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October 12, 2005
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(Please visit our sponsors. We try to make sure their products and services will be of interest to you. Thanks! --Editor)

Employers Not Eager for Systemic Overhaul to Bring Down Health Costs
Excerpt: "Instead, companies like Starbucks, Verizon and Pitney Bowes are advocating market solutions. At a recent Capitol Hill health care cost summit sponsored by CNBC, company leaders called for innovation, improved quality, greater transparency and empowered consumers as the best solutions to the health care cost crisis." (Workforce Management; one-time registration required)

President's Tax Panel Says Popular Breaks Should Be Cut
Excerpt: "President Bush's tax advisory commission indicated on Tuesday that it would not propose replacing the income tax with a national sales tax or a value-added tax, but would recommend limits in the popular tax deductions for mortgage interest and employer-provided health insurance." (The New York Times; one-time registration required)

Overview: New Grace Period Exception to Use-It-or-Lose-It Rule
Excerpt: "Under Notice 2005-42, employers may permit workers who participate in Section 125 plans a 2 1/2-month grace period to spend pretax amounts set aside in FSAs during the prior plan year." (Warner Norcross & Judd LLP)

Selected Welfare Benefit Claims-- Long Term Disability Plans (PDF)
11 pages. Excerpt: "This material was originally presented at the American Bar Association's National Seminar 'ERISA Litigation 2001' in Chicago, IL, sponsored by the ABA's Center for Continuing Legal Education and the Sections of Business Law, Health, Law, Labor and Employment Law, Real Property, Probate and Trust Law, Taxation, Tort and Insurance Practice, under the auspices of the Joint Committee on EmployeeBenefits." (Gardner Carton & Douglas LLP)

NYC Council Overrides Grocer Health Benefit Veto
Excerpt: "The New York City Council on Tuesday voted to override Mayor Michael Bloomberg's veto of legislation to require grocery stores and other retailers to make a substantial contribution toward their employees' health insurance coverage costs." (Business Insurance)

Electronic Medical Records Now on the Fast Track (PDF)
1 page. Excerpt: "This Health Care Update discusses a new series of Health and Human Services regulations that will accelerate the use and the implementation of electronic medical records ('EMR') and electronic prescribing." (Powell Goldstein LLP)

Sherlock Measures Effects of Health Benefits Shrinkage
Excerpt: "Efforts to trim health benefits packages and pass costs on to employees may be responsible for much of the recent moderation in rate increases." (National Underwriter Life & Health; free one-time registration or paid subscription required)

Aetna to Launch Generic Rx Program with 'ATM-Style' Machines in Physician Offices
Excerpt: "Aetna this week plans to launch a pilot program in which the company will place 'ATM-style' machines that dispense samples of generic medications in physician offices in Philadelphia, the Wall Street Journal reports." (Kaiser Family Foundation)

Impact of 3-Tier Pharmacy Benefit Design and Increased Consumer Cost-Sharing on Drug Utilization
Excerpt: "Objective: To estimate responsiveness of pres.cription demand within 9 therapeutic classes to increased cost-sharing compared with constant cost-sharing." (The American Journal of Managed Care)

A Cost-benefit Simulation Model of Coverage for Bariatric Surgery Among Full-time Employees
Excerpt: "Although the cost implications of bariatric surgery among full-time employees depend on many factors, the simulations reveal that 5 or more years of follow-up are most likely required for these operations to become cost saving unless the employee bears a significant fraction of the total costs of the surgery." (The American Journal of Managed Care)

Federal Contractor Health Care Measure Remains in Defense Spending Bill
Excerpt: "The version of the Defense bill (H.R. 2863) approved by the Senate Friday includes a provision that would prevent Pentagon officials from granting contractors an 'advantage' in public-private job competitions if they cut costs by scaling back on health insurance benefits for employees. Last year's spending measure contained similar language." (GovExec.com)

