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The BenefitsLink Newsletter -
Welfare Plans Edition
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June 11, 2002 - 6,459 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)

Consumer Reports Examines Cost-Shifting Trend in Employer-Based Health Insurance
Excerpt: "The current issue of Consumer Reports 'explains the new cost burdens' for workers with employer-sponsored health insurance and offers advice on how to select an appropriate health plan.... The full article is available online." (KaiserNetwork.org)

HHS Secretary Suggests Drug Companies Lower Medication Costs To Avoid Price Controls
Excerpt: "HHS Secretary Tommy Thompson on June 10 urged pharmaceutical companies to cut the cost of prescription drugs to avoid a consumer backlash that could result in price controls, the Milwaukee Journal Sentinel reports." (KaiserNetwork.org)

Unclear SPD Provisions Regarding Limitations Period Construed Against Drafter
Haymond v. Eighth Dist. Electrical Benefit Fund (10th Cir. 2002). Excerpt: "Observing that ERISA requires SPDs to be understandable, accurate and comprehensive, the court concluded that the plan had failed to explain the limitations period in a clearly understandable manner and, as the drafter of the SPD, should bear the consequences of the inaccuracy." (EBIA Weekly)

Plan May Not Sue Under ERISA to Recover Training Benefits From Trainee Who Violated Contract
Sheet Metal Local #24 Anderson, Trustee v. Newman (6th Cir. 2002). Excerpt: "Here is more fallout from Great-West v. Knudson, the U.S. Supreme Court's groundbreaking decision on enforcing subrogation/reimbursement rights under ERISA ... This latest decision affects not subrogation and reimbursement, but the ability of ERISA plans to recover benefits provided to participants who fail to satisfy plan conditions." (EBIA Weekly)

ERISA Does Not Apply to Medical Coverage Made Available Through Chamber of Commerce
Marcella v. Capital District Physicians' Health Plan, Inc. (2d Cir. 2002). Excerpt: "[T]he court noted that, while the ERISA definition of 'employer' includes 'a group or association of employers acting for an employer,' a group or association that accepts non-employers as members cannot qualify as an employer under this definition. (The court cited several DOL Opinion Letters in support of this point.)" (EBIA Weekly)

Job-Sponsored Child Care Eases Parents' Anxiety
Excerpt: "There's nothing new about emergency backup [child] care, but what is unusual is using backup facilities to offer free transitional child care-- especially since [J.P. Morgan Chase & Co.], which has 100,000 employees worldwide, doesn't have full-time child care centers." (Chicago Tribune; free registration required)

California Senate Approves Bill to Allow Paid Leaves To Care for Relatives, New Child
Excerpt: "California could be the first state to allow workers to take paid leaves from their jobs to care for a seriously ill family member or a new child under a bill approved Monday by the Senate." (The San Diego Union-Tribune)

Contributions to Retirees' Medical Insurance Based on Unused Sick Leave Excluded From Income
Priv. Ltr. Rul. 200222019 (Feb. 27, 2002). Excerpt: "[T]he IRS issued a favorable ruling to a school district that intended to provide benefits to eligible retirees as part of a sick-leave conversion plan. The school district intended to adopt a plan to convert retiring employees' unused sick leave into one of two benefits to be chosen by the school district ..." (EBIA Weekly)

Many Employers Unprepared for HIPAA Privacy Rules
Excerpt: "With some exceptions, employers that self-insure their workers must comply with the full range of the law, just as hospitals or health insurance providers must do. The same, however, is true for fully insured employers that receive personal health care information from their employees; for example, those that relay personal health information about an employee to an insurance provider." (East Bay Business Times via bizjournals.com; free registration required)

Employer Group Finds Large Inefficiencies in Health Care
Excerpt: "Warning that a surge in costs threatens to swamp the employer-subsidized health system within a decade, a new study by a group representing large employers says that $390 billion a year is being wasted on outmoded and inefficient medical procedures." (New York Times; free registration required)

