familiar, since many insurance plans already use tiered pricing for prescription drugs." (Dayton [Oh.] Business Journal via bizjournals.com; free registration required)

Opting Out of Health Insurance Can Pay Off for Workers at Some Businesses
Excerpt: "I recently asked readers if any of them had gotten paid for declining their company's health insurance. The answer for many was yes ..." (Chicago Tribune; free registration required)

Overview: Long-Term Care Insurance
Excerpt: "Accountants would never advise clients to go without car insurance. Yet rarely do CPAs recommend their clients purchase long-term-care insurance when, in fact, the probability of needing LTC insurance is much greater than the likelihood of being in a car accident." (AICPA Journal of Accountancy)

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

Bankruptcy Judge Grants DOL Petition to Let State Street Take Control of Enron Benefit Plans
Excerpt: "U.S. Bankruptcy Judge Arthur Gonzalez ordered Friday that control of the plans be turned over to the State Street Corp. investment firm, Labor Department officials announced.... State Street now will be responsible for selecting plan investment managers, selecting and overseeing the funds offered as investment options to employees, and other duties." (AP via Lycos)

DOL Fact Sheet on Revised Delinquent Filer Voluntary Compliance Program
Excerpt: "The DFVC Program gives delinquent plan administrators a way to avoid potentially higher civil penalty assessments by satisfying the program's requirements and voluntarily paying a reduced penalty amount." (U.S. Department of Labor, Pension and Welfare Benefits Administration)

DOL Fact Sheet on Revised Voluntary Fiduciary Correction Program
Excerpt: "Many workers can benefit from the program as a result of the increased retirement security associated with restoration of plan assets and payment of additional benefits. It also will help plan officials understand the law. The program describes how to apply, the 14 specific transactions covered, acceptable methods for correcting violations and examples of potential violations and corrective actions." (U.S. Department of Labor, Pension and Welfare Benefits Administration)

Interactive Online Chart: 2002 Annual Reporting & Disclosure Calendar for Benefit Plans
Includes IRS, DOL and PBGC requirements. (The Segal Company)

About 5% of 2000 Forms 5500 Being Returned by DOL Due to Noncompliance with EFAST Program
Excerpt: "The U.S. Department of Labor's Pension and Welfare Benefits Administration announced today that it is returning plan year 2000 Form 5500 Annual Returns/Reports filed on non-standard forms, which cannot be processed by the department's new computerized ERISA Filing Acceptance System (EFAST). The department's plan gives affected filers an additional 60 days to resubmit their forms in an acceptable format." (U.S. Department of Labor, Pension and Welfare Benefits Administration)

Newly Posted or Renewed Job Openings - Post a Help Wanted Ad
Employee Benefits Attorneys -- Sacramento, California for Chang Ruthenberg & Long PC
in CA
Plan Specialist for Retirement Management Services, LLC
in KY
Pension Administrator/Actuary for Small Mid-Westchester New York Administration Firm
in NY

Newly Posted Conferences (Post Yours!)
Retirement at Risk: 401 K Management Post-Enronin IL on June 24, 2002
presented by Strategic Research Institute

Newly Posted Press Releases
Double-Digit Health Care Hikes Demand Employee Awareness (Benefit Software Inc.)
Newkirk's Enroll Plus(TM) makes state-of-the-art enrollment materials affordable (Newkirk)
Labor Department Announces Plan to Correct Non-Standard Form 5500 Returns/Reports (U.S. Department of Labor, Pension and Welfare Benefits Administration)

Subscribe to the Retirement Plans Edition, too (click)

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.