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The BenefitsLink Newsletter -
Welfare Plans Edition
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May 15, 2002 - 6,379 subscribers
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Small Business Trade Association Disagrees with Blue Cross Blue Shield on Association Health Plans
Excerpt: "The National Federation of Independent Business, a small business advocacy organization, on May 14 challenged the findings of a Blue Cross and Blue Shield Association of America report issued last week on association health plans, CongressDaily/AM reports." (KaiserNetwork.org)

Large Employer's Use of MCO To Provide Mental Health and Substance Abuse Benefits Lowered Costs
Excerpt: "A case study appearing in the new issue of Health Affairs concludes that one large employer's decision to use a separate managed care organization to provide equal coverage for mental health and substance abuse services led to lower costs." (KaiserNetwork.org)

PPO 'CareEngine' Promises To Cut Health Care Costs; Doctors Balk
Excerpt: "The largest preferred provider organization in Wisconsin believes it can control health care costs by telling physicians 'best-care' practices for each patient, but some physicians are likely to question the recommendations." (The Business Journal of Milwaukee via bizjournals.com; free registration required)

HHS Predicts Publication Dates For HIPAA Administrative Simplification Rules
Excerpt: "HHS expects to publish the final versions of two HIPAA administrative simplification rules this summer, as well as several notices of proposed rulemaking (NPRMs), according to a forecast published in yesterday's Federal Register." (iHealthBeat.com; free registration required)

Firm Did Not Have Fiduciary Duty To Inform Worker's Former Spouse of Lapse In Life Insurance Policy
A company did not have a fiduciary obligation to personally inform the former spouse of a terminated employee of the substitution and lapse of two life insurance policies that had named the former spouse as the irrevocable beneficiary. This was the ruling of the First Circuit U.S. Court of Appeals in Barrs v. Lockheed Martin Corporation (No. 01-1203). (Spencernet)

Free Degrees, Loyal Employees
Excerpt: "While climbing the corporate ladder with one company is a cliche of a bygone era, many companies today are dangling advanced degrees to draw talented workers and keep them around for a while." (Christian Science Monitor)

Lawmakers Push Disclosure Measure for Employer Life Insurance Policies
Excerpt: "Forty-seven congressmen have signed on as sponsors to a bill ... that would require companies to notify their employees if they buy life insurance on their lives. The bill, which is known as the Life Insurance Employee Notification Act, would require employers to tell employees within 30 days if they buy new corporate-owned life insurance policies and 90 days to notify them about the existence of existing policies." (Houston Chronicle via International Foundation of Employee Benefit Plans)

National Committee for Quality Assurance Releases 2001 Annual Report (PDF)
48 pages. Excerpt: "For employers, variable quality of care is an issue that hits the bottom line. And that, in turn, has inspired a good deal of inquiry into the relationships among health care, health and productivity. Better understanding these relationships is key to defining and identifying value in health care." (National Committee for Quality Assurance)

Social Marketing: a Vehicle for Employer-Driven Health Promotion and Disease Prevention (PDF)
4 pages. Excerpt: "Social marketing offers employers an effective approach to maintaining a healthy workforce and reducing long-term health care expenditures. The goal of social marketing is to increase awareness-- of health risks, diagnostic capabilities, available treatments, safe practices and behaviors, or improved health status-- in order to elicit a desired behavior change." (National Health Care Purchasing Institute)

Against Depression, a Sugar Pill Is Hard to Beat
Excerpt: "After thousands of studies, hundreds of millions of prescriptions and tens of billions of dollars in sales, two things are certain about pills that treat depression: Antidepressants like Prozac, Paxil and Zoloft work. And so do sugar pills." (Washington Post)

Overview: HHS Proposes Changes To Privacy Regulation
In March 2002, HHS proposed significant changes to its regulation on standards for privacy of individually identifiable health information. The proposal would codify prior guidance on the regulation and would make a number of substantive changes that are directly relevant to group health plans and employers. (Sanders, Schnabel & Brandenburg, P.C.)

