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The BenefitsLink Newsletter -
Welfare Plans Edition
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July 31, 2002 - 6,490 subscribers
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Health Insurers Lose Bid on Case Records
Excerpt: "Aetna Inc., the Cigna Corporation, Humana Inc. and other health insurers lost a bid to bar plaintiffs' lawyers from obtaining internal records in cases that accuse the companies of skimping on patient care." (New York Times; free registration required)

Court Lacked Jurisdiction To Dismiss Plaintiff's Claim For LTD Benefits: Tenth Circuit
A federal district court improperly dismissed a plaintiff's claim for long term disability benefits because the LTD insurer had agreed to reopen the administrative record and reconsider the claim and, as a result, the district court lacked jurisdiction over the claim. This was the ruling of the Tenth Circuit U.S. Court of Appeals in Schwob v. Standard Insurance Company (No. 01-6168). (Spencernet)

Prefunding Retiree Medical Obligations: Pros and Cons
Excerpt: "In the United States ... employer-sponsored programs require cost recognition as people work. Pensions must ... be prefunded, but not necessarily at the same rate as costs are recognized. Funding is subject to federal law, and accounting to financial accounting standards. For retiree health benefits, however, while cost recognition is required as people work, employers have a choice about prefunding. Should your organization prefund? Let's look at the options." (Mercer Human Resource Consulting)

Defined Contribution Health Plans - a Greenlight for HRAs
Very nice overview. Excerpt: "This Legal Alert summarizes the key features of [Health Reimbursement Arrangements, or HRAs] as set forth in the written guidance. This alert also incorporates various Treasury/IRS comments ... regarding HRAs that stem from a July 11th conference ... on Defined Contribution Health Care Strategies by the Employers Council on Flexible Compensation." (Kilpatrick Stockton LLP)

Interest in Consumer-Driven Health Benefits Programs Grows, But They Might Not Control Cost Growth
Press release. Excerpt: "[T]he majority of health-benefit costs are incurred by a small minority of patients with chronic illness. Even if consumer-driven health benefits manage to control employer costs for health benefits, they are unlikely to control total costs unless some way is found to affect the spending patterns of the high users of health care services." (Employee Benefit Research Institute)

Aon Spring 2002 Health Care Trend Survey (PDF)
Excerpt: "Based on data provided by over twenty major health, dental, PBM (Pharmacy Benefit Manager), and vision vendors, Aon is forecasting the following health care trend rates for the period of May, 2002 to September, 2002 ..." (Aon Consulting)

Popularity of Bottled Water Might Cause Dental Claims to Go Up
Excerpt: "Many bottled water products do not contain the fluoride that many sources of tap water have added to retard cavities. Though no scientific evidence exists to support a correlation between drinking bottled water and tooth decay, public concern is prompting several bottled water manufacturers to include fluoride in their products." (BenefitNews.com)

Senate Kills Malpractice Limits As End of Drug Debate Nears
Excerpt: "Less than a week after President Bush called on Congress to address what he called a crisis in the nation's medical malpractice system, the US Senate did act-- but not the way Mr. Bush wanted. Members voted 57-42 to defeat an amendment to impose federal limits on malpractice suits that did not even go as far as the President wanted." (Reuters via Medscape; free registration required)

Big Senate Vote on Medicare Drug Benefits Is Set for Today
Excerpt: "The Senate moved today toward a showdown on legislation to provide prescription drug benefits to the elderly, as Democrats raced to round up Republican votes for a proposal that directs assistance mainly to people with low incomes or high drug costs. A Senate vote is scheduled on Wednesday ..." (New York Times; free registration required)

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

Third Circuit Affirms Tax Court in Disallowance of VEBA Deductions in Neonatology Associates Case (PDF)
19 pages. Excerpt: "Our examination of the record convinces us that the contributions at the heart of this dispute were so far in excess of the cost of annual life insurance protection that they could not plausibly qualify as ordinary and necessary business expenses in accordance with I.R.C. section 162. As correctly recognized by the Tax Court, these contributions were taxable disguised dividends and not deductible expenses." (U.S. Court of Appeals for the Third Circuit)

Overview: Benefits Provisions in the Sarbanes-Oxley Act (PDF)
Excerpt: "In addition to providing for broad corporate governance and accounting reforms, the Sarbanes-Oxley Act ... signed by the President on July 30, 2002 ... contains a number of provisions aimed at providing greater protections to benefit plan participants and curbing some executive benefits which are perceived as abusive in the current environment." (LeBoeuf, Lamb, Green & MacRae, L.L.P.)

Opinion: Replace Stock Options for Executives With Restricted Stock
Excerpt: "Stop giving out options and start giving out restricted stock instead. Unlike options, restricted stock must be expensed, and unlike options, it's pretty easy to figure out the value of restricted shares. Moreover, since the executive will receive some reward for preserving principal (the restricted shares decline in value as the stock drops, rather than becoming worthless), he or she will presumably act as an investor rather than a gambler." (Morningstar.com via Yahoo! Finance)

Newly Posted or Renewed Job Openings - Post a Help Wanted Ad
Pension Administrator 401(k) Defined Contribution for Davey Administration Group
in CA
401(k) Administrator for Stephen H. Rosen & Associates, Inc.
in NJ
Pension Administrator for CNA Trust
in IL

Newly Posted Conferences (Post Yours!)
NAGDCA 2002 Annual Conference - "Retirement Plans Today - Seeing Things in a New Light"in AZ on September 7, 2002
presented by National Association of Government Defined Contribution Administrators

Subscribe to the Retirement Plans Edition, too (click)

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