BenefitsLink Welfare Plans Newsletter June 16, 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) Opinion: Here's the Way the Use-It-or-Lose-It Rule Ought to Work (PDF) Excerpt: "There is no basis for the use-it-or-lose-it rule or the uniform coverage rule in Internal Revenue Code 125 or in the legislative history thereto. These rules exist under proposed regulations ... An alternative ... that would work under the law would be to: ... replace the uniform coverage rule ... with a rule that allows employees to reimburse themselves from their FSA accounts later in the year if expenses incurred earlier in the year exceeded the FSA premiums paid ..." (Allen Buckley, Smith Moore LLP) Employer Groups Spar over FMLA Changes Excerpt: "A debate is brewing in Washington over family and medical leave. Employer groups, worried about workers who abuse their Family and Medical Leave Act rights, have proposed reforms to FMLA, but critics have accused them of trying to shrink the amount of leave available to workers who need it." (Employee Benefit News) State Innovations: Many States Will Develop Major Health System Improvements Excerpt: "To focus attention on state health policies, the Fund's board of directors recently approved the establishment of a State Innovations program, directed by senior program officer Jennifer Edwards. It is hoped that the program will help states look to each other for ideas and that innovations in some states will inspire others to follow, as well as spur federal action." (The Commonwealth Fund) What's Next for HSAs? Can the Public Sector Benefit from Consumer Driven Options Like HSAs? (PDF) 3 pages. Excerpt: "Several states, including Alaska, Iowa, Minnesota, Montana, New Hampshire, Texas and Washington, are looking at Health Savings Accounts as a state-employee option, although some are facing significant opposition, especially from unions.6 If the experience of insurers offering HSAs in the private sector provides any indication, states will see significant savings by moving to HSA plans." (The Council for Affordable Health Insurance) Question on Disclosure of Protected Health Information to a Protection and Advocacy System Excerpt: "Question: May a covered entity disclose protected health information to a Protection and Advocacy system where the disclosure is required by law? Answer: Yes. The Privacy Rule permits a covered entity to disclose protected health information (PHI) without the authorization of the individual to a state-designated Protection and Advocacy (P&A) system to the extent that such disclosure is required by law and the disclosure complies with the requirements of that law." (U.S. Department of Health & Human Services) New Guidelines Developed for Calculating Disease Management ROI Excerpt: "Employers face a maze of different methodologies and ways to calculate return on investment when evaluating disease management providers. To help them out, the Population Health Impact Institute has developed five guiding principles for assessing the benefit of a DM program to their organization." (Employee Benefit News) Providers Say Strong Disease Management Program Helps on Pay-for-Performance Initiatives Excerpt: "The growing popularity of pay-for-performance (P4P) programs is helping to reshape the economics of physicians' disease management programs. Not only are providers finding that internal DM programs help them perform better in P4P initiatives â€' but these medical groups also are able to use the bonus payments to offset the costs of developing DM program infrastructure and capabilities." (INSIDE DISEASE MANAGEMENT via AISHealth.com) patientINFORM -- New Online Health Care Information Service Provides Access to Journal Articles Excerpt: "patientINFORM is a free online service that provides patients and their caregivers access to some of the most up-to-date, reliable and important research available about the diagnosis and treatment of specific diseases." (patientINFORM) Clinton and Frist Tout Medical Records Bill Which Would Improve Communication Between Providers Excerpt: "Hillary Rodham Clinton and Bill Frist, two senators in the mix of speculation about the White House race in 2008, touted a new medical records bill Thursday that they said is necessary to prevent life-threatening mistakes." (AP via The Washington Post; one-time registration required) Benefit Managers and Procurement Staff Collaborate to Corral Company Costs for Benefit Programs Excerpt: "In an effort to bring benefits costs, particularly health care expenses, back to a manageable level, senior executives are ordering their finance and purchasing experts to work with benefit managers on the benefits-buying process." (Employee Benefit News) Coalitions Aim for Health Insurance Market Reform: Companies Prove There Is Strength in Numbers Excerpt: "Employers are continuing to join coalitions in an attempt to increase their influence in a number of areas. This is certainly not a recent trend; in the mid-1980s, private businesses and public industries experimented with forming purchasing groups." (Employee Benefit News) Employers Can Tailor Pres.cription Drug Plans for Retirees Excerpt: "Sponsors of post-65 retiree medical plans with a pres.cription drug benefit have three broad approaches to consider in evaluating which path to follow now that the government is offering a subsidy to companies that decide to continue offering drug coverage after January 1, 2006." (Towers Perrin) Some Employers Still Undecided on a Pres.cription Drug Strategy for Retirees Excerpt: "While many employers offering pres.cription drug coverage in their retiree medical plans in 2006 plan to apply for the federal subsidy that will become available, a number of other companies remain undecided about their Medicare Part D strategy amid the anticipation about what will be available in the new private marketplace for Medicare drug benefits." (Towers Perrin) Text of IRS Notice 2005-50 on Miscellaneous Issues Under the Health Coverage