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The BenefitsLink Newsletter -
Welfare Plans Edition
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August 19, 2002 - 6,490 subscribers
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4.9% Increase In Cost of Health Care During Past Year Exceeds Overall Inflation Rate
Excerpt: "While prices in most economic sectors remained flat, health care costs jumped nearly 5 percent over the past year-- higher than any other category tracked by the Labor Department's Consumer Price Index." (The San Francisco Chronicle via the Society for Human Resource Management)

Health Care Industry Top Spender on Federal Lobbying in 2002
Excerpt: "The health care sector spent more money than any other industry to lobby federal lawmakers last year, the Washington Post reports in its 'Under the Hood: A Look at the Inner Workings of Government' column." (KaiserNetwork.org)

Restated HIPAA Privacy Rules (As Amended 8/14/02) (PDF)
52 pages. Excerpt: "This document shows the final HIPAA Privacy Rules, restated to show the amendments by the Department of Health and Human Services (HHS) published August 14, 2002, at 67 Fed. Reg. 53181. MB&F has restated the Privacy Rules to aid reference to and use of the Privacy Rules as amended." (Michael Best & Friedrich)

Health Plan Loses Claim for Reimbursement Filed Pre-Knudson; Didn't Ask for Right Relief (PDF)
Westaff (USA) Inc. v. Arce (9th Cir. Aug. 15, 2002). Excerpt: "The issue is whether Westaff could bring this action seeking a money judgment in federal court, despite the provision in ERISA permitting suits only for equitable relief.... Westaff contends that its action is allowed because the money sought is being held in escrow. We hold the existence of the escrow does not affect the application of the statute and affirm both the district court's dismissal and the award of fees." (U.S. Court of Appeals for the Ninth Circuit, via FindLaw.com)

Analysis: Ninth Circuit Follows Knudson and Finds No Remedy for Plan Where Complaint Did Not Seek Restitution
Westaff (USA), Inc. v. Arce (9th Cir. Aug. 15, 2002, Nos. 00-16178 and 01-15751). Excerpt: "[Westaff, the health plan,] initiated an action in federal court seeking a determination of the Plan's rights under ERISA. The action was filed before the Supreme Court decided Knudson and Westaff's attorneys only sought declaratory relief and specific performance. Westaff could not have realized the importance of specifically seeking restitution in the form of a constructive trust." (Benefit Recovery, Inc.)

Analysis & Comments on Major Changes to HIPAA Patient Privacy
Excerpt: "The final rule follows the proposed rule by clarifying that group health plans are permitted to share enrollment and disenrollment information with plan sponsors without amending plan documents as is necessary to share information for broader purposes. This policy was stated in the preamble to the final rule, but not in the regulation itself." (Davis Wright Tremaine LLP)

New Defined Contribution Health Program to Become Available in Denver Area
Excerpt: "Under the plan, which will be available Jan. 1 to companies that self-insure their health benefits, employers give employees a set amount of money to help them purchase medical coverage for themselves and their family members.... Employees then go to a secure Web site to create their own network of doctors and hospitals ... Employees choose about 20 providers and facilities ... Employees will only be charged a co-pay for visiting one of their 20 chosen providers." (The Denver Business Journal via bizjournals.com; free registration required)

COBRA Required by Company with 15 Employees That Used to Be Subsidiary of Much Larger Company?
Excerpt: "Must COBRA coverage be offered by a company with 15 employees that was, in the previous calendar year, the wholly-owned subsidiary of a large corporation with over 100 employees? ... Whether COBRA coverage must be offered under these circumstances is unclear, and the best course is to consult with counsel. Here's why." (EBIA Weekly (Question of the Week))

Firefighter Who Was Temporarily Unable To Work Was Not Disabled Under the ADA: Eighth Circuit
The Eighth Circuit U.S. Court of Appeals has ruled that a volunteer firefighter who was temporarily unable to perform the duties of his position was not 'disabled' within the meaning of the Americans with Disabilities Act (ADA). The ruling came in Rinkenberger v. City of Clearwater, Minnesota (No. 01-3835). (Spencernet)

The Rules of Insuring Employee Benefits in Captives
Excerpt: "There are three categories of legal issues to consider: federal income tax issues, state insurance regulatory constraints and prohibited transaction considerations under the Employee Retirement Income Security Act of 1974 (ERISA). The U.S. Department of Labor's (DOL's) evolving interpretations of ERISA have spurred more contentious issues and provide for more dramatic changes in the future." (Risk Management via International Foundation of Employee Benefit Plans)

