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March 10, 2008

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


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[Guidance Overview] Using Alternative Coverage To Offset COBRA
Excerpt: "Why do employers offer alternative coverage independently from COBRA? Sometimes, the employer is legally required to do so, as in the case of State continuation laws affecting insured plans. Other times, as with retiree plans, coverage is provided as a reward for service to the employer. In other instances, employers effectively use alternative coverages to reduce their COBRA liability or COBRA administrative expenses. For instance, alternative coverage often is used as part of a severance package negotiated incident to an employee's involuntary termination of employment." (HRTrainingCenter.com)

[Guidance Overview] Carrier's Neglect in Compiling Administrative Record Constitutes an Abuse of Discretion
Excerpt: "By relying on upon written evidence alone, the carrier in Granite v. Guardian Life abused in discretion in determining that a cancer patient had never been 'actively at work' as required by the life insurance policy. The procedural irregularities in the carrier's adjudication of this claim drew sharp criticism by the district court. The case provides a good backdrop for discussion of the concerns voiced by those critical of the deference afforded plan administrators operating under a conflict of interest." (Health Plan Law blog by Attorney Roy F. Harmon III)

[Guidance Overview] Alaska Supreme Court - An Opinion on ERISA Preemption
Excerpt: "The Supreme Court held: 1) ERISA § 514 does not pre-empt a common law claim for negligent misrepresentation by non-participants. 2) Emotional distress damages were justified, even in the absence of physical injury . . . . 3) The allocation of 75 % fault to the Fund and 25 % fault to the employer was justified. The Court seemed to approve Judge Suddock's analogy of the employer to a 'lay consumer' and the Trust to an insurance company." (Alaska Employment Law)

[Guidance Overview] WHCRA Doesn't Prohibit Limiting Payments for Breast Reconstruction Surgery to the Usual, Customary, and Reasonable Rate
Excerpt: "EBIA Comment: WHCRA requires group health plans (and health insurance issuers providing coverage in connection with such plans) that provide medical and surgical benefits for mastectomies to provide specified coverage for participants and beneficiaries who receive mastectomy benefits and elect related breast reconstruction. Although WHCRA specifically provides that reconstructive surgery benefits may be subject to annual deductibles and co-insurance provisions, this is the only case we have seen addressing whether WHCRA allows a plan to impose UCR caps on reconstructive surgery after a mastectomy. The court's decision is consistent with the understanding that most group health plans have regarding WHCRA." (Employee Benefits Institute of America)

[Guidance Overview] No Claim for Failure to Provide COBRA Notice for Employee Who Did Not Follow Standard Procedures for an Address Change
Excerpt: "EBIA Comment: Generally, the proper address to which the COBRA election notice should be sent is the last-known address of the qualified beneficiary. An ounce of prevention, of course, is worth a pound of cure. Employers should have a policy of obtaining up-to-date mailing addresses from departing employees and of forwarding them to those responsible for COBRA notifications. And all COBRA forms and other communications with qualified beneficiaries should impose an obligation to inform the plan in writing, at a specified address, of any address changes." (Employee Benefits Institute of America)

Baby Boomers' Awareness of Disability Risks - Summary of Survey Findings, February 2008
Excerpt: "The AHIP survey finds that Baby Boomers substantially underestimate the risk of suffering a disabling injury or illness. Just over a third (34%) of Baby Boomers think the chances are 5% or less that a typical working adult will become disabled due to illness or injury over the course of his or her working life causing him/her to miss three or more months of work. A slight majority of Baby Boomers (51%) think the chances that a typical working adult will become disabled are 10% or less." (America's Health Insurance Plans)

EBSA Chief Blasts Mental Health Parity Bill
Excerpt: "[If] the House bill, H.R. 1424, became law, it would require plans that offer any mental health benefits to expand their offerings to include all diagnoses in the Diagnostic and Statistical Manual of Mental Disorders, Fourth Edition . . . . That change would put self-insured plans in the position of deciding between offering no mental health benefits or all mental health benefits, Campbell said." (The National Underwriter Company; free registration or paid subscription required)

The Democratic Presidential Candidates and Their Health Care Reform Proposals
Excerpt: "Now that it appears the Democratic presidential contest will keep going for some time, health care will continue to be a major topic of debate. While most of the disagreement between Sens. Hillary Clinton and Barack Obama has focused on universal coverage -- and particularly an individual mandate -- that dispute is actually overshadowing how many similarities there are between their two health policy proposals. . . . [H]ere is a partial list of what Sen. Clinton and Sen. Obama are proposing that reveals their visions of a much larger role for government in our health sector." (Galen Institute)

Pricing an Employment-Based Long-Term Care Plan
Excerpt: "Given an employer's limitations regarding cost, how can an LTC plan be designed to provide the best protection against future catastrophic losses for as many employees as possible? In fact, implementing self-funded LTC program with several true group features can result in employer costs very similar to a dental benefit." (Milliman)

Mid-Size Employer Turns to 'Hybrid' CDHP Model
Excerpt: "Sperian Protection, an equipment manufacturer, lowered its health care costs over the past years with some innovative tinkering with consumer-driven health care options and through a catchy communications program." (Employee Benefit News; free registration required)

The Changing Definition of 'Dependent' - Who Is Insured and for How Long?
Excerpt: "In an attempt to directly address the fastest growing uninsured population (young adults), state lawmakers are proposing and enacting legislation that extends dependent benefits to older children. Typically, children lose health care coverage under a parent or other legal caregiver on their 19th birthday. Full-time students are often given an exception with dependent status ending at graduation or a specified age. States have addressed specific populations within this age group as well, ensuring that students who take a leave of absence from school due to illness, injury, or service in the armed forces do not lose their health insurance. [Chart of state laws on the issue was updated October 2007.]" (National Conference of State Legislatures)

