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April 19, 2004 - 8856 subscribers
Today's sponsor: Employee Benefits Institute of America Inc. 


EBIA's Tax Savings Calculator Just Got Better!
EBIA's new Tax Savings Calculator is a "must have" tool for
every employer that sponsors a cafeteria plan, 401(k) plan,
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employees to estimate their federal tax savings that arise
from making a wide variety of pre-tax salary reductions. It
also compares the tax savings of a DCAP vs. the dependent
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Learn More

(Please visit our sponsors. We try to make sure their products and services will be of interest to you. Thanks! --Editor)
Comparison Chart: HSAs, Archer MSAs, HRAs and FSAs
Click on link to 4/12/04 'article' on target page. (Miller & Chavalier Chartered)

Do HSAs Save Money for Employers?
Excerpt: "With rampant health-care costs weighing on the minds--and budgets--of most plan sponsors these days, a consumer-directed health plan (CDHP) offers a compelling alternative. The trouble is, despite some early anecdotal findings and a few shreds of short-term data, no one knows for sure if it actually works." (PLANSPONSOR.com; one-time registration required)

Overview: Additional Guidance on Health Savings Accounts (PDF)
2 pages. Excerpt: "On March 30, 2004, the Treasury Department issued new guidance on health savings accounts (HSAs), the tax-preferred personal savings accounts that, when coupled with a high-deductible health plan (HDHP), can be used to pay medical expenses. This Bulletin summarizes this guidance, which addresses three issues that are important to plan sponsors that are thinking about offering HSAs." (The Segal Company)

Savvy, Small-Town Banker Seizes Financial Opportunity
Originally published March 4, 2004. Excerpt: "Howards Grove [Wisconsin] - A cramped basement in this Sheboygan County village has become the nerve center of a nationwide, multimillion-dollar financial empire.... [W]hen Congress created Medical Savings Accounts in 1997, [Bradley O.] Yocum was among the few bankers nationally, and perhaps the only one in Wisconsin, who realized the business had potential." (Milwaukee Journal-Sentinel)

Hillary Clinton Takes on Health Care Again
Excerpt: "The former first lady discusses ... her proposals with NPR's Scott Simon. Among her recommendations is legislation to prohibit insurance companies from discriminating against people whom genetic tests determine are susceptible to certain diseases. She also favors establishing a system of electronic medical records that would give people who move or travel instant access to their medical information." (National Public Radio)

Opinion: Capitalists for Hillarycare
Excerpt: "In the early 1990s, big business largely opposed Hillary Clinton's ill-conceived effort to establish a government-run universal health insurance plan. But over the past several years--and especially in the past year--large corporations, and the trade groups that speak for them, have been subtly changing their tune." (Slate)

Opinion: Now Can We Talk About Healthcare?
Excerpt: "I know what you're thinking. Hillary Clinton and health care? Been there. Didn't do that! No, it's not 1994; it's 2004. And believe it or not, we have more problems today than we had back then." (Hillary Rodham Clinton in the New York Times)

Washington Post Examines Proposals for Federal Insurance Regulation
Excerpt: "The Washington Post on Sunday examined how insurance regulation by states, touted as the 'most desirable system' for nearly 60 years, may be poised for 'fundamental change' that could include greater oversight by the federal government, according to many insurance industry officials and consumer advocates." (KaiserNetwork.org)

U.S. Moves to Shut Operations It Accuses of Health-Plan Fraud
Excerpt: "The Justice Department moved on Thursday to shut down what it said was a health-benefits fraud that it said allowed employers nationwide to disguise wages by listing them as nontaxable reimbursement for medical costs or by deducting health insurance premiums improperly, costing the government both income and Social Security taxes." (New York Times; one-time registration required)

Overview: 9th Circuit Holds ERISA Does Not Preempt Action for Reimbursement from Participants (PDF)
4 pages. Excerpt: "The Ninth Circuit Court of Appeals surprised many when it ruled ... that employer-provided health plans can sue in state court to enforce provisions requiring participants to reimburse the plans for medical costs paid by third parties. Despite contrary state and district court rulings, the bold decision in Providence Health Plan v. McDowell holds that such state-court breach of contract actions are not preempted by ERISA." (Harvey L. Rochman and Joanna S. McCallum of Manatt Phelps & Phillips)

