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February 29, 2008

Here are the Web's best new links about compliance and cost aspects of plan operation, design and policy.

Today's sponsor is Employee Benefits Institute of America Inc. (EBIA)

(Click on company name or banner to learn more.)
Banner ad for Employee Benefits Institute of America Inc. (EBIA)

Record Retention Requirements for Health & Welfare Plans

In Record Retention Requirements for Health & Welfare Plans, EBIA's experts analyze record retention requirements for ERISA health and welfare plans as well as other employer-provided health and welfare benefits not subject to ERISA. You'll find answers to your record retention questions for many benefits including cafeteria plans, DCAPs, qualified transportation plans, HSAs, group health plans (like major medical, dental, health FSAs, and HRAs), and other ERISA benefits.
Available now at the introductory price of $195.
Please enter priority code BL195. For more information and to order, visit

[Guidance Overview] Hewitt Federal Legislation Quick Guide Updated February 27, 2008, for Health and Welfare Plans (PDF)
12 pages. This 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. (Hewitt Associates)

[Guidance Overview] Class Action Seeking Insurance for Eating Disorders Can Go Forward
Excerpt: "In a case being watched by advocates for patients with anorexia and bulimia, a federal judge in Newark, N.J., has ruled that class action lawyers can pursue an attempt to compel Aetna Inc. to improve benefits for eating disorder victims. U.S. District Judge Faith Hochberg on Wednesday denied a dismissal motion, in which the insurer argued the coverage dispute should be decided by state regulators or by its own internal review process on a case-by-case basis." (

Health Care Opinion Leaders' Views on the Presidential Candidates' Health Reform Plans
Excerpt: "Survey participants strongly support reform proposals that applied a mixed private–public market approach. Additional favored policy strategies for reform include a requirement for individuals to obtain health insurance, new private market regulations, and a requirement for employers to provide coverage or contribute to a coverage fund. Alternatively, respondents think proposals that focus on tax incentives to purchase individual private health insurance are not an effective method for controlling the rising costs of health care or achieving universal coverage." (The Commonwealth Fund)

Comparison of Purchase of Prescribed Drugs from Mail Order Pharmacies with Other Outlets, 2005 (PDF)
8 pages. Excerpt: "This Statistical Brief provides information as reported by households in the U.S. civilian noninstitutionalized (community) population for calendar years 2000 and 2005 on the proportion of persons who purchased at least one prescribed medicine at the following types of pharmacies: mail order; drug store; HMO, clinic, or hospital; and another store (e.g., grocery store, etc.)." (U.S. Agency for Healthcare Research and Quality)

Rules on Time Limits for California HMOs to Provide Care Rejected
Excerpt: "On Wednesday, the Office of Administrative Law rejected a set of regulations by the Department of Managed Health Care that would have allowed HMOs to define for themselves what constituted timely access to care, the Los Angeles Times reports (Los Angeles Times, 2/28)." (California HealthCare Foundation; free registration may be required)

Audio: Poll Shows Broad Support for Requiring Health Coverage
Excerpt: "A new poll on health care from NPR, the Kaiser Family Foundation and the Harvard School of Public Health finds that a majority of Americans are backing key elements in the health reform proposals of Democratic presidential candidates Hillary Clinton and Barack Obama." (Morning Edition via National Public Radio)

Commission Launched to Look Beyond Medical Care System to Improve the Health of All Americans
Excerpt: "The national, independent and nonpartisan health commission will focus on factors outside the health care system and identify non-medical, evidence-based strategies -- both short- and long-term -- to improve the health of all Americans. The group will investigate how factors, such as education, environment, income and housing, shape and affect personal behavioral choices through an extensive inquiry that will include regional field hearings." (Robert Wood Johnson Foundation)

