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The BenefitsLink Newsletter -
Welfare Plans Edition
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July 30, 2002 - 6,490 subscribers
Today's sponsor: EBIA's ERISA Compliance for Health & Welfare Plans

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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)

Polaroid Bankruptcy Likely To Go Through; No Provisions for Retiree Health Benefits
Excerpt: "Bankrupt Polaroid Corp.'s sale to Bank One appears ready to close this week, with rival bidder Deutsche Bank saying it won't try to reopen the bidding and retirees resigning themselves to recovering little of their benefits and pension fund." (AP via Yahoo! News)

Reservation of Rights Provision Precludes Retirees' Claim of Vested Health Benefits
Stearns v. NCR Corp. (8th Cir. 2002). Excerpt: "[T]he reservation of rights [to terminate the program, in the SPD] was clear and unambiguous. Moreover, the clarity of this reservation meant that there would have to be an affirmative indication in the plan documents of an intent to vest the benefits. No inference could be drawn from the fact that the retirement program documents (including the releases) did not address the vesting issue or refer to the reservation of rights." (EBIA Weekly)

Sixth Circuit Allows ADEA Claim by Employees Age 40-49 Due to Elimination of Retiree Health Benefits
Cline v. General Dynamics Land Systems, Inc. (6th Cir 2002). Excerpt: "The employees in this case were between the ages of 40 and 49 when their employer and their labor union entered into a new collective bargaining agreement under which only employees who were age 50 or older as of the agreement's effective date were eligible for full health benefits on retirement." (EBIA Weekly)

DOL Clarifies Application of USERRA to FMLA
Press release. Excerpt: "Under ordinary circumstances, a worker becomes eligible for leave under the FMLA after working for a covered employer for at least 12 months, during which he or she completed at least 1,250 hours of work. The memorandum says that employers should count the months and hours that reservists or National Guards would have worked if they had not been called up for military service towards FMLA eligibility." (U.S. Department of Labor)

The Basics of Defined Contribution Health Insurance
Excerpt: "As an employee, the biggest advantage of defined contribution health insurance is that it offers you control over your own health care. You decide which benefits you need and how much you're willing to pay for them. But do you really want the responsibility that comes with this freedom of choice?" (insure.com)

Fraudulent Health Plans Target Small Businesses
Excerpt: "Prompted in part by the shaky economy and the rising cost of health insurance premiums, a wave of fraudulent group health plans have been targeting small businesses throughout the United States. According to James Quiggle, director of communications for the Coalition Against Insurance Fraud, state regulators are rushing to combat this increasing wave of fraud, which has left thousands of workers effectively without insurance." (United Press International via International Foundation of Employee Benefit Plans)

FTC Urges Patent Law Change to Speed Generic Drugs
Excerpt: "The Federal Trade Commission called on Congress ... to revise the nation's patent laws to prevent brand-name drug companies from unduly delaying the sale of low-cost generic drugs. In a report to be issued [July 30, 2002], the commission says several provisions of a landmark 1984 law 'have the potential for abuse' and may have been exploited by brand-name drug companies to prevent the marketing of generic drugs." (New York Times; free registration required)

Clock Ticking On HIPAA Privacy Rule Requirements
Excerpt: "Most employers have until April 2003 to bring their health care plans into compliance with the Privacy Rule section of [HIPAA]-- not long given the complexity of the task. In this article, the first of four on HIPAA compliance, Kimiko Orosz, an attorney and Senior HIPAA Consultant with Hazen Group Inc., provides an overview of HIPAA and details what steps employers must take to meet the important Privacy Rule requirements." (BenefitNews.com)

Senate Prepares to Vote on Scaled-Back Medicare Drug Benefit Plan
Excerpt: "The Senate could vote as early as July 30 on a compromise Medicare prescription drug benefit bill that would provide coverage for low-income beneficiaries and those with 'catastrophic' costs, the Boston Globe reports." (KaiserNetwork.org)

Opinion: Is Anyone Asking Whether We Can Afford Medicare Drug Coverage?
Excerpt: "While most Americans likely would support some form of prescription drug coverage for at least some of the nation's 40 million Medicare recipients, no one seems to be asking how this coverage will be paid for. The Democratic drug plan that failed would have cost $600 billion over the next 10 years, the failed Republican plan $370 billion." (The San Diego Union-Tribune)

Senate in Quandary Over Medicare Drug Bill Compromise
Excerpt: "Senators continued making last-minute changes to a compromise Medicare prescription drug plan, hoping to pick up enough votes to pass a measure they can tout before the November election. Democrats were lined up behind a scaled-back plan, already endorsed by AARP, to help primarily low-income seniors and those facing catastrophic pharmacy bills. Lawmakers decided in late-night meetings Monday to lower the threshold for government support and make more seniors eligible." (New York Times; free registration required)

White Paper: Time for a Sensible Medicare Drug Benefit
Excerpt: "The national debate ... is over the best way to deliver the drug benefit. Instead of trying to craft a complicated and highly regulatory Medicare drug program, Congress could give direct and immediate assistance to those senior citizens most in need who do not now have access to drug coverage, primarily those with lower incomes. Congress could do this by combining a prescription drug discount card with a generous federal subsidy to cover senior citizens' routine drug costs ..." (The Heritage Foundation)

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

Labor Department, EEOC Seek Cooperation With Employers
Excerpt: "The Labor Department has created new positions to help employers understand and comply with labor laws." (AP via FindLaw.com)

Recent Developments in Accounting for Stock Compensation (PDF)
12 pages. Excerpt: "The following is a discussion of the IASB's and Congress' initiatives and a summary of Statement 123 (including the significant differences between the recognition provisions of Statement 123 and APB Opinion No. 25, Accounting for Stock Issued to Employees)." (Ernst & Young, published online by Financial Executives Institute - www.fei.org)

White Paper: Correcting the Record on Stock Option Penetration (PDF)
Excerpt: "Part of the campaign to force companies' to deduct the value of employee stock options from their profits is to convince the public that only senior executives benefit from stock options. Grants to lower-level employees, if they exist at all, are at most tokenism.... The CEOs are right and the news reports are wrong." (Frederic W. Cook & Co., Inc.)

Opinion: Adding Confusion To Earning Reports by Valuing Stock Options Won't Solve Our Problems
Excerpt: "The problems start with the question, how much do you deduct? What is that option grant worth today, before the right can even be exercised? Maybe a lot if the stock will rise, but maybe zero if it turns out to fall. The only reliable way to find true present value would be to create a market by letting the employees sell the options. This would defeat the whole purpose of options ..." (OpinionJournal.com)

Newly Posted or Renewed Job Openings - Post a Help Wanted Ad
Director, Client Servicing, DC Administration for New York Life Benefit Services LLC
in MA
Managing Director of Retirement Services for Confidential
in TX
Project Manager for Transamerica
in CA
District Marketing Manager for Retirement Marketing Specialists
in PA
Pension Researcher for LIMRA International, Inc.
in CT

Newly Posted Conferences (Post Yours!)
AICPA National Conference on Employee Benefit Plansin TX on May 4, 2003
presented by AICPA (American Institute of Certified Public Accountants)
SWBA/IRS 13th Annual Employee Benefits Conferencein TX on October 21, 2002
presented by SouthWest Benefits Association and Internal Revenue Service

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