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The BenefitsLink Newsletter -
Welfare Plans Edition
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July 3, 2002 - 6,490 subscribers
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What Innovative Benefits Are Companies Now Offering, and Why?
Excerpt: "Asked to identify the most innovative benefit offering added in the past year, a surprising 27.6% said they offered a flexible spending account or cafeteria plan to their company's benefits offerings, IOMA's 2002 Benefits Management and Cost Reduction Survey reveals." (IOMA's Report on Managing Benefits Plans via International Foundation of Employee Benefit Plans)

Disease-Management Programs Continue To Grow; Lack of Physician, Patient Cooperation Is Sore Spot
Excerpt: "Health plans nationwide are funneling millions of consumers into programs designed to control costly chronic illnesses such as asthma, diabetes and heart disease. The goal, they say, is to maintain or improve members' health in an attempt to reduce emergency-room visits and hospital stays that cut deeply into their profits." (Modern Healthcare)

Commentary: Two Hospital Systems Join Employer Coalition on Patient Safety, Healthcare Costs
July 1, 2002 issue. Excerpt: "The Leapfrog Group, an employer coalition known for turning the screws on hospitals to improve patient safety, has added a pair of very unlikely new members to its ranks: two large hospitals systems." (Modern Healthcare)

Oregon Citizens Now Can Get Help On HMO Claim Denials
Excerpt: "Consumers facing a health insurer's refusal to authorize care can now appeal to an impartial expert, under a state law that took effect Monday. Health plans that submit to the reviews gain protection from lawsuits; plans that fail to follow a ruling face fines of as much as $1 million. Such laws have become widespread in the past five years. Oregon is the 42nd state to require binding outside reviews of health plan denials." (The Oregonian)

Mid-Year Forecasts For Health Care Cost Increases Don't Always Hold Up
Excerpt: "Early surveys indicate employers may face a 15 percent to 20 percent increase in health premiums next year, but some consultants are warning against taking those numbers too seriously." (The Denver Business Journal via bizjournals.com; free registration required)

California Launches Program To Tout Availability of Independent Medical Reviews for HMO Denials
Excerpt: "Hardly anyone in California is using a 2-year-old system designed to resolve disputes between patients and their HMOs, and the state is trying to change that. The California Department of Managed Care has launched a campaign to inform people about the option of independent medical review." (Silicon Valley/San Jose Business Journal via bizjournals.com; free registration required)

Overview: IRS Resolves Key Issues in Favor of Consumer-Driven Health Plans (PDF)
Excerpt: "IRS has published comprehensive guidance on the tax treatment of consumer-driven health plans. (Rev. Rul. 2002-41 and Notice 2002-45.) These plans have a variety of names, including: 'defined contribution health plans,' 'personal care accounts,' or 'personal spending accounts.' IRS now officially calls them HRAs ('health reimbursement arrangements')." (Aon Consulting)

Understanding Defined Contribution Health Plans (PDF)
8 pages. Excerpt: "A defined contribution health plan is not a particular type of health plan. Rather, it is a concept that gives rise to alternative approaches to financing and managing health care for employees. These approaches can be arranged along a continuum of alternatives that realign responsibility, or choice, from the employer or sponsor to the employee or participant. Primary differences among the approaches reflect the degree to which responsibility and choice are shifted." (American Academy of Actuaries)

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

California Agency Publishes Booklet on Recommended Practices for Complying With New SSN Law (PDF)
28 pages; June 28, 2002. Excerpt: "The law has a phased-in compliance schedule: [all] subject entities but those involved in providing health care or insurance [beginning on 7/1/2002 must] comply with all requirements for new accounts ... [Entities] providing health care or insurance [must begin to comply on 1/1/2003] with all requirements except ban on putting SSNs on identification cards, for individual policyholders ..." (California Department of Consumer Affairs, Office of Privacy Protection)

California Law Restricting Disclosure of Social Security Numbers Became Effective July 1
Excerpt: "A California law took effect today that limits disclosure of Social Security numbers, forcing businesses to remove this ubiquitous and essential identifier from forms sent to customers and used in correspondence and on identification cards. The law, which affects any company doing businesses in California, is at the vanguard of legislation to stop identity theft and could affect business practices nationally as well as the development of laws in other states and federal laws." (Computer World)

Rev. Proc. Provides Exception from Form 1099-B Reporting for Certain Stock Option Transactions
Excerpt: "Where the service provider purchases stock through the exercise of the stock option and sells that stock on the same day through a broker, the broker executing such a sale is not required to report the sale on Form 1099- B, provided certain conditions are met. The revenue procedure is effective for sales of stock occurring after December 31, 2001." (tax.CCHGROUP.com)

Text of Rev. Proc. 2002-50, Providing Exemption from 1099-B Reporting for Certain Stock Option Sales
Excerpt: "This revenue procedure provides an exception from reporting on Form 1099-B, Proceeds From Broker and Barter Exchange Transactions, for transactions involving an employee, former employee, or other service provider who has obtained a stock option in connection with the performance of services [when the] service provider purchases stock through the exercise of the stock option and sells that stock on the same day through a broker ..." (Internal Revenue Service)

Analysis: Stock Options Hit By New Parachute Tax Rules; They Just Got More Expensive
Excerpt: "The IRS has issued new golden-parachute tax rules requiring that options be valued using generally accepted accounting principles (or other methods based on those principles). Under these rules, we expect most options to have a higher value than under prior valuation methods and therefore parachute taxes will increase. This could be a significant cost where change-in-control benefits are 'grossed up' for taxes." (Mercer Human Resource Consulting)

Newly Posted or Renewed Job Openings - Post a Help Wanted Ad
Plan Administrator for JRN Benefits
in CA
Employee Benefits Officer (JO #314) for a Trust Company in IN
in IN
Senior Health Benefits Analyst for Segal Company, employee benefits & human resources consulting
in CA
Manager, Tax & Compliance for ICMA Retirement Corporation
in DC
Retirement Benefit Plan Specialists for A Global Consulting Company
in NJ
Manager, International Benefit Plans for Colgate-Palmolive
in NY
RFP Specialist - Retirement Services for Bank of America
in NC

Newly Posted Conferences (Post Yours!)
401(k) Plan Design under EGTRRA, Cross Testing and the Ramifications of the GUST II Erain FL on July 15, 2002
presented by ASPA Employee Benefits Council of Central Florida
Great Lakes Area IRS/ASPA Benefits Conferencein IL on May 1, 2003
presented by ASPA & IRS
Great Lakes Area IRS/ASPA Benefits Conferencein IL on April 29, 2004
presented by ASPA & IRS
Plan Sponsor Forum 2002 - Toledo, OHin MI, OH on August 6, 2002
presented by Caterpillar Investment Management Ltd.

Newly Posted Press Releases
401kid launches web-based 529 and Education Savings Plan product for families and companies (401kid, Inc.)
CEO Dharmesh Shah Honored with Top 40 Under 40 Award (Pyramid Digital Solutions)

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