Determining 'Value' of Health Care Treatments Requires More Technology, Data Collection and Analysis
Excerpt: "Would a 'value-chain' approach to health care delivery in the United States improve quality, reduce costs, and increase access? This was the subject of an article entitled The Value Chain Case for Health Care Reform -- A Conference Summary, published in the March 2008 issue of the Chicago Fed Letter, The article reviews the major points discussed by speakers representing varied stakeholders' points of view at a two-day forum organized by the Federal Reserve Bank of Chicago and the Detroit Regional Chamber." (Wolters Kluwer Financial Services)

N.C. Blues Continue Trend Toward 'Value-Based' Drug Formularies
Excerpt: "In the latest move toward 'value-based' drug formularies, Blue Cross and Blue Shield of North Carolina (BCBSNC) said Dec. 27 that it will waive copayments on all generic drugs that treat congestive heart failure, high blood pressure, high cholesterol and diabetes. The Blues plan also said it will move more than 40 brand drugs to a lower-cost drug category." (

Proposed 'Behind-the-Counter' Category of Drugs Would Give Health Plans and PBMs New Cost-Saving Opportunities
Excerpt: "The long-familiar Rx and OTC (over-the-counter) classifications could someday have company. The FDA held a public meeting Nov. 14 to discuss the feasibility of establishing a third 'behind-the-counter' (BTC) category of drugs, a concept that health plans and PBMs say could eventually lower Rx payers' overall spending, but for which savings would be modest at first and coverage decisions would depend on individual products." (

Coalition to Examine Health, Poverty Link
Excerpt: "A coalition of leaders from the business, health care and education sectors said yesterday that they will examine how factors such as income, housing, education and stress -- not medical insurance -- shape the health choices people make and cause poor and middle-class people on average to live shorter lives than wealthier Americans." (The Washington Times)

Financial Incentives Help Employees Shed Weight
Excerpt: "A study published in late 2007 shows that even a small amount of money can encourage people to make healthier choices and lose weight." (Employee Benefit News; free registration required)

Humana Offers Members Gift Cards for Participating in Health Practices
Excerpt: "Humana last month launched a program, called 'Healthy Returns,' that provides its Medicare plan beneficiaries with gift cards to Macy's, CVS, Lowe's and Borders as an incentive to adopt healthier lifestyles, Florida Health News reports." (Kaiser Family Foundation)

Links to Items on Executive Comp, Benefits in General

[Official Guidance] Text of Proposed Labor Regs: 7-Day Safe Harbor for Participant Contributions for Plans Having Fewer Than 100 Participants (PDF)
Excerpt: "[T]he Department believes that adoption of a '7-business day' safe harbor rule would present little, if any, additional risk to plan participants and beneficiaries. In this regard, the Department believes that most employers with small plans that are taking longer than 7 business days to deposit participant contributions will expedite the depositing of those contributions to take advantage of the safe harbor. The Department also believes that where participant contributions are being made by employers with small plans within a period shorter than 7 business days, few employers with small plans will incur the costs attendant to modifying their payroll system in order to hold such contributions for a few additional days." (Employee Benefits Security Administration, U.S. Department of Labor)

[Guidance Overview] Employee Benefits Update, February 2008 (PDF)
7 pages. The newsletter covers select compliance deadlines, retirement plan developments, and health and welfare plan developments. (Reinhart Boerner Van Deuren s.c.)

[Guidance Overview] Hewitt Federal Legislation Quick Guide Updated February 27, 2008, on Human Resources & Employment Law (PDF)
14 pages. This 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 human resources and employment law. (Hewitt Associates)

[Guidance Overview] State Regulation Barring Grants of Discretion to ERISA Plan Administrators Sustained
Excerpt: "Note: This holding affects the fundamental operation of ERISA plans and, as such, is a remarkable outcome. If state insurance departments can by fiat remove the advantage conferred by grants of discretion to the plan administrator, the standard of review in an enormous number of ERISA cases could be altered in short order." (Health Plan Law blog by Attorney Roy F. Harmon III)

