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October 22, 2008

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

Today's sponsor is International Foundation of Employee Benefit Plans

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E-learning Benefit Courses From the International Foundation

If you need compliance education and are under pressure to cut travel expenses, the International Foundation’s e-learning courses are the perfect choice. With the Foundation’s commitment to high quality education, you can be certain you are receiving need-to-know employee benefit information. A wide range of benefit topics are available, from the basics to compliance technicalities. Stay within your travel budget and stay on top of benefit complexities with the International Foundation’s e-learning courses.

[Guidance Overview] Ninth Circuit Finds San Francisco's Employer Spending Requirement Not Preempted by ERISA (PDF)
3 pages. Excerpt: "On September 30, 2008, the U.S. Court of Appeals for the Ninth Circuit ruled that ERISA does not preempt the employer spending requirement of the San Francisco Health Care Security Ordinance. (Golden Gate Rest. Ass'n v. City & County of San Francisco, No. 07-17370, slip op. (9th Cir. Sept. 30, 2008).) . . . . Golden Gate is a result-driven opinion that demonstrates the ever-increasing need for federal health care reform. The Ninth Circuit's protests notwithstanding, the decision effectively creates a split with the Fourth Circuit's Fielder decision as to whether state health care laws imposing pay or play requirements on employers are preempted by ERISA." (Thompson Hine LLP)

[Guidance Overview] Ninth Circuit Upholds San Francisco Health Care Ordinance Against ERISA Preemption Challenge
Excerpt: "The Ninth Circuit rejected all of the ERISA preemption arguments. The court concluded that the ordinance does not require employers to establish their own ERISA plans or to make any changes to any existing ERISA plans. While employers may want to set up ERISA plans or to modify existing plans to comply with the ordinance, they need not do so. Instead, they may select the City-payment option that allows employers to make payments directly to the City." (Thelen LLP)

[Guidance Overview] Extended Health Coverage for College Students on Medical Leave (PDF)
1 page. Excerpt: "A dependent child on a medically necessary leave of absence is entitled to the same level of benefits as the dependent child had immediately before taking the leave of absence. If any changes are made to the health plan during the child's leave of absence, and the changed coverage remains available to other dependent children under the plan, the dependent child on leave must be afforded the same options and coverage levels." (Seyfarth Shaw LLP)

Survey Finds Voters Want Next President to Make Patient Centered Primary Care Key Component of Health Reform
Excerpt: "A new survey conducted by Harris Interactive on behalf of the [Patient Centered Primary Care Collaborative] found that support for the major presidential candidates' health care plans surges when the patient-centered medical home model is included. The survey found that more than 75 percent of respondents said their support would increase for the next U.S. President's health care reform plan if it includes a PCMH." (The ERISA Industry Committee)

How Much Is Too Much? An Analysis of Health Plan Profits and Administrative Costs in California
Excerpt: "This issue brief examines three main questions: To what extent are health plan administrative costs and profits responsible for the fast rise in premiums? Are California health plans' administrative costs and profits 'reasonable'? What has been the effect of medical loss ratio regulations in other states? The findings suggest that medical spending was the primary driver of recent premium increases. The research does not provide a strong case for or against medical loss ratio regulation in California, but rather raises issues and offers implementation considerations." (California HealthCare Foundation)

What Employers Want from Health Insurers – Now
Excerpt: "The PricewaterhouseCoopers' report from the Health Research Institute (HRI), What employers want from health insurers – now, examines the needs, wants, and satisfaction levels of employers regarding health insurance and benefits to identify and understand emerging themes from the employer's perspective." (PricewaterhouseCoopers)

Health Care Reform to Be a Top Priority of Congress
Excerpt: "When Congress returns to Washington in January, legislators likely will make the faltering economy the top priority, but health care reform will remain in the mix. Perhaps the first piece of the puzzle was put on the table October 7 by a bipartisan group of prominent senators in health care policy, including Sens. Max Baucus, D-Montana; Charles Grassley, R-Iowa; Mike Enzi, R-Wyoming; and Ron Wyden, D-Oregon. They introduced a 'discussion draft' of legislation that would require companies to disclose on employees' W-2 tax forms the amount of money they spend annually on health insurance. The idea emanated from a set of hearings designed to prepare Congress to legislate next year on health care." (Workforce Management; free registration required)

New Survey Shows 'High-Performing' Companies Doing Better Job Controlling Healthcare Costs Than Others
Excerpt: "In 2008, high-performers have done better at beating inflation, a tall order for employers with large healthcare programs. The survey found that 42 percent of high performers managed to hold healthcare cost increases to 3 percent or less. Those savings have been passed on to the employee, so to speak, as employees at those companies are paying, on average, $350 less than employees at low-performing organizations." (Human Resource Executive Online)

