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October 20, 2004
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Marsh & McLennan Investors Are Losing Ground as Spitzer's Insurance Inquiries Expand
Excerpt: "The disastrous decline in Marsh & McLennan's stock that has followed Eliot Spitzer's lawsuit of last week has injured a broad array of institutional and individual investors. But the pain of losing almost 50 percent in share value is perhaps most excruciating to the thousands of Marsh & McLennan employees who have bought Marsh stock in the company's employee stock purchase plan or in their retirement plans." (The New York Times; one-time registration required)
Drug Maker Promotes Generics for Its Own Workers; Novartis Draws Fire on Cost-Cutting Bid
Excerpt: "It's not unusual for a major corporation to push employees to use more generic drugs to help lower health-care costs. Unless the company is a big drug maker. In a memo to employees last month, Novartis Pharmaceuticals urged workers to choose more generics and over-the-counter medications, and also purchase more medicines through mail order to 'control the escalation of costs.' .... A copy of the Sept. 21 memo was obtained by The Star-Ledger." (New Jersey Star Ledger via The Foundation for Taxpayer & Consumer Rights)
Lucent Seeking to Shift Part of Soaring Health Costs to Retirees
Excerpt: "Lucent Technologies' population of retired workers has grown so large over the years, there are four retirees for every active employee on its payroll. With health insurance costs soaring, Lucent now is saying that it's time for retirees to help pay for the benefit. In contract negotiations with its unions, Lucent, which fully funds retiree healthcare, proposed 70,000 retired union workers begin paying premiums, ranging between $200 and $700 a month." (The Boston Globe)
Newspaper Articles on Health Care Costs: Increases Lead to Changes in Employee Health Plans
Excerpt: "Long Island Newsday on Tuesday published two articles examining rising health care costs and their effect on employer-sponsored health care plans. [They are] 'Health Insurance: Choices, Risk Weighed' ... (Luhby, Long Island Newsday, 10/19) [and] 'Big Issue for Small Businesses' (Blumberg, Long Island Newsday, 10/19).' Newsday is at www.newsday.com. (BlueCross BlueShield Association)
Obesity Gets Part of Blame for Health Care Costs; Early Intervention Would Control Rising Costs
Excerpt: "More than a quarter of the phenomenal growth in health care spending over the past 15 years is attributable to obesity, Emory University researchers reported yesterday. With 60 percent of the U.S. population deemed overweight or obese, study author Kenneth Thorpe said the only way to control soaring medical costs is to begin targeting prevention efforts and treatment on the most costly weight-related illnesses, such as diabetes, high cholesterol and heart disease." (The Washington Post; one-time registration required)
Letter to the Editor of NYT from Karen Ignagni, America's Health Insurance Plans, on HSAs
Excerpt: "In 'Bush [HSAs] Slow to Gain Acceptance' (Business Day, Oct. 13), a bleak future is painted for these accounts, but data and real-life experience suggest otherwise. Several hundred thousand individuals are expected to elect this product by year-end, with significant growth projected for next year. A recent poll conducted for America's Health Insurance Plans suggests that when given a description of such consumer choice plans, 71 percent of respondents have a favorable opinion of them." (The New York Times; one-time registration required)
Success of California's Proposition 72 Could Determine Other States' Actions on Mandated Benefits
Excerpt: "Proposition 72 -- a referendum on the Nov. 2 statewide ballot that asks state residents to vote 'yes' to uphold or 'no' to repeal a law (SB 2) on mandatory employer health coverage -- could have 'national reverberations,' .... Under the law (SB 2), which is scheduled to take effect Jan. 1, 2006, employers with 200 or more employees will be required to provide health insurance to workers and their dependents by 2006 or pay into a state fund to provide such coverage." (California HealthCare Foundation)
Real Differences Between the Bush and Kerry Health Plans
Excerpt: "The debate over national health policy, one of the most important issues facing our country, is becoming mutilated in this increasingly combative 2004 Presidential campaign. I am especially sensitive to this as President Bush, in Wednesday night's debate, invoked a report by The Lewin Group, of which I am the founder and former CEO, as evidence of the high cost of Senator Kerry's proposals.' (Lawrence S. Lewin for HealthLeaders News)
Overview: DOL Proposes Regulations to Provide Guidance on Implementing USERRA
Excerpt: "On September 20, 2004, the United States Department of Labor (DOL) issued proposed rules interpreting the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA or 'the Act'). USERRA is the primary federal law that provides employment and benefit protection for employees who are absent from work because of military service. Prior to the proposed regulations, only limited guidance has existed to implement and interpret USERRA." (Tax Management Inc)
Links to Items on Executive Comp, Benefits in General
SEC Regulators Are Investigating How Some Companies Tinker With Retiree Benefits Accounting