[Guidance Overview] Possible Fixes for New 162(m) Problems
Excerpt: "Every corporation with plans and agreements potentially affected by the new rule will need to consider whether to revise its plans and agreements, and if the answer is affirmative, how to revise its plans and agreements to best achieve the original purposes of the acceleration. Remember, the new ruling would deny deductibility to plans and agreements with the offending language even if the acceleration event never occurs. The . . . examples show how a corporation could accelerate vesting provisions to preserve deductibility, with the possibility of a reduced payout to a participant who retires." (Michael S. Melbinger via Winston & Strawn LLP)

[Guidance Overview] New IRS Position on Section 162(m) Performance-Based Compensation Deduction
Excerpt: "In a surprisingly swift and unexpected turn of events, the Internal Revenue Service (IRS) has reversed its long-standing position with respect to a public company's right to deduct certain 'performance-based compensation' under Section 162(m) of the Internal Revenue Code. Revenue Ruling 2008-13, issued by the IRS on February 21, 2008, provides that the performance-based compensation requirements of Section 162(m) are not met if compensation could be payable on a termination without cause or for good reason, or on a voluntary retirement, even if the applicable performance goals are met. This Ruling is directly counter to the IRS's position in prior private letter rulings issued as recently as 2006." (Kirkpatrick & Lockhart Preston Gates Ellis LLP)

[Guidance Overview] IRS Affirms Position That Right to Performance-Based Compensation on Termination of Employment Results in Loss of Deduction
Excerpt: "Companies should consider whether the IRS' new position on Section 162(m) also impacts bonuses intended to qualify as 'performance bonuses' for purposes of the special deferral rules of Section 409A (which permit deferral elections to be made up to six months before the end of the performance period). Additionally, as companies amend their compensation arrangements for Section 409A, they will need to consider whether such amendments will result in the employment contracts no longer qualifying for the Section 162(m) transition relief described above on the basis the employment contracts have been renewed or extended." (Troutman Sanders LLP)

[Guidance Overview] Corporate Communicator, March 2008, Recent Developments Concerning Small Public Companies (PDF)
6 pages. Excerpt: "In this issue we highlight recent significant developments in the reporting requirements for small public companies. We are also including a discussion about recent rulings from the Internal Revenue Service that reverse the IRS's position on the tax deductibility of certain severance payments under IRS Code Section 162(m)." (Snell & Wilmer L.L.P.)

[Guidance Overview] New IRS Ruling Affecting 162(m) Performance-Based Compensation
Excerpt: "The IRS just recently issued a revenue ruling (Rev Rul 2008-13) that may affect how some bonus arrangements and employment contracts are structured for 'covered employees' of public companies. As of 2007, the IRS is interpreting the term 'covered employee' to mean the CEO and the other three most highly compensated officers other than the CFO." (Gray, Plant, Mooty, Mooty & Bennett, P.A.)

Compensation Model Breeds Excessive Executive Pay, Study Says
Excerpt: "Corporate boards of directors and institutional investors disagree over whether the executive pay model has helped improve corporate performance, but they agree it has led to excessive levels of compensation, according to a Watson Wyatt Worldwide study released today." (Pensions & Investments)

GAO Report Says Many States Are Lax in Funding Their Pension Plans
Excerpt: "The Government Accountability Office looked at a sample of about 70 public retirement systems at the request of Senators Max Baucus, Democrat of Montana, and Charles E. Grassley, Republican of Iowa, the chairman and ranking Republican member of the Finance Committee, respectively. The request was somewhat unusual, because Congress has little authority over the way states handle their pension funds." (The New York Times; free registration required)

State and Local Government Retiree Benefits: Current Funded Status of Pension and Health Benefits (PDF)
32 pages. Excerpt: "[T]he GAO was asked to examine: 1) the key measures of the funded status of retiree benefits and 2) the current funded status of retiree benefits. GAO analyzed data on public pensions, reviewed current literature, and interviewed a range of experts on public retiree benefits, actuarial science, and accounting." (U.S. Government Accountability Office)

Newly Posted Press Releases
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Roth 401k Analyzer Version 3.0 Released by ERISA Expertise
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MassMutual to Acquire First Mercantile Trust Company from SunTrust Banks

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