Sicker and Poorer: the Consequences of Being Uninsured
Excerpt: "A new report by the Kaiser Commission on Medicaid and the Uninsured synthesizes the major findings of the past 25 years of health services research assessing the most important effects of health insurance.... having health insurance would reduce mortality rates for the uninsured by 10-15 percent; and better health would improve annual earnings by about 10-30 percent (depending on measures and specific health condition) and would increase educational attainment." (Henry J. Kaiser Family Foundation)

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

IRS Proposed Regs Imperil 'Phantom' Options for Non-Profit Org Executives
Excerpt: "Not-for-profit hospitals and other tax-exempt organizations that want to offer deferred compensation programs for their top executives would have fewer choices under proposed regulations issued last week by the Internal Revenue Service. The regulations are designed to eliminate tax advantages of mutual fund option programs, also known as 'phantom' stock option plans, which have emerged in the past four years or so." (Modern Healthcare)

Analysis of Letter Ruling: Code Section 83(b) Election Cannot be Revoked
Excerpt: "Under Internal Revenue Code Section 83(b), an employee who receives compensation in the form of property such as employer stock, is permitted to accelerate an inclusion in his or her income by making an election under Section 83(b).... However, one downside to [making a section 83(b) election] is that, except in very limited circumstances, the election is irrevocable. A recent IRS private letter ruling illustrates this point." (Winston & Strawn)

Firms Hit IRS On Plan To Tax Stock Options and Employee Stock Purchase Plans
Excerpt: "Major corporations, including Marriott International and Texas Instruments Inc., yesterday pressed the Internal Revenue Service to kill or delay a plan to impose payroll taxes on incentive stock options and employee stock purchase plans, warning the change would be so costly that many firms would drop the popular benefits." (Boston Globe)

Text of ERIC's Testimony to IRS at Hearing on Employment Taxes for Stock Options (PDF)
John Vine of Covington & Burling spoke on behalf of ERIC. Excerpt: "The rationale that the Treasury and the Service have advanced to justify imposing employment taxes on statutory options is on shaky ground at best.... There are many strong reasons why the employment tax regulations should not include statutory option gains in wages: ..." (ERISA Industry Committee)

Testimony of American Benefits Council at IRS Hearing on Applying Employment Taxes to Stock Options (PDF)
Testimony of Edward Rosic, Marriott International, on behalf of the American Benefits Council. Excerpt: "We wish to commend the Treasury and IRS for the proposed rules that would exempt statutory stock options from income tax withholding upon exercise or upon disqualifying disposition. However, we are very concerned about the position taken by the IRS that FICA and FUTA taxes should be imposed whenever statutory stock options are exercised." (American Benefits Council)

Employment Taxes on Stock Options Coming Next January?
Excerpt: "Technology companies would likely take the biggest hit from a tax on stock options. Some 97 of the top 100 ecommerce companies provide stock options to most or all workers, according to the National Center for Employee Ownership. The tax would also impose a bigger burden on lower-paid employees. Why? Because the cap on annual Social Security contributions is currently $84,900." (CFO.com)

Opinion: Accounting Reforms Won't Add Up Unless Stock Options Are Addressed
Excerpt: "When it comes to action on two key reforms -- accounting for stock options and showing the value of chief executives' compensation packages -- corporations are as opaque as ever." (Washington Post)

Newly Posted or Renewed Job Openings - Post a Help Wanted Ad
Business Analyst for CNA Trust
in CA
Retirement Plan Administrator for InWest Pension Management, Inc.
in TX
SVP - Dept Head - Employee Benefits for Michael Shirley Associates, Inc.
in MO
Defined Contribution Plan Administrator for Petersen Hastings Investment Management, Inc.
in WA
Conversion/Installation Specialist for BenefitStreet
in CA
Sr. Plan Administrator for M.L. Kerns & Assoc., Inc. - Houston, TX
in TX

Newly Posted Webcasts (Post Yours!)
DC Plan Mergers on June 13, 2002
presented by ASPA
Health Care Quality: How Can Policy Promote Improvement? on May 10, 2002
presented by KaiserNetwork.org

Newly Posted Conferences (Post Yours!)
The 2002 RetireMint(tm) Conferencein NY on May 18, 2002
presented by American Savings Education Council
Administration Hot Topics: Independent Audits, Participant Loans and Self-Directed Investmentsin FL on May 16, 2002
presented by Employee Benefits Council of Central Florida

Newly Posted Press Releases
Secretary of Labor, Social Security Commissioner, and Leading Money Experts to Address National Savings Education Conference on May 17-18 (American Savings Education Council)

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.