Overview: Health Savings Accounts and Health Insurance (PDF)
13 pages. Excerpt: "Health Savings Accounts (HSAs) solve the economic distortion caused by third-payer financing. HSAs reduce medical expenditures by giving patients a financial incentive to use medical care efficiently. Consumers benefit directly from the smarter use of medical services, because any savings accumulate in their HSA accounts. HSA accounts allow consumers to get the best use from their own money to suit their individual health care needs." (Washington Policy Center via The Heartland Institute)


Links to Items on Executive Comp, Benefits in General

Q&A on GASB (PDF)
2 pages. Excerpt: "The Governmental Accounting Standards Board or GASB is an independent, private-sector, not-for-profit organization that -- through an open and thorough due process -- establishes and improves standards of financial accounting and reporting for U.S. state and local governments. Governments and the accounting industry recognize the GASB as the official source of generally accepted accounting principles (GAAP) for state and local governments." (Governmental Accounting Standards Board)

Delphi CEO Offers Warning for General Motors, Urges Remedy of Slashing Workers' Pay by 2/3s
Excerpt: "Delphi Corp.'s chief executive said a collapse of the auto supplier, which has filed for bankrup.tcy protection, would damage most of the world's automakers, and that the company can save its pension plan for U.S. hourly workers only if unions agree to work for a third of their old pay and benefits, according to two separate news reports published Tuesday." (CNN Money)

Benefits Council Comment Letter in Regard to IRS Electronic Communications Proposed Regulations (PDF)
3 pages. Excerpt: "The proposed regulations appear to indicate that if a plan relies on consumer consent (instead of the alternative method) to provide electronic notices, electronic records cannot include oral communications or recordings of oral communications (see Prop. Reg. Section 1.401(a)-21(b)(5))." (American Benefits Council)

Summary: Federal Legislative & Executive Branch Actions in Response to Hurricanes
The table covers: Charitable Contributions; Courts; Education; Employment/Labor; Energy; Food Stamps; Funding; Health; Housing; Insurance; Interoperable Communications; TANF; and, Taxes. (National Conference of State Legislatures)

Overview: Massive Changes in Deferred Compensation Rules Require Immediate Action
Excerpt: "Because of some guidance that has already come out prior to the expected regulations, we know enough about what the 200 pages of regulations will say to know that virtually every executive employment agreement in place today and any plan or program that even remotely looks like deferred compensation is going to flunk these new rules unless it is amended." (Warner Norcross & Judd LLP)

Overview: Sec. 409A Proposed Regulations-- Extension for Many Deferred Comp Compliance Requirements
Excerpt: "The IRS has issued proposed regulations that expand the guidance available for complying with the deferred compensation tax rules of Section 409A of the Internal Revenue Code. Section 409A generally provides that amounts deferred under a nonqualified deferred compensation plan are currently includible in income if not subject to a substantial risk of forfeiture, unless the plan meets specified design and operational requirements." (Perkins Coie LLP)

Deferred Compensation and Section 409A: What's Still on the 2005 To-Do List?
Excerpt: "The good news for employers is that, for most purposes, the December 31, 2005 compliance deadline that was previously in place has been pushed back a full year, to December 31, 2006. However, not all of the Section 409A deadlines were pushed back. This Client Alert focuses on the items that still must be completed in 2005 to comply with Section 409A." (O'Melveny & Myers LLP)

The Employee Benefit Plan Auditor's Written Communication to Trustees (PDF)
8 pages. Excerpt: "An auditor of an employee benefit plan is required to communicate in a management letter to the board of trustees any reportable conditions or material weaknesses found during the audit. Auditors can often make useful suggestions for operational improvements." (Benefits & Compensation Digest)

Lockheed Sweetens Pension Switch with Vacation Boost
Excerpt: "Lockheed Martin Corp. is making its recent decision to switch from a traditional pension plan to a defined contribution plan more palatable to new hires by offering more vacation time. The defense contractor announced last week that it was joining the ranks of employers relinquishing defined benefit plans for salaried workers in favor of employee contributions plan, effective for new employees Jan.1, 2006." (BenefitNews Connect)

