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December 4, 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 Foundationís e-learning courses are the perfect choice. With the Foundationís 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 Foundationís e-learning courses.

[Official Guidance] Text of IRS Notice 2008-104: Additional Transition Relief on Use of Debit Cards for Medical Expense Reimbursements (PDF)
1 page. Excerpt: "The deadline in Notice 2007-2 is extended by six months so that, after June 30, 2009, health FSA and HRA debit cards may not be used at stores with the Drug Stores and Pharmacies merchant category code unless the requirements of (1) or (2) above are satisfied." (Internal Revenue Service)

[Guidance Overview] Restaurant Association Challenge to San Francisco Healthcare Ordinance Fails
Excerpt: "In what may become a trend statewide, or even nationwide, the San Francisco City Council passed what is called the Health Care Security Ordinance (HCSO). The purpose of the ordinance is to require employers to pay certain monetary amounts for health care, based on the number of persons employed. The Golden Gate Restaurant Association challenged the ordinance arguing that it is preempted by ERISA. A federal district court agreed with the Association, but the City of San Francisco appealed. On September 30, 2008, the U.S. Court of Appeals for the 9th Circuit overturned the district court decision, ruling that the HCSO is not preempted by ERISA." (Fisher & Phillips LLP)

UAW Suspends Jobs Bank and Delays Retiree Fund Payments
Excerpt: "Following a somber meeting with hundreds of union representatives from General Motors (GM), Ford Motor (F) and Chrysler, the United Auto Workers announced Wednesday that it's suspending the jobs bank, allowing the automakers to delay payments for a retiree health care fund and looking at other contract provisions to help save the ailing companies." (USA TODAY)

Insurance Company Group Proposes Universal, Centralized Healthcare
Excerpt: "AHIP would require all Americans to get coverage, a new mandate that Obama rejected during the presidential campaign. In exchange for such a mandate, insurers would agree to longtime demands from consumer advocates that they no longer reject people with preexisting medical conditions. The group is urging Congress to set up an advisory organization to identify ways to cut the increase in healthcare costs by 30% over the next five years." (Los Angeles Times)

Medicare Drug Program Criticized As Unclear
Excerpt: "More than 1 million people in the Medicare drug program next year will pay almost the full price for certain brand-name drugs when they choose them over generics -- a move that advocates for patients say is not clearly spelled out by the government nor insurers. For hundreds of targeted drugs, patients will pay a standard co-payment. They also will pay the difference in price between the brand- name medicine and the generic. The practice in Medicare mirrors similar efforts in job-based insurance." (USA TODAY)

The Emerging Role of Group Medicare Private Fee-for-Service Plans
Excerpt: "This issue brief examines the recent boom in Medicare Advantage enrollment attributable to employers contracting with Private Fee-for-Service (PFFS) plans to cover their Medicare-eligible retirees. Between 2006 and 2008, the number of Medicare beneficiaries enrolled in Medicare Advantage group plans nearly doubled from 900,000 to nearly 1.7 million as of June 2008; most of this growth is attributable to contracts between employers and PFFS plans. The issue brief . . . highlights changes in regulation, statute and the marketplace that appear to be influencing employers' interest in PFFS plans as an option for their retirees, drawing on interviews with employers, benefit consultants, insurers and consumer representatives." (Kaiser Family Foundation)

Blue Cross Seeks Alternative to Health Fee Hikes
Excerpt: "Blue Cross Blue Shield is reconsidering a change to its Standard Option plan that substantially increases the fees paid by federal employees who have surgeries performed by out-of-network doctors, a top official with the health carrier said on Wednesday. Stephen Gammarino, senior vice president of national programs for Blue Cross Blue Shield, told the House Oversight and Government Reform Federal Workforce subcommittee that he is working with the Office of Personnel Management to pursue an alternative to a 2009 policy change that increases a patient's deductible to $7,500 for each procedure or surgery, including maternity care, that uses an out-of-network provider. The change affects the carrier's Standard Option plan, in which 4 million federal employees currently are enrolled." (

State Health Care Reform Update
Excerpt: "[T]he election of Barack Obama has halted talks of health care reform in several states. Many state legislatures, such as Pennsylvania and Wisconsin, are waiting to see what the Obama Administration is going to do in regard to health care reform before acting, to ensure that their state's program complies with the federal program. However, there has been health care activity in the states the past few weeks . . . ." (Wolters Kluwer)

Insurers Group Proposes Universal Health Care
Excerpt: "The trade group for health insurers on Wednesday offered its own universal-coverage proposal that calls for Congress to slow the growth of health-care costs by 30% in five years, envisioning a total savings of more than $500 billion. The money could be used to fund coverage of the uninsured and to cut costs for those with insurance, said officials from America's Health Insurance Plans. The group called on Congress to establish a public-private advisory group to recommend action in three areas: reducing wasteful spending, changing how doctors and hospitals are paid, and reducing administrative costs." (The Wall Street Journal)

