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The BenefitsLink Newsletter -
Welfare Plans Edition
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June 17, 2002 - 6,490 subscribers
Today's sponsor: Glasser LegalWorks

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   ERISA Fiduciary Program- Advising and Running Employee Benefit Plans After Enron....  

   Plan now to attend this important one-day briefing taught by
   corporate counsel, law firm partners and plan administrators.
   The ERISA Fiduciary Program is being held on June 17 in New York
   City and June 21 in San Francisco.

   Call 1-800-308-1700 for Special Rates to Attend!

(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)

IBM Aims for Paperless Health Insurance Claims
Excerpt: "International Business Machines Corp. is rolling out a program to automate the health insurance claims, claiming it can save administrative costs, the company said on Thursday [June 13, 2002].... If widely adopted by healthcare insurance carriers the service could save at estimated 35% to 40% of the $250 billion or more annually spent pushing paper, IBM said." (Medscape; free registration required)

OK to Retroactively Terminate COBRA Coverage When Gross Misconduct is Discovered?
Excerpt: "[O]ur new bookkeeper discovered that our retired bookkeeper embezzled more than a million dollars' worth of cash and property from our company over a ten-year period. We would certainly have terminated this employee for gross misconduct if her embezzlement had been discovered while she was employed. We know that COBRA need not be offered to employees who are terminated for gross misconduct. Can we retroactively terminate this [former] employee's COBRA coverage?" (EBIA Weekly (Question of the Week))

Insurer Properly Denied LTD Benefits To Nurse Who Was Capable of Sedentary Work
The Eighth Circuit U.S. Court of Appeals has ruled that an insurer properly denied long term disability benefits to a nurse who was capable of performing sedentary work. The ruling came in Gerdes v. UNUM Provident Corporation (No. 01-3978). (Spencernet)

Disability Insurer's 3-Year Limit on Lawsuits Waived Because Denial Did Not Use Contractual Terms (PDF)
7 pages. Mogck v. UNUM Life Insurance Co. of America (No. 00-56797, 9th Cir. 2002). Excerpt: "[B]ecause Unum drafted certain terms regarding the time limits on legal actions, but did not utilize those terms at all in its correspondence with [plaintiff] Mogck, the policy's time limitation provision was never rendered operative." (U.S. Court of Appeals for the Ninth Circuit via Findlaw.com)

Health Can Be a Factor In Hiring Decisions: Supreme Court
The U.S. Supreme Court has ruled that an employer may refuse to hire an individual with a medical condition for a job that could worsen the individual's problem. The ruling came in Chevron U.S.A., Inc. v. Echazabal (Docket No. 00-1406). (Spencernet)

Maryland High Court Upholds Ability of County to Provide Domestic Partner Benefits
Excerpt: "Maryland's highest court unanimously upheld a Montgomery County law extending benefits to domestic partners in an opinion released [June 13, 2002], giving gay rights groups a victory unprecedented in the state and spurring hope among advocates that more communities will take up the cause." (Washington Post)

Opinion: Corporate-Owned Life Insurance Makes Sense for Employers, Doesn't Exploit Employees
Excerpt: "The 1986 tax legislation on business-owned life insurance -- perhaps unintentionally -- encouraged [employers] to insure large groups of employees and gain significant income tax benefits, on account of the per-employee loan interest deduction limit. (Note: Congress passed legislation in 1996 further limiting interest deductions to a maximum of 20 insured employees, effectively eliminating broad-based leveraged insurance.)" (Houston Business Journal via bizjournals.com; free registration required)

Generous Benefits Package Means Low Recruiting Budget for California Employer
Excerpt: "Employees are also eligible for up to eight weeks of paid leave to volunteer at nonprofit environmental organizations.... Each year since 1985, Patagonia has donated 10% of its profits or 1% of its sales (whichever is greater) to more than 900 environmental groups ... Many of the company's 1,000 employees ... were originally attracted to Patagonia not only for its respected clothing brand but also for its commitment to Mother Earth." (BenefitNews.com)

Dads, Too, Try Hard To Balance Work and Family
Excerpt: "70 percent of men ages 21 to 39 said they'd be willing to trade pay for family time. Despite such indicators, plenty of American workplaces still conduct business as usual. But a growing number are responding to employees' desires by relaxing rigid rules and recalibrating their definition of a 'productive' employee." (The [Pittsburgh] Post-Gazette via Society for Human Resource Management)

Michigan's Health Insurance Coverage Appeals System 'Efficient' But Underutilized, Report Says
Excerpt: "Michigan's system allowing patients to appeal health insurance companies' decisions to deny coverage is 'well-managed' and efficient, but it should be 'better publicized,' according to a report released last week by AARP Michigan, the AP/Detroit News reports." (KaiserNetwork.org)

Dialogue Deepens Debate On Consumer-Driven Health
Excerpt: "Unsustainable leaps in employer health care costs have spurred rising interest in 'consumer-driven' health plans, said speakers at a May policy forum hosted by the Employee Benefit Research Institute (EBRI).... Yet with 50% to 60% of health cost inflation attributable to advances in technology ... experts ask whether consumer-driven health plans will be able to tame staggering premium increases." (BenefitNews.com)