Tax Credit (PDF) 10 pages. Excerpt: "This notice provides guidance on miscellaneous issues that have arisen under section 35 of the Internal Revenue Code (added by the Trade Act of 2002, Public Law 107-210). Section 35 provides a 65% tax credit for amounts certain individuals spend on certain kinds of health coverage for themselves and certain family members. This credit is referred to as the Health Coverage Tax Credit (HCTC)." (Internal Revenue Service) Introduction of Bill to Encourage Large Employers to Provide Health Coverage Expected in Congress Excerpt: "Rep. Anthony Weiner (D-N.Y.) and Sen. Edward Kennedy (D-Mass.) later this month are expected to introduce legislation intended to encourage large employers such as Wal-Mart to provide health insurance to more workers, CQHealthBeat reports. The bill ... would require states to disclose annually the number of employees of companies with a workforce of 50 or more who receive health coverage through publicly funded programs rather than employer-based plans." (Kaiser Family Foundation) State Pool for Health Benefits Proposed: Plan Would Impose Tax on Employers to Buy Insurance Excerpt: "A bipartisan pair of state lawmakers are recommending a radical change to the way health insurance is bought and sold in Wisconsin by proposing the creation of a statewide insurance purchasing pool." (Milwaukee Journal Sentinel) Health Care Plan Was Entitled To Recover Medical Expenses From Settlement Received By Insureds Excerpt: "A health care plan was entitled to recover $74,869 in medical expenses that it had paid on behalf of two beneficiaries out of a personal injury settlement received by the beneficiaries. This was the ruling of the Fourth Circuit U.S. Court of Appeals in Mid Atlantic Medical Services, LLC v. Sereboff (No. 04-1336)." (Spencer Benefits Reports) Links to Items on Executive Comp, Benefits in General SEC Report and Recommendations Pursuant to Section 401(c) of the Sarbanes-Oxley Act of 2002 (PDF) 119 pages. Section 401(c) of the Sarbanes-Oxley Act of 2002 mandates that the Securities and Exchange Commission conduct a study of filings by issuers and issue a report. The staff of the Commission conducted an empirical analysis of the filings as well as a qualitative analysis of pertinent U.S. Generally Accepted Accounting Principles and Commission disclosure rules. In this Report the Staff describes the Study, reports its findings and provides recommendations." (U.S. Securities and Exchange Commission) Perspective on Equity Compensation Excerpt: "For the third time in four years, Mercer has conducted a Future of Equity survey to examine equity compensation trends. The most recent results, Compensation 2005: A Time to Question Everything, show continued and dramatic change in the marketplace." (Mercer Human Resource Consulting; one-time registration required) Text of IRS Rev. Rul. 2005-39 on Treatment of 83(b) Restricted Stock for Golden Parachute Purposes (PDF) Holdings: Restricted stock for which a section 83(b) election has been made is treated as outstanding stock for purposes of determining whether there has been a change in ownership or control under section 280G. In addition, restricted stock for which a section 83(b) election has been made is treated as outstanding stock for purposes of determining the amount of stock held by shareholder in testing whether such shareholder is a disqualified individual under section 280G. (Internal Revenue Service) Washington Regulatory Wrap Up, 2005, As of June 14, 2005 (PDF) 3 pages. The chart of federal regulatory proposals concerning employee benefits of interest to NCTR members has been updated to be current as of June 14, 2005. The federal updates referenced in the chart are available at http://www.nctr.org/federal/index.html. (National Council on Teacher Retirement) Hewitt Federal Legislation Quick Guide Updated as of June 14, 2005 Excerpt: "Hewitt's Federal Legislation Quick Guide provides short updates on federal legislation that is currently under active consideration by Congress or has recently been enacted into law regarding health and welfare benefit plans, retirement plans, and human resources and employment law." (Hewitt Associates) Working Paper Abstract: Employee Sentiment and Stock Option Compensation Excerpt: "We analyze whether the popularity of option compensation for rank and file employees may be driven by employee optimism. We develop a model of optimal compensation policy for a firm faced with employees with positive or negative sentiment, and explicitly take into account that current and potential employees are able to purchase equity in the firm through the stock market." (National Bureau of Economic Research) Newly Posted Press Releases Council to Congress: help employers remain in the defined benefit pension system (American Benefits Council) Newly Posted or Renewed Job Openings Health Insurance Specialist for Centers for Medicare & Medicaid Services, HHS in DC, MD, VA Benefit Project Specialist for Aon Consulting in MD Employee Benefits/Executive Compensation Attorney for Miller Johnson in MI 401(k) Analyst for The Paragon Consulting Group, Inc. in CA TPA MANAGER POSITION- UPPER MIDWEST for The Rose Search Group, Inc in WI DC Plan Administrator for Milliman, Inc. in TX Benefits Account Executive- Design and Financing for Lockton Companies, Inc. in CA Employee Benefits Consultant for CUNA Mutual Group in DC, NC Benefits Account Executive- Administration Outsourcing for Lockton Companies, Inc. in CA Manager, Benefit Strategy & Design for Amerada Hess Corporation in NJ Compliance Testing Consultant for Diversified Investment Advisors in NY Health Benefits Consultant / Account Manager for Financial Directions Group in NC H&W Project Manager for The Paragon Consulting Group, Inc. in TN Compliance Specialist for Mercer HR Services in MA Defined Benefit Account Executive for Transamerica in CA 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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