Fact Sheet: Extension of Time Frames to Help Plans and Individuals Affected by Hurricane Katrina
Excerpt: "For participants, beneficiaries, and plans in the disaster areas ..., the time frames for the [provisions noted on the target page] are tolled for the period between August 29, 2005 and February 28, 2006. The effect is to freeze the application of the time periods through February 28, 2006." (U.S. Employee Benefits Security Administration)

IRS, DOL Extend HIPAA, COBRA Deadlines to Feb. 28, 2006 to Comply with KETRA Law (PDF)
2 pages. Excerpt: "The period group health plans, disability and other welfare plans, pension plans, and health insurance issuers subject to Part 7 of ERISA must disregard is from August 29, 2005 through February 28, 2006." (Internal Revenue Service; Employee Benefits Security Administration)

Washington Legislative Wrap Up, 109th Congress, 2005-2006, As of October 4, 2005 (PDF)
6 pages. The chart of federal legislative and regulatory proposals concerning employee benefits of interest to NCTR members has been updated to be current as of October 4, 2005. (National Council on Teacher Retirement)

IRS Employee Plans FY 2006 Work Plan: Operating Priorities and Program Guidance (PDF)
38 pages. Excerpt: "EP will continue to take an aggressive stance towards all identified abusive tax avoidance transactions. Examinations are continuing and resolution strategies are being developed for S Corporation ESOPs that violate IRC 409(p), and IRC 412(i) plans that take deductions for excessive insurance. In addition, CE&O will be refining and updating the abusive transaction information on the Retirement Plans web page (www.irs.gov/ep) and the EP Intranet site." (U.S. Internal Revenue Service)

Lattice Models: Understanding the Modeling Exercise Behaviors in a Binomial Model
Excerpt: "In this article, we continue our discussion of lattice models to show how employee exercise behaviors can be modeled directly within a lattice model and incorporated into stock option valuations." (Chicago Consulting Actuaries, LLC)

Value of Stock Option Grants at the Nation's Largest Corporations Declined, According to Survey
Excerpt: "The survey also found that, using the Black-Scholes formula, the economic value of stock options granted at the typical company declined 64% from $103 million in 2001 to $37 million in 2004, according to a Watson Wyatt press release. The decline occurred in all industry sectors in spite of stock market increases." (PLANSPONSOR.com: one-time registration required)


Newly Posted Events

Compensation for Executives and Directors - 20th Annual National Institute
in New York on November 3, 2005
presented by ABA Joint Committee on Employee Benefits

DEFERRED COMPENSATION - THE LATEST GUIDANCE FROM THE IRS
in New York on October 18, 2005
presented by Ford & Harrison LLP

ERISA Litigation - 15th Annual National Institute
in Illinois on November 10, 2005
presented by ABA Joint Committee on Employee Benefits


Newly Posted Press Releases

Gilsbar, Inc. Expands New Business Development In Louisiana and Mississippi.
(Gilsbar, Inc.)

DAILYVEST PERSONAL RATE OF RETURN TECHNOLOGY SUPPORTS 401K STATEMENT DOWNLOAD USING OFX
(Metrics Partners)

EPIC Advisors, Inc. Announces New Web 401k Offering - Envisage Provides the Advantage with Enveritus
(Metrics Partners)

NBCH Supports use of Minimally Invasive Procedures for Early Diagnosis and Treatment of Breast Cancer
()


Movers and Shakers: Newly Posted Announcements of Promotions and New Personnel
(Post Yours!)

Creasia Gale, APA
(Bidwell Consulting Services, Inc.)


Newly Posted or Renewed Job Openings
Post a Help Wanted Ad

ERISA Associate
for Kraw & Kraw
in CA

Employee Benefits Paralegal
for Cozen O'Connor
in PA

Plan Administration Team Manager
for Boston Financial Data Services
in MA

Sr Pension Analyst
for T Rowe Price
in MD

Senior Pension Administrator
for American Fiduciary Corporation
in MA

401(k) Enroller/Contractor-- Part-time
for Diversified Investment Advisors
in ANY STATE

Director of Account Management for Health Insurance Carrier
for Great-West Healthcare
in OH, TX




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