Opinion: HMOs Bucking California State Control of Prescription Drug Benefits
Excerpt: "The Knox-Keene Act, the legal framework created to regulate health insurers, clearly provided the Department of Managed Health Care (DMHC) broad authority to regulate all products offered by state health care plans. Nothing in that legislation limits this authority in the realm of prescription drugs. However, a recent court decision ... could effectively remove the state's authority to ensure that patients have access to necessary prescription drugs." (The Foundation for Taxpayer & Consumer Rights)

Opinion: House-Passed Tax Bill Provides Little Assistance To People With Long-Term Care Needs
Excerpt: "On July 25, the House of Representatives passed tax legislation (H.R. 4946) that includes two provisions related to long-term care. The first provision would provide a deduction for the purchase of long-term care insurance. The second provision would permit taxpayers who care for family members with long-term care needs in their homes to claim an additional personal exemption on their tax return. Both ... are likely to be ineffective in helping lower and middle-income people ..." (Center on Budget and Policy Priorities)

Atlanta-Area Companies Vary Significantly in Generosity of Severance Packages
Excerpt: "While the economy has lumbered along, the kinds of severance packages that flourished during the risk-taking dot-com decade have greatly diminished, according to two recent studies. Fewer companies are giving severance packages -- the number offering severance has dropped, from 62 percent last year to 46 percent this year, according to a Buck Consultants study ..." (The Atlanta Journal and Constitution via Society for Human Resource Management)

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

Third Circuit Finds Camelot Music's COLI Arrangement Lacked Economic Substance (PDF)
IRS v. CM Holdings, Inc. (3d Circuit Aug. 16, 2002, No. 00-3875). Excerpt: "Appellant CM Holdings, Inc. ('CM Holdings'), the parent company of Camelot Music, Inc. ('Camelot'), challenges the District Court's holding that loading dividends used to fund insurance premiums for corporate-owned life insurance ('COLI') policies were shams in fact, and that the transactions as a whole lacked economic substance. We affirm ..." (U.S. Court of Appeals for the Third Circuit, via FindLaw.com)

In Notice 2002-59, IRS Throttles Back Valuation Methods in Certain Split-Dollar Arrangements
Excerpt: "Treasury and the Service understand that, under certain split-dollar life insurance arrangements (some of which are referred to as 'reverse' split-dollar), one party holding a right to current life insurance protection uses inappropriately high current term insurance rates, prepayment of premiums, or other techniques to confer policy benefits other than current life insurance protection on another party." (Internal Revenue Service)

Enron Executive Played Favorites in Allowing Compensation Plan Cash-Outs
Excerpt: "A top Enron executive wrongfully allowed employees who stayed with the company to cash deferred-compensation claims worth at least $32 million, while denying similar payments to former employees, legal experts say." (The Houston Chronicle via Society for Human Resource Management)

Interview with New Chairman of Financial Accounting Standards Board
Excerpt: "Our current proposal still doesn't deal with [whether to require all companies to include stock-option expenses on their income statements]. The International Accounting Standards Board (IASB) is heading toward that requirement. Once the IASB issues its rules later this year, we'll put out another document explaining the differences between current U.S. rules and the ones the IASB will be proposing. We'll get comments on that, then we'll try to figure out what we'll do." (Business Week)

Lack of Rigid Rules For Stock-option Pricing Makes Earnings' Manipulation Easy
Excerpt: "Don't think the new movement by public companies to record expenses for the stock options they give employees will be a cure-all for manipulative accounting." (Associated Press via Ottawa Citizen)

Newly Posted or Renewed Job Openings - Post a Help Wanted Ad
Account Manager for National Retirement Services, Inc.
in NC
DC Administrator for Northern CA TPA
in CA
Retirement Sales Specialist for Deutsche Bank (Scudder Investments)
in MA
Customer Relations Representative for UMB Financial Corporation
in MO
Retirement Plan TPA for TravisWolff & Company
in TX
Client Services Consultant for American United Life Insurance Company
in IL

Newly Posted Conferences (Post Yours!)
HIPAA PRIVACY REGULATIONSin NY on September 25, 2002
presented by NYC CHAPTER OF WEB
Assessment Centres for Recruitment and Developmentin on September 25, 2002
presented by The Institute for International Research

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