Campaign for an American Solution: Affordable, High-Quality Healthcare for Every American
America's Health Insurance Plans presents a new proposal to achieve universal coverage, affordability, quality improvement and market reform in health care. (America's Health Insurance Plans)

Lobbies Backing Health Reforms: Insurers Change Their Tune from 1993-94 Debate
Excerpt: "Significant differences over policy remain unresolved, and even the most optimistic proponents of reform think passing major legislation next year would be difficult. But two key factions, the business lobby and the health insurance industry, are talking seriously about substantial changes that would ideally help cover the nation's 47 million uninsured, improve the quality of care, and tame the growth of healthcare spending." (The Boston Globe)

Conseco Inc., a Major Insurer, Has Dumped a Chunk of Its Long-Term-Care Policies Into an Independent Trust
Excerpt: "Conseco Inc. officials have said the transfer of many of the insurers' long-term care policies to a new state-supervised nonprofit trust, Senior Health Insurance Co. of Pennsylvania, allows it to concentrate on its core businesses. The policies were a drag on the company's earnings because they were underpriced and required continuing capital infusions to meet the long-term needs of policyholders." (The Wall Street Journal)

California Regulators Propose Repeal of Disability Benefit Offset Rule
Excerpt: "California insurance regulators have proposed repealing a recently adopted rule (2232.45) that prohibits insurers from offsetting disability benefits by amounts they estimate the beneficiary will receive from state-mandated disability or workers' compensation. The rule was issued under a California insurance law (790.06) that gives the Department of Insurance (DOI) broad powers to interpret and enforce any activity or practice it deems unfair or deceptive." (Mercer LLC)

Hopes of Mandating Paid Family Days May Lose to Recession
Excerpt: "The work/family cause now has ardent champions in President-elect Barack Obama and self-described mom-in-chief Michelle Obama, who says it will be among her top priorities. The strengthened Democratic majority in Congress is certain to lend a hand. Yet the ambitious agenda, featuring bills that would for the first time mandate paid sick days and paid family leave nationwide for many businesses, is colliding head-on with the worst economic crisis in decades, giving wary employers and their allies fresh ammunition for their fight against the mandates." (Brown Publishing Company Network)

[Opinion] The Elusive Connection Between Health Care Spending and Quality
Excerpt: "Richard Cooper [in 'States With More Health Care Spending Have Better-Quality Health Care'] has shown a positive association between health care quality and 'total spending' at the state level, but he does not appear to understand the limitations of this total spending measure; simply adjusting for median age causes the significant positive correlation to disappear. Cooper also finds that some third factor--we think that it is 'social capital'--is the key to explaining health care quality. Cooper may believe that this result challenges three decades of research by the Dartmouth group. Instead, it supports the group's view that improved efficiency--and not more doctors and hospital beds--is central to improving quality." (Health Affairs)

[Opinion] Fundamental Health Care Reform Featuring Universal Insurance Coverage Is a Good Start
Excerpt: "What [most health care reform] plans have in common is the goal of covering every American. And all would require major new spending in the near term -- perhaps $100 billion a year or more. Given the present need to address the economic crisis, many people say the government cannot afford a big investment in health care, that these plans are going nowhere fast. But this represents a false choice, because health care reform is good for our economy. As the country slips into what is possibly the worst downturn since the Depression, nearly all experts agree that Washington should stimulate demand with new spending. And one of the most effective ways to spend would be to give states money to enroll more people in Medicaid and the State Children's Health Insurance Plan." (The New York Times; free registration required)

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Links to Items on Executive Comp, Benefits in General

[Guidance Overview] Year-End Checklist for Benefit Plan Sponsors (PDF)
3 pages. Retirement Plans, 403(b) Plans, Deferred Compensation Plans, and Health and Welfare Benefit Plans are covered on a checklist of compliance actions and design decisions that benefit plan sponsors should make before the end of the year." (Venable LLP)

[Guidance Overview] San Francisco Commuter Ordinance - Sounds Like a Good Idea? Maybe?
Excerpt: "San Francisco recently passed an ordinance (Ordinance) requiring San Francisco non-governmental employers to offer employees 'subsidized' commuting benefits. . . .This article discusses the new Ordinance as well as its interplay with [Qualified Transportation Fringe Benefits] and California laws allowing employees to cash out employers' subsidized parking for additional wages under the California Air Resources Board's 'Parking Cash-Out Program.'" (Littler Mendelson P.C.)

