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The BenefitsLink Newsletter -
Welfare Plans Edition
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July 22, 2002 - 6,490 subscribers
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Research Suggests More Health Care Might Not Be Better Health Care
Excerpt: "The Dartmouth researchers acknowledge that their findings are unexpected, and some experts say more work is needed to sort out cause from effect.... Life expectancy is no greater in regions that have more intensive medical care, the researchers find, and Medicare surveys find that their quality of care is no better." (New York Times; free registration required)

Health Care Appeals Are No Snap
Excerpt: "In New York, for example, consumers appealed 25,527 denials to their health plans in 2000, but only 910 made it through external review ... Karen Ignagni, chief executive of the American Association of Health Plans ... said the low numbers showed the positive effect of health plans' internal appeals processes, which resolve disputes that might otherwise have gone to external review." (New York Times; free registration required)

Witness List and Statements: the Impact of Excessive Litigation on Patient Access to Care
July 17, 2002. Witnesses included Sam Roberts, M.D., American Academy of Family Physicians; Lauren Townsend, Coalition for Consumer Justice; Lisa Hollier M.D., American College of Obstetricians and Gynecologists; Stuart H. Fine, American Hospital Association; Victor E. Schwartz Esq., Shook, Hardy & Bacon L.L.P.; Travis Plunket, Consumer Federation of America; Jim Hurley, American Academy of Actuaries; Jamie Court, Foundation for Taxpayer and Consumer Rights. (U.S. House of Representatives, Committee on Energy and Commerce, Subcommittee on Health)

Opinion: Do We Really Need a "Cure" for High-Priced Drugs?
Excerpt: "A study ... last fall demonstrated that replacing 1,000 old drug prescriptions with 1,000 newer and more expensive drug prescriptions would increase drug costs by $18,000 but would also cut hospitalization costs by $44,469.... This is the 'bigger picture' that often gets lost in the rush to save a few bucks." (Lawrence W. Reed in the National Review)

Medicare Drug Benefit Debate Continues in Senate; Lawmakers Skeptical That Any Bill Can Pass
Excerpt: "The Senate on July 23 will hold 'test votes' on the two competing proposals to add a prescription drug benefit to Medicare, the Hartford Courant reports." (KaiserNetwork.org)

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

What Are the Pros and Cons of Sending ERISA Materials Electronically to Former Employees?
Excerpt: "Here are the additional requirements for electronic disclosure to non-employees (and to employees who do not have work-related computer access).... You need to be aware, of course, that the above requirements are in addition to the ones that apply to all electronic disclosures, even those made to employees who have work-related computer access." (EBIA Weekly (Question of the Week))

IRS Signals Caution On Cafeteria Plan Auto Enrollment Due to Consequences for Retirement Plans
Excerpt: "In Revenue Ruling 2002-27, the IRS cleared the way for automatic enrollment in cafeteria plans that don't restrict an employee's ability to opt out before enrollment. But if an employer wants its employees to certify that they have alternative health coverage before opting out, then there will be an adverse effect, not on the cafeteria plan, but on the employer's retirement plan." (BenefitNews.com)

Survey Results: Employee Benefits in Private Industry, 2000
Results were published July 16, 2002. Excerpt: "Paid time off continued to be the most prevalent benefit available to workers in private establishments in 2000. Paid vacations were available to 80 percent of employees and paid holidays to 77 percent of employees in private industry, according to the Bureau of Labor Statistics, U.S. Department of Labor." (Bureau of Labor Statistics, U.S. Department of Labor)

Overview: Stock Options and Deferred Compensation-- IRS To Split Taxes of Splitting Couples
Excerpt: "In what appears to be a reversal of its prior position, the IRS has just ruled [in Rev. Rul. 2002-22] that Section 1041 trumps the normal compensation rules in the case of divorce. Hence, [a hypothetical Mr. Executive] recognizes no income now or thereafter if he transfers non-qualified options or deferred compensation to his departing spouse.... In a separate proposed ruling [Notice 2002-31], the IRS apparently intends a different result for employment taxes." (Nixon Peabody LLP)

Managerial Power and Rent Extraction in the Design of Executive Compensation
Working paper available for downloading from SSRN.com for $5. Excerpt: "[T]he desire to camouflage rent extraction might lead to the use of inefficient pay arrangements that provide suboptimal incentives and thereby hurt shareholder value. The authors show that the processes that produce compensation arrangements, and the various market forces and constraints that act on these processes, leave managers with considerable power to shape their own pay arrangements." (National Bureau of Economic Research)

Democratic Leaders Urge Bush to Direct Agencies to Move on Pension, Executive Comp Issues (PDF)
Excerpt: "We will continue to press for congressional action on pension reform this year. But there are several actions that you can take immediately under existing authority to reform the nation's pension system and better protect the life savings of millions of Americans. No further action by the Congress is required to achieve many needed reforms." (U.S. Senator Edward M. Kennedy, U.S. Rep. George Miller, published online by ERISA Industry Committee)

Opinion: Attempt to Cap Executive Salaries 10 Years Ago Got Us Into Today's Corporate Mess
Excerpt: "In the early 1990s, angered by coincident downsizings and reports of large executive payouts, Congress ended the deductibility of executive salaries above $1 million." (Daniel Gross in Slate.com, via MSNBC.com)

Five Ways of Valuing Options
Excerpt: "Of these possible methods, only one results in reliable, tamperproof, financial results." (Business Week)

Pinning Down an Option's Value
Excerpt: "As Congress and Corporate America ponder the pros and cons of expensing stock options, a difficult issue looms: Even if a company decides that expensing options is the right thing to do, as Coca-Cola Co. and Bank One Corp. have recently done, determining just how to value them is tough.... The big problem is that corporations can't predict what will happen to share prices, who will leave the company before their options vest, and which options will expire underwater ..." (Business Week via Yahoo! News)

Welcome to new BenefitsLink advertiser Findley Davies, Inc.
Excerpt: "Findley Davies, Inc. is a leading human resources consulting firm. We specialize in providing consulting solutions in organizational planning and development; compensation and rewards management; HR communication; HR technology; health and group benefits; and retirement plans, actuarial services, and recordkeeping. Our offices are located in Charlotte, Cleveland, Greensboro, and Toledo."

Welcome to new BenefitsLink advertiser SMART PlanTrax Timesaver Module
Excerpt: "Developed by Intac Actuarial Services - PlanTrax runs on Windows. This fully customizable, integrated practice management timesaver module enables administrators to gain total control of any plan on any day. More info and FREE downloadable demo are available"

Newly Posted or Renewed Job Openings - Post a Help Wanted Ad
Retirement Sales District Manager for ADP, Inc
in GA, WA
Employee Benefits Administrator for Kidder Benefits Consultants, Inc.
in IA
Plan Adminstrator for Alliance Benefit Group of New England
in NH
Pension Administrator for PFS
in GA
Defined Benefit Specialist for The Paragon Consulting Group
in GA
Communications Consultant for CitiStreet
in FL

Newly Posted Press Releases
ORTEC International Introduces its Proven "Finance Paradigm" to the North American Market (ORTEC International)

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