Candidates' Health Reform Numbers Are the Roughest of Estimates
Excerpt: "The campaigns acknowledge that the numbers are 'all over the map,' in the words of Jay Khosla, a McCain adviser. But that does not keep them from selectively highlighting the most favorable ones (as when Mr. Obama says his plan will cut insurance premiums by $2,500 per family, or when Mr. McCain says his tax changes will leave 95 percent of Americans with more money)." (The New York Times; free registration required)

Many Uninsured Kids Have Parents with Insurance
Excerpt: "More than 2 million children in the United States who have no health insurance of any kind have at least one parent who gets employer-provided medical coverage, researchers said on Tuesday. These parents typically get insurance through work that covers them but cannot afford the extra thousands of dollars that may be needed for a plan that also covers their children, the researchers wrote in the Journal of the American Medical Association." (Reuters)

Small Employers Say Providing Health Care Costs Too Much
Excerpt: "The majority of U.S. employers that do not sponsor an employee health plan (almost exclusively small employers, with fewer than 500 workers) believe that, at its current price, providing employee medical coverage is far beyond their means, according to a new survey. In a news release, Mercer said the majority of employers that do not provide health benefits say they would not contribute even $50 a month to cover an employee, while the majority of those that do provide benefits favor mandatory coverage for all." (; free registration required)

Port of Seattle Must Pay Health Care Obligations from Ended Contract
Excerpt: "The Washington state Supreme Court ruled 5-4 Tuesday that the Port of Seattle owes retired union workers health care benefits agreed to during collective bargaining in 1997, even though the contract ended in 2003. According to the Seattle Post-Intelligencer, the court said when employers give retirees health care through a collective bargaining agreement, they create a vested right to those benefits, absent contract language that specifically names when they will end." (; free registration required)

Arizona Daily Star Examines State Ballot Measure That Would Make Mandated Health Coverage Illegal
Excerpt: "The Arizona Daily Star on Monday examined a measure appearing on Arizona's November ballot that would amend the state's constitution to prohibit laws that mandate people obtain health coverage, or that restrict an individual's choice of private health care systems or private health plans. Proposition 101 also would prohibit laws that interfere with an individual's 'right to pay directly for lawful medical services' or that impose a penalty or fine on an individual who chooses not to obtain coverage." (Kaiser Family Foundation)

Sponsored by: ALM

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Complete Benefits Law Guidance from Law Journal Press

The nation's workforce and health care system are constantly evolving and so are the legal issues. Law Journal Press helps you handle any benefits law question with up-to-date, authoritative books on all aspects of the field. Get legal and practical advice from leading experts on everything from COBRA to ERISA, "contingent" employees to family and medical leave, and more. Browse our product listings for detailed information and special offers.

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

Links to Items on Executive Comp, Benefits in General

[Guidance Overview] 2009 Limits for Benefit Plans
4 pages. Excerpt: "Each year, the U.S. government adjusts the limits for pension plans, Social Security, Medicare, and other benefit programs to reflect price and wage inflation, and changes in the law. As a result, employee benefit specialists must annually adapt their benefit plans to accommodate the new limits." (Aon Consulting)

[Guidance Overview] Economic Stabilization Act Creates Bicycle Commuter Benefit
Excerpt: "The Emergency Economic Stabilization Act (EESA) of 2008 (Pub. L. 110-343), enacted Oct. 3, 2008, creates a new qualified transportation fringe benefit. The EESA amends Code Section 132(f) to authorize employers to reimburse their employees for certain bicycle commuting expenses beginning Jan. 1, 2009. The new law permits a $20 monthly reimbursement for each month in which an employee 'regularly uses' a bicycle to commute to work, but not during any month in which that employee gets any other type of transportation reimbursement under Section 132(f)." (Thompson Publishing Group Inc.)

[Guidance Overview] IRS Updates Business Travel Expenses Deemed Substantiated / Per Diem Rates
Excerpt: "Revenue Procedure 2008-59 updates the rules under which an employee's expenses for lodging, meals and incidental expenses while traveling away from home are deemed to be substantiated under Treasury Regulation § 1.274-5 when an employer provides a per diem allowance. The Procedure also provides, for those employees and self-employed individuals who are not reimbursed, an optional method for use in computing the amounts paid or incurred for business meals and incidental expenses while traveling away from home." (Deloitte via