UNC Health Care Requiring Patients to Pay Costs Up Front
Excerpt: "UNC Health Care on Saturday began asking patients at its affiliated hospitals and physician clinics to pay up front for their share medical care costs, the Raleigh News & Observer reports. Under the new policy, patients will contribute up front copayments for physician visits, as well as for tests such as MRI scans." (Kaiser Family Foundation)

[Opinion] Issues on COBRA and Dependent Eligibility Audits
Excerpt: "Included among [California state employee benefits] is health care coverage for workers and their dependents, which is specifically provided under the state's Consolidated Omnibus Budget Reconciliation Act of 1985 () (COBRA). [T]he article, 'Employers Are Taking Steps to Reduce Costs Associated with Employee Benefits', posted on November 29, 2007, contradicts nearly everything the law says. This article is about the practice of some employers who terminate medical coverage for worker's dependents unless they can show proof of qualification to the benefit." (Los Angeles Attorney Services and Legal Resources)


Links to Items on Executive Comp, Benefits in General

[Opinion] Time To Come To Grips With Connecticut's Huge Pension Bill
Excerpt: "No matter how you look at it, $54.2 billion is a huge, pretty much unfathomable amount of money. It also happens to be what Connecticut taxpayers are obligated to pay for outstanding state debt and unfunded liabilities for pensions and retiree benefits for teachers and state employees." (TheDay.com)

Too Much Freedom of Choice Causes Bad Decisions; Time to Push Participants in Right Direction?
Excerpt: "Among the most influential of these new ideas is the 'nudge' - a model for how employers, friends, and even the government can structure people's choices to push them in the right direction without restricting their freedom to go their own way. It can take a variety of shapes, from the automatic-enrollment version of the 401(k) to cash payments that encourage recovering drug addicts to stay clean to new kinds of feedback on the power consumption of cars and appliances that will subtly encourage people to save energy." (The Boston Globe)

Employee Communication, Enrollment Periods, and Voluntary Benefits
Excerpt: "If employers really want to convey the value of their benefits offerings and advisers want to uphold their role as benefit educators, they both need to make enrollment a priority. That may mean offering multiple enrollment opportunities throughout the year." (Employee Benefit Advisor; free registration required)

Is There a Link Between ESOPs and Better Company Performance?
Excerpt: "A developing body of research suggests that exceptional business performance for ESOP firms is driven by a change from the traditional hierarchal business model." (Workforce Management; free registration required)

How Many Struggle to Get by in Retirement?
Excerpt: "This paper uses data from the 2004 Health and Retirement Study to demonstrate how the poverty rate of adults 65 and older changes using alternative resource and threshold measures. Results show that alternative poverty measures that account for health spending produce higher poverty rates than the official measure, even those that include the value of housing and financial assets." (Urban Institute)

Financial Analysts Must Think Like Detectives When Assessing Shareholder Risk Due to Pension Plans (PDF)
2 pages. Excerpt: "As the clock ticks, the gap between what we know about employee benefit plan economics and the true impact on share price is getting dangerously wide. Unless sponsors get lucky (and current market volatility presents a challenge) and employees stop getting old (not a pleasant thought), proper management of employee benefit plans will become increasingly urgent. Growing liabilities and liquidity needs affect debt ratings, growth, flexibility, cash, cost of capital, and the power to attract and retain productive workers." (Susan Mangiero, CFA, reprinted from CFA Magazine)

Public Worker Coalition Forms to Support Defined benefit and Retiree Health Care Plans
Excerpt: "The Associated Press reports that the New Hampshire Retirement Security Coalition is 'dedicated to ensuring New Hampshire workers who teach our children, police our streets, and fight our fires can depend on a stable and modest retirement income after a career of public service.' The coalition is supportive of efforts to maintain defined benefit pension and health care benefits for retired public employees provided by the New Hampshire Retirement System and to ensure the long-term viability of the plan for current and future public employees." (PLANSPONSOR.com; free registration required)


Newly Posted Events

18th Annual IRA Academy
in Texas on May 13, 2008
presented by PenServ, Inc.

Emerging Issues in the Retirement Benefit World
in Illinois on March 13, 2008
presented by Center for Tax Law and Employee Benefits at The John Marshall Law School


Newly Posted Press Releases

U.S. Labor Department Re-schedules Hearing On Service Provider Compensation And Plan Fee Disclosure
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

Investment Boom in Microfinance Fueled by Socially Responsible Investors
Consultative Group to Assist the Poor (CGAP)


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DC Plan Administrator
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Administrator
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Plan Administrator
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VP - Administration
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Account Manager - 2 openings
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in OR

Client Relationship Manager
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401k Administrator
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in WA

Retirement Services Education & Enrollment Specialist
for Prudential Financial
in NE

Retirement Consultant
for Towers Perrin
in CT, DC, MA, NJ, NY, PA

Health and Welfare Benefits Manager
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in NJ

Health and Welfare Actuarial Consultant
for Towers Perrin
in CT, NJ, NY

Benefit Administration Team Associate
for Towers Perrin
in PA

Retirement Associate
for Towers Perrin
in CT, DC, MA, NY, PA

Health and Welfare Associate
for Towers Perrin
in NJ, NY, PA

Senior Retirement Consultant
for Towers Perrin
in DC, MA, PA

Health and Welfare Consultant
for Towers Perrin
in GA, NJ, NY, TX

Retirement Research Consultant
for Hewitt Associates
in IL

New Business Analyst
for Jacob, Haxton & Boord, llc
in OH




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