Overview: EIN Chosen as Standard Unique Employer Identifier for HIPAA Purposes
Excerpt: "CMS acknowledged in the preamble to the final regulations that for employers that are not covered entities, use of the EIN will be voluntary. But CMS also stated: 'we believe that employers will have a strong incentive to continue the common business practice of providing their EINs voluntarily in those rare cases where it is not already known in order to maintain or improve the efficiency of administrative processes.'" (EBIA Weekly)

Florida Insurance Commissioner Appoints Task Force To Examine Health Insurance Issues for Small Biz
Excerpt: "Florida Treasurer and Insurance Commissioner Tom Gallagher has appointed 17 individuals to a task force that will investigate how to make health insurance for small businesses 'more flexible, affordable and accessible,' the Florida Times-Union reports." (KaiserNetwork.org)

Lawmakers, Advocates Say 'Patient Education' Letters from Drug Companies Drive Up Health Costs
Excerpt: "Letters sent from pharmacies reminding patients to refill a prescription or advising them to switch to another medication could 'undermine patient care,' increase treatment costs and violate privacy, according to some critics, the Washington Post reports." (KaiserNetwork.org)

Opinion: HMOs Are Stalking California Patients' Rights Law
Excerpt: "The industry can't be allowed to undermine the two pillars of HMO patients' rights it has targeted: effective state regulation and legal accountability. In the latest assault, Kaiser Permanente convinced an administrative law judge to rule that the state's HMO regulator could not intervene in most patients' quality of care problems." (Los Angeles Times; free registration required)

Vermont Governor Outlines Proposed National Health Plan
Excerpt: "The United States can have universal insurance coverage without a disruptive overhaul of the nation's healthcare system, but those who can afford it will have to pay more, Vermont Democratic Governor Howard Dean told a health policy conference ..." (Medscape; free registration required)

California Bill Would Require Study of Costs of Future Proposed Mandated Benefits
Excerpt: "The bill ... approved by the state Assembly and awaiting action by the state Senate, would appoint an independent panel to analyze the cost of any future legislation before it reaches the Capitol floor." (Silicon Valley/San Jose Business Journal via bizjournals.com; free registration required)

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

The Vulnerability of Unfunded Supplemental Pension Plans and Certain Deferred Comp Arrangements (PDF)
Excerpt: "Born in the days of steady growth and the 'institutional firm,' unfunded partner pension plans represented faith in the ability of future partners to pay retirees' pensions through successive generations. Consultants have always reminded firms that these plans were unfunded, but the real risks seemed quite remote-- until recently. The difficulties being faced by retired partners of the troubled accounting firm Arthur Andersen show that the risks are real." (The Segal Company)

Emphasis On CEO Pay Outweighs Focus On Results
Excerpt: "In a five-year study of what it takes to turn good companies into great ones conducted at my management research laboratory, we'd speculated that executive compensation would play a key role in corporate transformation ... We were dead wrong in our speculations.... We learned in our research that making a company great has very little to do with how you compensate executives and everything to do with which executives you have to compensate in the first place." (USA Today via Yahoo! News)

Supreme Court Upholds ADA Regulation on Refusal to Hire Workers Who Pose Threat to Themselves
Excerpt: "In a rare showing of unanimity among this term's several employment law decisions, the Supreme Court today upheld the validity of an Equal Employment Opportunity Commission (EEOC) regulation that allows an employer to refuse to hire an individual if his disability would pose an on-the-job threat to the worker's own health." (Society for Human Resource Management)

Newly Posted or Renewed Job Openings - Post a Help Wanted Ad
401(k) Compliance Manager - Vice President for CitiStreet
in MA
Vice President, Benefits for TEAM America
in OH
Qualified Pension Administrator for B & B Benefits Administration, Inc.
in CA
Defined Benefit Consultant for Mellon HR Solutions
in IL, NC, NJ
Health & Welfare Sales Executive for Ceridian
in CA, IL

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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.