BenefitsLink Welfare Plans Newsletter June 14, 2005 Today's sponsor: ASPPA -- Working for America's Retirement (tm) (Click on company name or banner to learn more.) Meeting Midway Conference July 24-27, 2005 * San Diego, CA Health and welfare issues * 401(k) plans Employee compensation * Actuarial pension issues Health Savings Accounts * Legal & fiduciary issues You don't want to miss this one! Register online today. Brought to you by WP&BC and ASPPA. (Please visit our sponsors. We try to make sure their products and services will be of interest to you. Thanks! --Editor) Overview: Court Enjoins EEOC Rule Allowing Coordination of Retiree Health Benefits with Medicare Excerpt: "Prompted by a lawsuit filed by AARP, a federal court in Pennsylvania has prohibited the Equal Employment Opportunity Commission (EEOC) from issuing its final rule on coordinating retiree medical benefits with Medicare. The final rule would have allowed employers to coordinate their own medical benefits with those provided by Medicare without violating the Age Discrimination in Employment Act (ADEA)." (Watson Wyatt Worldwide) Patient Care Ombudsman to Be Appointed under New Section 333 of the Bankruptcy Code (PDF) 2 pages. Excerpt: "Over the last five to ten years, the number of healthcare businesses filing bankrup.tcy petitions has greatly increased. The bankrup.tcy courts found themselves grappling not simply with business issues, but also with issues of patient care. .... As a result, the bankrup.tcy amendments have added a new section to address the needs of patients when the healthcare business is in bankrup.tcy." (Powell Goldstein LLP) Overview: IRS Allows Grace Period for Flex Plans Excerpt: "Employers that provide cafeteria plans may now establish a two-and-one-half-month grace period for participant claims, under a new rule released by the IRS last month. This will be particularly useful for health flexible spending accounts (FSAs), since participants often find it difficult to set aside precisely the right amount. Workers whose employers choose to establish a grace period will have an extra two-and-one-half months to use their untaxed funds before forfeiting unused ...." (Watson Wyatt Worldwide) Overview: TPA Was Not Plan Administrator and Not Proper Defendant in Health Benefits Claim Excerpt: "While TPAs continue to be caught up in benefits litigation because of their role in the claim process, this decision confirms that generally only plans or plan administrators can be named as defendants in a claim for benefits. Note, however, that breach of fiduciary duty claims may prove more troublesome for TPAs due to their apparent authority to interpret the terms of a plan in order to make coverage determinations." (Employee Benefits Institute of America Inc.) Guide to Managed Care and State Mandated Coverage, Updated May 2005 Excerpt: "Legislators continuously debate whether mandates actually ensure adequate protection for their constituents or further increase their health care costs. Here are some links that provide background, information and examples of legislation regarding mandated coverage." (National Conference of State Legislatures) Are Health Costs Leveling Off? BLS Reports Slowing in the Cost Trend Excerpt: "How many times have you heard health care costs are rising at record rates? Well, they aren't any more. The Bureau of Labor Statistics reports health care costs rose 71/2 percent in 2004, well under the 11.4 percent rise in 2002. The BLS also reports cost increases for employers for health insurance per employee per hour worked has slowed even more." (The Washington Times) Overview: IRS Clarifies Application of HSA Rules for Married Couples in Revenue Ruling 2005-25 Excerpt: "Under a strict reading of these rules, a high-deductible health plan (HDHP) participant whose spouse has other non- HDHP coverage may not contribute to an HSA, even if he or she is not covered by the spouse's non-HDHP. The new revenue ruling removes that barrier, allowing employees to contribute to an HSA even if their spouse has a non-HDHP, as long as the employee is excluded from coverage by the spouse's plan." (Watson Wyatt Worldwide) Overview: IRS Issues New Guidance on HRA Contributions and Distributions Excerpt: "In Revenue Ruling 2005-24, the IRS authorizes tax-free employer contributions of accumulated unused vacation and sick leave to health reimbursement arrangements (HRAs) for retirees. The ruling also confirms that HRAs that provide anything other than reimbursement for qualified medical expenses will lose their tax-free status." (Watson Wyatt Worldwide) Healthy Choice: An Often Overlooked Medical Plan Can Save Your Small Company Money Excerpt: "President Bush has been aggressively promoting health savings accounts as an antidote to rising health-care costs, but so far relatively few small businesses are seeing such plans as a cure-all. Only 14% of the one million users who had established such plans through March worked for businesses with fewer than 50 workers, according to a trade-group survey." (Fortune Small Business) Leave-Sharing Helps Retain State Workers As 18 States Offer Leave-Share Banks Excerpt: "Leave-sharing is a job benefit states are offering more often than the private sector with an eye toward retaining an aging state workforce, especially the 44 percent of state employees age 45 and older who otherwise might look toward retirement. The leave banks, pioneered by public universities, cost little compared to states' potential expense in providing public assistance for jobless, penniless sick people." (Stateline.org) Links to Items on Executive Comp, Benefits in General Overview: SEC Delays Effective Date for Expensing Stock Options Excerpt: "Last month, U.S. companies received two important -- and mostly welcome -- messages from the Securities and Exchange Commission (SEC) regarding the new stock option accounting rules under FAS Statement No. 123R. The SEC has given companies more time to begin treating stock options as a business expense. Companies are not required to follow the new rules until the first fiscal year, rather than the first accounting period, beginning after June 15, 2005." (Watson Wyatt Worldwide) Overview: Supreme Court Permits Disparate Impact Claims under ADEA Excerpt: "In Smith v. City of Jackson, the U.S. Supreme Court resolved a split in the circuits, ruling that the Age Discrimination in Employment Act (ADEA) permits disparate impact claims. The ruling could affect cash balance plan litigation. In a separate case involving a hybrid plan, a district court has created a split in the courts by ruling that the prohibition against decreasing the rate of benefit accruals applies to employees of all ages." (Watson Wyatt Worldwide) Newly Posted Press Releases Immigrants Make Up a Growing Share of U.S. Population Without Health Insurance, Study Finds (Employee Benefit Research Institute (EBRI)) Leggette Selects ICC Plan Solutions as Enrollment Kit and Retirement Plan Communication Provider (Metrics Partners) FreeERISA.com Announces Addition of the Complete Compensation Database (FreeERISA.com) J. Smith Lanier Offers Legal Insurance to Its Workforce (ARAG) Newly Posted or Renewed Job Openings Employee Benefits Consultant II for Wachovia in MD Retirement Plan Coordinator for American Funds, a part of the Capital Group Companies, Inc in TX Health Benefits Program Administrator for City of Bellevue in WA Healthcare Consultant for Employee Benefit Solutions, Inc. in TX Compliance Analyst for Great-West Retirement Services in CO Data Processor for PFS in GA Administrative Assistant for PFS in GA Defined Contribution Administrator for Meridian Benefits Administration in PA Consultant, Actuarial Services for Clark Consulting in GA Compliance Specialist, Retirement Plans for The Newport Group in NC Handy Links: View Today's Active Message Threads Search BenefitsLink Using the Web for Employee Benefits Research (hypertext article) Employee Benefits Library Copyright 2005 BenefitsLink.com, Inc.; except that you may reprint this newsletter in full (including this sentence) without obtaining our permission. 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