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The BenefitsLink Newsletter -
Welfare Plans Edition
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June 10, 2002 - 6,459 subscribers
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IRS Says Healthcare Account Elections for Cafeteria Plan Participants May Continue After Employer's Sale
Revenue Ruling 2002-32. Excerpt: "In an asset sale, may transferred employees who have elected to participate in health flexible spending arrangements (FSAs) under seller's I.R.C. § 125 cafeteria plan continue that benefit without interruption at the same level of coverage after becoming employees of buyer?" (Internal Revenue Service)

Proof of Loss Language in Disability Policy Not Enough to Enable Abuse of Discretion Standard
Hoover v. Provident Life and Accident Insurance Company (No. 00-5796, 6th Cir. 2002). Excerpt: "The requirement that the insured submit written proof of loss, without more, does not contain 'a clear grant of discretion [to Provident] to determine benefits or interpret the plan.' ... The policies do not expressly state that the administrator has discretion over the determination of residual benefits, nor is there language requiring 'satisfactory' proof of a disability." (U.S. Court of Appeals for the Sixth Circuit via Findlaw.com)

District of Columbia Preparing to Implement Domestic Partner Benefits for Gov't Employees
Excerpt: "The program is often associated with gay couples, but the majority of people expected to sign up are heterosexual, officials say. The law will immediately make thousands of unmarried people who live with District government workers eligible to purchase membership in a city health plan and provide coverage to their own children." (Washington Post)

One In Four Workers Currently Cares for Elderly Relatives
Excerpt: "To curb the financial losses, [and to] support workers, employers are implementing eldercare benefit programs and extending current paid leave and flex-time options." (BenefitNews.com)

Soft Market, Hard Choices: Provide Pay Raises or Maintain Level of Benefits?
Excerpt: "Despite shortages of qualified employees in certain industries such as health care, or sectors like information technology, employers are reaping the benefit of a soft labor market this year. But even a modest economic recovery could quickly lead the United States back to full employment and create new pressures on compensation costs ... With more baby boomers retiring and fewer employees entering the market, employers may be in trouble." (BenefitNews.com)

Group of Senators Introduces Bill That Would Implement Patient Safety Protections
Excerpt: "Sens. John Breaux (D-La.), Bill Frist (R-Tenn.), Judd Gregg (R-N.H.) and James Jeffords (I-Vt.) on June 5 introduced the Patient Safety and Quality Improvement Act, which would implement many recommendations suggested by the Institute of Medicine for the reporting of medical errors, CongressDaily/AM reports." (KaiserNetwork.org)

Commentary: the Truth About Drug Spending
Excerpt: "But the ABC News special and [the National Institute for Health Care Management], in defining the health-care crisis as a problem of rising drug costs, failed to tell the truth about drug spending and its real role in promoting human health. Their errors and distortions could fill a book, but here are a few of the most outrageous ..." (The National Review)

Louisiana Shuts Down More Illegal Health Insurers
Press release. Excerpt: "Louisiana Acting Commissioner of Insurance J. Robert Wooley has issued a cease-and-desist order against another unauthorized insurer marketing and issuing health coverage in the state--the second one this year. The order was issued against Privilege Care Inc.; Privilege Care Marketing Group Inc.; P.I.T.W.U. Health and Welfare Fund; Privilege Care Employee Health and Welfare Fund ... the Department of Insurance said in a statement." (BestWire via Hoover's Online)

Increase in Obesity Among Older Americans Threatens Health Savings Created by Drop in Smoking
Excerpt: "Obesity among those over 50 nearly doubled from 1982 to 1999, to 26.7% of that population from 14.4% ... Reports have shown that some 60% of U.S. adults are overweight or obese, as are nearly 13% of children." (NewsRx.com via International Foundation of Employee Benefit Plans)

Insurers Emphasizing More Preventive Care
Excerpt: "Insurers, employers and employees must emphasize preventive medicine in order to reduce long-term health care cost increases, the experts agree.... Preventive measures focus on getting people to take advantage of the appropriate screenings, vaccines, tests and lifestyle improvements that some health plans offer." ([Fort Worth, TX] Star-Telegram via DFW.com)

Employees Facing Bigger Share of Health Insurance Premiums
Excerpt: "Massachusetts companies that renew their insurance contracts on Jan. 1-- about half of all companies-- are receiving 2003 premium estimates from insurers this month.... Prescription drugs are no longer the only major culprit. Newer injectable biotechnology drugs starting to come onto the market, such as those aimed at fighting multiple sclerosis and cancer, can cost $10,000 for a year of treatment, far more than the cost of pills." (Boston Globe)