Insurer Had No Fiduciary Duty to Inform Participant That Employer's Premium Had Not Been Paid
Nakazawa v. Principal Fin. Group (D. Neb. 2/26/04). Excerpt: "Claims under the insured group health plan in this case were denied by the insurer because the insurance policy had lapsed when the employer failed to pay premiums. Neither the employer nor the insurer had informed the participant of the policy lapse. The participant's estate brought suit ..." (Employee Benefits Institute of America Inc. (EBIA))

Texas Managed Care Damage Recovery Law Has Not Brought Flood of Lawsuits
Excerpt: "The message to Texas health plans was clear: If you wrongly refuse to cover patients' pres.criptions, hospital stays or medical procedures, consumers harmed by those denials will have the state Legislature's go-ahead to sue. That was a landmark right in a 1997 law that made Texas the first state to make managed-care plans liable in court." (Star-Telegram.com)

Home Depot Woos Older Workers
Excerpt: "As America's demographics continue to shift, farsighted employers like The Home Depot are changing the way they seek and keep talented workers." (BenefitNews.com)

Opinion: Don't Buy Drugs from Canada
Excerpt: "While importation advocates claim vast savings are possible from the practice, the reality belies their assertion. In fact, studies have suggested savings to governments of as little as 1 percent of their total drug costs." (Alan F. Holmer of the Pharmaceutical Research and Manufacturers of America in the Boston Globe)

Employers Adopt Aggressive Health Benefit Plan Designs
Excerpt: "The NBGH-Watson Wyatt study shows that just 29% of employers were willing to absorb health care cost increases in 2003, down from 52% during the more competitive labor market of 2000. Employers are also less likely to try to control costs through shopping around for different plans or vendors, the study found." (BenefitNews.com)

Phony Insurance Scams Create Epidemic in Illinois
Excerpt: "A sagging economy and soaring health insurance premiums have sparked a dramatic rise in bogus health insurance plans. Sold through the Internet, direct mail and established insurance agents, the plans prey on individuals and companies desperate for affordable health coverage. Illinois is one of the states hit hardest by such schemes." (Chicago Tribune; one-time registration required)

Increased Federal Payments to Medicare HMOs May Help Sponsors of Health Plans that Cover Retirees (PDF)
2 pages. Excerpt: "Medicare's increased payments will generally mean lower premiums and/or better benefits for both retirees in [Medicare Advantage] plans and plan sponsors that contract with them.... Plan sponsors that have not contracted with MA plans may wish to reconsider their attractiveness in light of the new law." (The Segal Company)

Seniors To Rally Outside Pfizer's Headquarters To Protest Company's Stance on Drug Reimportation
Excerpt: "Senior federations on Thursday will 'ratchet up' their 'Pfix Pfizer' campaign to help convince the company to resume supplies to Canadian pharmacies that sell Pfizer products to U.S. consumers, Long Island Newsday reports." (KaiserNetwork.org)

Opinion: New Retirement Medical Account Proposal Would Create Lucrative Tax Shelter, Swell Deficits
Excerpt: "Some Members of Congress, including Senate Majority Leader Bill Frist, have recently expressed support for a new health tax-cut proposal. The proposal, which would create new Retirement Medical Benefit Accounts (RMBAs) and was apparently designed by Fidelity Investments, first surfaced during negotiations last fall over the Medicare pres.cription drug legislation." (Center on Budget and Policy Priorities)

GAO Chief Urges Major Health Care Overhaul
Excerpt: "The U.S. health-care system needs a major overhaul in order to control long-term costs and improve the quality of medical care, the head of Congress' nonpartisan watchdog agency said on Friday." (Reuters via Yahoo! News)

Boomers' Bill is Coming Due
Excerpt: "That America faces a looming crisis as Boomers begin to retire around 2008 is not a new subject. Nonetheless, neither Capitol Hill nor Wall Street has shown an appreciation for this critical issue." (Financial Times via Miami Herald; one-time registration required)

Do You Need Business Associate Contracts?
Excerpt: "Complying with the HIPAA Privacy Rule is not something that only health care providers and insurance carriers need to worry about. HIPAA does not specifically cover employers, but to the extent that they sponsor health plans and have access to the personal health information of their employees and families, they need to comply with at least some of the law's provisions." (OnQue Technologies, Inc.)