Mental Health Parity Push Reemerges
Excerpt: "After months of inertia on a comprehensive mental health parity bill, a flurry of activity is recreating worries among employers." (BenefitNews.com)

Opinion: In Disputes With HMOs, California Patients Need Fair System
Excerpt: "Mandatory arbitration has long been a cornerstone of managed health care in California. The reasoning is that using an arbitrator to settle disputes between patients and insurers is faster, cheaper and fairer than going to court. But there are reasons to doubt that this is still true." (The Mercury News via BayArea.com)

Benefits and Costs of Newer Drugs: An Update
Working paper by Frank Lichtenberg. Excerpt: "We update and extend our previous study of the effect of drug age -- years since FDA approval -- on total medical expenditure, in several respects. The estimates indicate that, in the entire population, a reduction in the age of drugs utilized reduces non-drug expenditure 7.2 times as much as it increases drug expenditure." (National Bureau of Economic Research; $5 Download from SSRN.com)

New Professional Society Dedicated to Patient Safety: Patient Safety Officer Society
Excerpt: "Amid growing efforts by the nation's hospitals and health systems to reduce preventable medical errors, the role of patient safety officer is emerging as a new position in many institutions, said Dr. David Shulkin, the society's president.... Roughly half of the society's current roster of members are risk managers, a quarter are physicians, and the rest are pharmacists and nurses, he noted." (Medscape; free registration required)

Austin TX Chamber Contemplates Purchasing Pool for Small Employer Health Benefits
Excerpt: "Other chambers of commerce across the country already serve as conduits for affordable health care benefits, and chamber executives here are conducting focus groups and evaluating other programs that might serve as the basis for an Austin initiative... [E]xperts say there's a rekindled interest among business leaders here to join forces and use their combined buying power to demand better rates, or at least minimize cost increases." (Austin Business Journal via bizjournals.com; free registration required)

Opinion: Close Loopholes, Reduce Drug Costs
Excerpt: "One bill pending in the Senate ... would give millions of people (both old and young) a break on the price of some commonly prescribed drugs. Sens. Chuck Schumer, D-N.Y., and John McCain, R-Ariz., have sponsored a bill that would close legal loopholes drug companies use to delay competition from cheaper generic drugs." (St. Petersburg Times)

Some Experts Wary of G.O.P. Prescription Drug Plan for Medicare
Excerpt: "The plan, they say, would face problems like those that have plagued Medicare's attempt to encourage the use of health maintenance organizations.... The House Ways and Means Committee plans to vote next week on a bill to add drug coverage to Medicare, the largest expansion of the program in its 37-year history." (New York Times; free registration required)

Last Year's Tax Cuts Would Cover Half the Cost of Medicare Drug Benefit, Policy Group Says
Excerpt: "In a recent paper that is the most rigorous and comprehensive analysis available of the effects of last year's tax cut, William Gale and Samara Potter of the Brookings Institution estimate that when the tax cut is fully effective, the tax cuts going to the top one percent of the population will constitute 36.7 percent of the annual costs of the legislation." (Center on Budget and Policy Priorities)

Links to Items on Executive Comp, Benefits in General
(These items appear in both editions of the BenefitsLink Newsletter)

Summer 2002 Issue of the Enrolled Actuaries Report (PDF)
Includes articles on the proposed ERISA 204(h) regulations, guidance on SFAS 87, pension professionalism, and trends in health care. (American Academy of Actuaries)

Supplemental Disability and Long-Term Care Insurance for Executives
Excerpt: "Supplemental executive retirement plans and supplemental executive life insurance are the most prevalent executive benefit offerings among the Fortune 1000. In contrast, just one in five companies offer Supplemental Disability Insurance (SDI) to their executives and fewer offer any Long-Term Care (LTC) insurance coverage." (Aon Consulting)

IRS Cancels Hearing On Proposed Regs Governing Golden Parachute Payments
The Internal Revenue Service has announced that it has canceled the public hearing on its proposed regulations under IRC Sec. 280G relating to golden parachute payments. Notice of the cancelation of the hearing was published in the June 14 Federal Register. (Spencernet)

Newly Posted or Renewed Job Openings - Post a Help Wanted Ad
DC/401(k) Administrator for Cremen, Clements and Associates Pension Administration, Inc.
in MD
Director, Client Servicing, DC Administration for New York Life Benefit Services LLC
in MA
New Business Consultant for New York Life Benefit Services LLC
in MA
Sr. Consultant - Qualified Plans for MetLife Retirement Plans Group
in MO
Pension Administrator for Southern California Firm
in CA
Pension Consultant/Administrator for Swerdlin & Company
in GA
401K TPA Manager for Saltmarsh, Cleaveland & Gund CPAs
in FL

Newly Posted Conferences (Post Yours!)
The AFP 23rd Annual Conferencein LA on November 2, 2002
presented by Association for Financial Professionals

Subscribe to the Retirement Plans Edition, too (click)

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Editor and Publisher: David Rhett Baker, J.D.