Employer Health Insurance Coalition Wants More Members
Excerpt: "The group, whose members include General Motors Corp. and MeadWestvaco Corp., became Tri-River Employers Healthcare Coalition June 1. The name change comes as Tri-River seeks to add members and become the leading voice of employers concerned about skyrocketing health care costs ... Tri-River members employ about 37,000 people in the Dayton region and pay millions of dollars in health insurance premiums annually. As a group, those employers can negotiate for better rates ..." (Dayton [Oh.] Business Journal via bizjournals.com; free registration required)

Fewer Employees Able To Afford Health Insurance Premiums
Excerpt: "A year and a half ago, 44 carriers covered Colorado's small-business health insurance market, said state Insurance Commissioner William J. Kirven III. Now, just 24 are actively marketing to the small-business group, a decline that reflects a feeling that the economics no longer work." (Rocky Mountain News via GoMemphis.com)

Commentary: Would Lower Drug Prices Jeopardize Research?
Excerpt: "Consumers keep hearing that laws to lower prescription drug prices would harm research, stifle innovation and, ultimately, wreck hopes of cures for major diseases. Critics call this argument the drugmakers' 'scare card,' accusing them of using it whenever their bottom line is threatened." (AARP Bulletin)

Lawmakers Vow More Pressure on Prescription Drug Prices
Excerpt: "A union-backed seniors group and U.S. lawmakers announced moves on Thursday designed to up the pressure on Congress to enact a prescription drug benefit for the Medicare program.... Bus trips to Canada have become commonplace as a way for seniors to purchase small quantities of medicine at lower prices." (Reuters Health via Medscape; free registration required)

Position Paper: Mandated Health Insurance Benefits
Excerpt: "NAHU is very concerned about the growing number of mandated benefit laws that have been enacted at both the federal and state levels of government.... Research shows are that there are now over 1000 benefit mandates in existence, and various studies indicate that they have caused health insurance premiums to increase as much as 25 percent." (National Association of Health Underwriters)

Commentary: Consumer Demand Helps Drive Healthcare Costs
Excerpt: "Many policy experts say that increased demand is due in part to consumers not knowing the true cost of their healthcare. A routine visit to the doctor is most often accompanied by a $15 co-pay, leaving patients in the dark about the true cost of that appointment.... This insulation from the real costs of healthcare is coupled with high consumer expectations." (BlueCross BlueShield Association)

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

Economy In 2000 Took Rare Bite from CEO Pay in Pacific Northwest
Excerpt: "Driven by a sputtering economy, drooping stock prices and the Enron accounting scandal, executives and boards slashed bonuses and reined in stock awards last year, sending CEO pay down for the first time in more than a decade." (The Seattle Times)

Strategies for Underwater Stock Options
Excerpt: "Table 1 is a decision-making matrix designed to assist executives and financial managers in understanding the range of strategies available and selecting the most appropriate path for their organization." (Strategic Finance)

Analysis: Tougher Stock Option Rules Proposed by N.Y. Stock Exchange
Excerpt: "It's not surprising that Nasdaq would pursue a weaker standard than the NYSE because Nasdaq has more companies that spread around options like fertilizer." (San Francisco Chronicle via Society for Human Resource Management)

Dentist Was An "Employee," and Not An Independent Contractor, According To Tax Court
The U.S. Tax Court has ruled that a dentist who performed services for his own professional corporation was an 'employee,' rather than an independent contractor, and thus was liable for payment of employment taxes. The ruling came in Katz, D.D.S., P.C. v. Commissioner (Docket No. 8498-00. T.C. Memo. 2002-118). (Spencernet)

Newly Posted or Renewed Job Openings - Post a Help Wanted Ad
Defined Contribution Plan Administrator for Northeast Planning Services, Inc.
in MA
401(k) Investment Educator for ADP, Inc.
in MA
Retirement Plan Specialist for Diversified Investment Advisors
in CA, IN, TX
Brokerage Sales & Retention Manager for CUNA Mutual Group
in WI
Retirement Plan Administrator for L. R. Webber Associates, Inc.
in PA

Newly Posted Announcements of Promotions and New Personnel (Post Yours!)
Judith Sitton (GEMGroup)

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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.