Spitzer: Health Plans Fail To Disclose Required Coverage Information
Excerpt: "Attorney General Eliot Spitzer [on March 30] released a report with a survey showing that health plans in New York State are failing to disclose required information that could help consumers obtain coverage for medically necessary treatments." (Office of New York State Attorney General Eliot Spitzer)

Links to Items on Executive Comp, Benefits in General

Results of Segal's Survey of Top HR and Benefits Issues for Institutions of Higher Education (PDF)
2 pages. Excerpt: "Higher education institutions may want to explore negotiating with PBMs for better discounts. The survey found that less than one-third of respondents (27 percent) are pursuing or have pursued that cost management strategy, and half of respondents are either not currently considering it (31 percent) or don't know (19 percent)." (The Segal Company)

Insurer's Delay in Deciding Appeal Did Not Permit Claimant to File Suit Before Decision Was Issued
Nichols v. Prudential Ins. Co. of America (S.D.N.Y. 2004). Excerpt: "[T]he court said that when a claims administrator 'begins in good faith to investigate and consider [an appeal] within a period manifesting substantial compliance with the regulatory limits and notifies the claimant that it is doing so, that process should be allowed to run its course for a reasonable time, as long as the administrator continues to exhibit good faith.'" (Employee Benefits Institute of America Inc. (EBIA))

Overview: Same-Sex Marriages and Employee Benefit Plans (PDF)
2 pages. Excerpt: "[T]he apparent validity of same-sex marriages in Massachusetts, the absence of clear answers on the issue in other jurisdictions, and the possibility that higher authorities in the jurisdictions debating the issue could conclude that the marriages are not and never were valid, are forcing employers and employee benefit plan fiduciaries to sort through difficult issues regarding the entitlements of same-sex spouses under their employee benefit plans." (Kirkpatrick & Lockhart LLP)

Failure to Deliver SPD Is Not Breach of Fiduciary Duty Where Need to Enroll Was Communicated
Brenner v. Johns Hopkins Univ. (4th Cir. 2004). Excerpt: "[T]he court rejected the assertion that failure to distribute the SPDs by adequate means would, by itself, constitute a breach of fiduciary duty when several other documents sent by the employer would have adequately informed the employee of the enrollment requirement." (Employee Benefits Institute of America Inc. (EBIA))

GAO Chief Sounds Alarm Bells On Baby Boomer Liabilities
Excerpt: "General Accounting Office chief David M. Walker, who has raised the profile of his agency by warning about the dire consequences of spiraling government debt, said yesterday that the public and Congress remain oblivious to the serious financial crunch that is looming with the retirement of the baby boomers." (Washington Times)

Overview: FASB Issues Exposure Draft on Accounting for Employee Stock Option Grants
Excerpt: "The Financial Accounting Standards Board on March 31 issued an Exposure Draft that would amend FASB Statement No. 123, Accounting for Stock-Based Compensation, to generally require companies to expense the fair value of stock options issued to employees for fiscal years beginning after December 15, 2004." (The Human Capital practice of Deloitte Consulting LLP)

Opinion: FASB Fumbles Stock Options
Excerpt: "In essence, FASB proposes treating a possible future expense if it were as an actual expense.... The FASB proposal to require companies to treat the estimated fair value of stock options as an actual and current expense rests on a dubious conjecture about what the real cost of stock options to stockholders and when it occurs." (Alan Reynolds in the Washington Times)

Newly Posted Events

22nd Annual ALI-ABA Course of Study - Advanced Law of Pensions, Welfare Plans, and Deferred Compensation
in Massachusetts on July 5, 2004
presented by ALI-ABA (American Law Institute-American Bar Association)

28th Annual ALI-ABA Course of Study - Basic Law of Pensions, Welfare Plans, and Deferred Compensation
in Illinois on July 12, 2004
presented by ALI-ABA (American Law Institute-American Bar Association)

Joint Forum on Health, Productivity and Absence Management
in Florida on November 9, 2004
presented by Integrated Benefits Institute - National Business Group on Health
Newly Posted Press Releases

Health Savings Accounts: Latest News, Opinion and Products & Services
(benefits information group)
Newly Posted or Renewed Job Openings
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Daily Valuation Supervisor
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Defined Contribution Business Analyst
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in AL

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