Excerpt: "Telecom giant SBC Communications Inc. ... last year reported a stunning $2.2 billion plunge in operating income, and the company's explanation probably seemed arcane to many investors. SBC's number-crunchers, the company said, had lowered the expected return on retirement funds by a mere percentage point. Likewise, they raised their assumption of health-care cost inflation by a single point. And they shaved their estimate of future interest rates by just 0.75 percentage points." (BusinessWeek Online)
S.E.C. Inquires Into Pension Fund Accounting and Retiree Health Benefits at Ford and General Motors
Excerpt: "The General Motors Corporation and the Ford Motor Company said yesterday that the federal government had asked them to provide information about how they account for their pension funds and retiree medical benefits, suggesting that a new inquiry into an area of accounting that has long troubled both investors and pension-rights advocates will cast a broad net." (The New York Times; one-time registration required)
Results of the 2004 Annual FASAC Survey on FASB Priorities (PDF)
126 pages. Excerpt: "FASAC's annual survey on the priorities of the FASB provides valuable perspectives and observations about the Board's process and direction. The 2004 survey asked Council members, Board members, and other interested constituents to provide their views about the FASB's priorities, future financial reporting issues, international convergence, differential accounting standards for certain entities, and the priority of a codification of U.S. GAAP." (Financial Accounting Standards Board)
Overview: Congress Passes Sweeping Changes for Deferred Comp Plans; Employers Must Act Quickly (PDF)
3 pages. Excerpt: "The Act requires that a covered NDCP must comply with new Section 409A ... If a covered plan does not comply with Section 409A, amounts deferred under the plan are subject to income taxes, interest and penalties ... to the extent not subject to a substantial risk of forfeiture. If a plan contains a substantial risk of forfeiture provision but does not comply with Section 409A, the income taxes, interest and penalties will apply when the risk of forfeiture lapses." (von Briesen & Roper, s.c.)
Legislation May Require Extensive Changes for New & Existing Executive Compensation Arrangements
Excerpt: "[T]his legislation will make significant changes to rules relating to deferred compensation arrangements, and will affect a ... number of programs that have been established to benefit corporate executives. Although the Act principally impacts deferred compensation plans, it may also impact SERPs, 'excess' plans, certain equity compensation arrangements, severance arrangements, 457(f) plans ... and other 'non-qualified' vehicles which provide a mechanism for the deferral of income." (Littler Mendelson)
Overview: Section 409A: Future Shock for Nonqualified Deferred Compensation (PDF)
Excerpt: "This Legal Alert reviews section 409A, which was included as a revenue offset in the American Jobs Creation Act of 2004, a bill that has passed both the House and Senate and that is expected to become law. The Alert begins by outlining key features of section 409A, it then reviews section 409A's immediate implications for important categories of compensation, and it closes by highlighting particularly sensitive calls that Treasury will need to make in the near future." (Kilpatrick Stockton)
Rules Governing Deferred Compensation Overhauled Affecting Nonqualified Retirement Plans & More (PDF)
Excerpt: "In enacting the American Jobs Creation Act (AJCA), Congress has made it significantly harder for companies to provide nonqualified deferred compensation (NQDC) to executives and managers and has imposed draconian penalties for failures to satisfy the new rules. The far-reaching law expands the definition of NQDC plans to include arrangements such as supplemental executive retirement plans (SERPs), and also imposes new requirements that will affect many stock-based plans, bonuses ...." (Milliman)
Newly Posted Events
Executive Edge Seminar: Pensions, Benefits, & Healthcare
in Florida on November 17, 2004
presented by National Association of Professional Employer Organizations (NAPEO)
Health & Welfare Plans Making Your Sick?
in New York on November 4, 2004
presented by Eisner Retirement Solutions LLC
Legislative Update: Health and Welfare and Retirement Plans
in California on October 28, 2004
presented by No. Calif. Chapter of Certified Employee Benefits Specialists (ISCEBS)
Newly Posted Press Releases
IRS Announces Pension Plan Limitations for 2005 (Corrected)
(Internal Revenue Service (IRS))
Labor Department Extends Annual Reports Deadline After Severe Storms and Flooding Hit Minnesota
(U.S. Department of Labor, Office of Public Affairs, Chicago)
Labor Department Extends Annual Reports Deadline After Tropical Depression Ivan Hits New Jersey
(U.S. Department of Labor, Office of Public Affairs, Chicago)
Labor Department Extends Annual Reports Deadline After Tropical Storm Frances Hits South Carolina
(U.S. Department of Labor, Office of Public Affairs, Atlanta)
Labor Department Extends Annual Reports Deadline After Tropical Depression Ivan Hits New York
(U.S. Department of Labor, Office of Public Affairs, New York, N.Y.)
Modern Woodmen Of America Selects PAi To Provide Turnkey Co-Branded Services For Modern Woodmen 401(k) Plans
(PAi)
Newly Posted or Renewed Job Openings
401(k) Administrator
for Co-Advantage Resources, Inc.
in FL
In House Counsel - Legal Consulting Practice
for UnumProvident Corporation
in ME, TN
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