[Guidance Overview] Financial Rescue Bill Raises Thorny Issues in Setting New Restrictions on Executive Pay
Excerpt: "Sweeping new restrictions on executive pay programs are suddenly a reality as a result of the financial rescue legislation signed by President Bush on Oct. 3. While the rules are aimed at banks and other financial institutions, they raise a lot of unanswered questions -- and some tough issues. How, exactly, will they work for participating institutions? And could this be the beginning of a broad new push by lawmakers in Washington to extend additional restrictions on executive compensation to other companies outside the financial sector?" (Towers Perrin)

[Guidance Overview] Offshore Deferred Compensation to be Taxable at Time of Vesting (PDF)
4 pages. Excerpt: "On October 3, 2008, the Emergency Economic Stabilization Act of 2008 (the 'EESA') was enacted with the hope of restoring the viability of the nation's credit markets. The EESA contains a revenue-raiser requiring the current income inclusion upon vesting of nonqualified deferred compensation paid by certain 'tax indifferent' entities, effective for services performed beginning January 1, 2009." (Pillsbury Winthrop Shaw Pittman LLP)

[Guidance Overview] U.S. Treasury Provides Interim Guidance on Executive Compensation Provisions in Emergency Economic Stabilization Act
Excerpt: "The interim guidance provides important details about permitted executive compensation practices for financial institutions participating in the Troubled Asset Relief Program; other companies should also consider this guidance when working with their compensation committees regarding potential further executive compensation and corporate governance reform." (McDermott Will & Emery)

[Guidance Overview] Highlights of Treasury Department Guidance on Executive Compensation Restrictions in the Emergency Economic Stabilization Act of 2008
Excerpt: "On October 15, 2008, the Treasury Department . . . issued four pieces of guidance implementing the executive compensation restrictions contained in the Emergency Economic Stabilization Act of 2008 (EESA). In general these restrictions apply only to senior executive officers of financial institutions which sell troubled assets through auction or direct purchase to the Department under the Department's 'Troubled Asset Relief Program' (TARP). The Department's authority to purchase troubled assets under TARP became effective October 3, 2008 and will expire on December 31, 2009, unless extended until a date no later than October 3, 2010 (the 'TARP Effective Period')." (McGuireWoods)

[Guidance Overview] Executive Compensation under the Emergency Economic Stabilization Act of 2008 (PDF)
Excerpt: "On October 3, President Bush signed into law a $700 billion economic rescue package that imposes limits on the compensation for certain executives of financial firms whose troubled assets may be purchased by the government. Although these limits are aimed at companies that are expected to benefit from the bailout, the stage may be set for market forces to demand similar restraints on other companies' executive compensation practices going forward. This For Your Information discusses the rules affecting executive compensation, including guidance released on October 14 and 15." (Buck Consultants)

[Guidance Overview] New 457A Rules on Offshore Deferred Compensation Pose Tough Issues
Excerpt: "The bailout law calls for harsh tax treatment of offshore deferred compensation, effective in 2009. Offshore hedge and similar funds may have been the intended target, but new Section 457A tax rules could apply to other companies, depending on treaty terms and foreign income tax laws. If 457A applies, employees pay tax when compensation vests, regardless of the payment date. If the amount is not known at the vesting date, taxes -- and hefty penalties -- are due once the amount is determinable. Determining whether 457A applies could be very challenging for employers with foreign operations." (Mercer LLC)

Economic Crisis Hits Incentive Plans Hard
Excerpt: "A new survey from Deloitte reveals that decreased earnings and falling stock prices have decimated the value of some companies' annual incentive and long-term incentive plans, leaving companies searching for ways to help their employees feel valued and motivated in this economy. The survey of 151 U.S. companies found that 59% expect their annual incentive plans to pay out below target, while 11% believe there will be no payout at all." (Employee Benefit News; free registration required)

Newly Posted Events
(Post Yours!)

Are You Ready for Mental Health Parity? Webcast
Nationwide on October 30, 2008
presented by International Foundation of Employee Benefit Plans

Connecting With Employees During Economic Turbulence Webcast
Nationwide on November 7, 2008
presented by International Foundation of Employee Benefit Plans

Newly Posted Press Releases
(Post Yours!)

Council Outlines 10-Point Plan To Address Challenges Threatening Employer-Sponsored Retirement Plans
American Benefits Council

Recordkeeper Is Certified To Industry Best Practices
Centre for Fiduciary Excellence (CEFEX)

Investment Advisor Is Certified For Fiduciary Excellence
Centre for Fiduciary Excellence (CEFEX)

Recordkeeper Is Certified To Industry Best Practices
Centre for Fiduciary Excellence (CEFEX)

Americans for Tax Reform and Rutledge Capital Release Version 2.0 of Obama-McCain 401(k) Tax Calculator
Americans for Tax Reform (ATR)

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