[Guidance Overview] The Fiduciary Exception to Attorney Client Privilege in ERISA Cases
Excerpt: "[F]or the ERISA lawyer, the question is not only avoiding waiver of the privilege, but whether there is a privilege - and that will depend on the further question of what court your case happens to be in. Tip - Communications prior to benefit decisions are more likely to be subject to the exception than subsequent communications." (Health Plan Law blog by Attorney Roy F. Harmon III)

[Guidance Overview] PPA May Restrict Rabbi Trust Funding (PDF)
2 pages. Excerpt: "Public companies could effectively be prohibited from funding nonqualified plan benefits for certain executives through a rabbi trust (or otherwise) under a provision in the Pension Protection Act of 2006 (the 'PPA'). Specifically, funding for top executives may need to cease if any qualified defined benefit plan in a company's controlled group is considered 'at risk' under the PPA rules. While the IRS has yet to issue any guidance on this rule under Code section 409A(b)(3), a Treasury official recently confirmed informally that companies need to be in good faith compliance with the rule at this time. We summarize below the requirements of section 409A(b)(3)." (Groom Law Group)

Worker Absenteeism Shows Up in Bottom Line
Excerpt: "The nation's 300 largest employers estimate that unscheduled absenteeism costs their businesses, on average, more than $760,000 per year in direct payroll costs - and even more when lower productivity, lost revenue and the effects of poor morale are considered, according to a 2007 survey by the research firm CCH Inc." (The Dallas Morning News)

Looking Indefinitely Into the Future, Anticipated SS and Medicare Benefits, Over and Above Expected Premiums and Dedicated Tax Revenues, Amount to $102 Trillion (PDF)
16 pages. Excerpt: "How large is the federal government's debt? The figure most likely to be reported in newspapers is the debt held by the public. This measure currently stands at $6.3 trillion and is rising. However, the debt held by the public tells only a small part of the story. How should the government account for the predicted shortfalls of Social Security and Medicare? Officially, they are considered government 'obligations,' but not 'liabilities' or 'debts.' The reason: retirees and workers do not have a contractual right to the benefits they expect to receive." (National Center for Policy Analysis)

AK Steel to Impose Cuts for Salaried Workers
Excerpt: "The steel maker said it will . . . freeze the defined benefit plan for salaried workers and replace it with a defined contribution retirement plan, and offer incentives for voluntary retirement up until Feb. 6. The company said it would also consider eliminating jobs if too few employees take the voluntary retirement option." (Business Courier of Cincinnati via; free registration required)

UAW Gives Concessions to Big Three
Excerpt: "The United Auto Workers union on Wednesday offered two major concessions to the Big Three auto makers, a day before the Detroit companies are set to make a second appeal to Congress for a bailout. Two weeks after insisting his union had already done enough to help the car makers, UAW President Ron Gettelfinger said the union would allow the companies to delay billions of dollars in payments into funds that will cover health-care costs for retired workers. The union also will suspend a controversial 'jobs bank' program under which workers continue to collect most of their wages after they are laid off." (The Wall Street Journal)

Labor Department Accused of Straying from Enforcement Function
Excerpt: "With the new administration, I think you are going to a shift from compliance assistance to pure enforcement,' said Randel K. Johnson, a vice president of the U.S. Chamber of Commerce. Labor activists say that focusing so closely on the concerns of employers shortchanges workers and that a shift in emphasis is long overdue. Under President Bush, they say, the pendulum has swung far away from enforcement, leaving workers vulnerable to dangerous workplaces and with little protection from exploitive employers." (The Washington Post; free registration required)

[Opinion] Of Ironies, ERISA & Reform: ERISA's Uncertain Future
Excerpt: "Professor Gerry W. Beyer (Wills, Trusts & Estates Prof Blog) recently posted a note about Paul Secunda's article, Sorry, No Remedy: The Grand Irony of ERISA, which is an article I have looked forward to reading. Evidently only the abstract is available on SSRN at present, but I'll update this post if I find out otherwise. Judging by the abstract, the article may be understood syllogistically as follows [on the target page]." (Health Plan Law blog by Attorney Roy F. Harmon III)

[Opinion] Electronic Discovery and the Federal Rules
Excerpt: "Litigators who read this blog already understand my obsession with this issue; while trying cases is the joy of the work, discovery - and fights over it - is the heavy lifting that takes up much of a litigator's time and a client's money. It's a particular problem in ERISA cases, where any type of a plan with a significant number of participants is going to create a great deal of electronically stored data, almost none of it of relevance to any particular dispute yet still possibly open to discovery as things currently stand." (Stephen Rosenberg of The McCormack Firm, LLC)

Newly Posted Events
(Post Yours!)

EBSA's Proposed Guidance on Investment Advice for 401(k): Be Prepared Webcast
Nationwide on December 18, 2008
presented by International Foundation of Employee Benefit Plans

Fee Disclosure Issues: Special Considerations for Trust Organizations
Nationwide on December 11, 2008
presented by Goldleaf Partners

How to Know if Your Company is Paying More Than Other for the Same Health Insurance Coverage
Nationwide on December 4, 2008
presented by Healthy Halo

Payroll Companies . . . The New Competition in the Insurance, Employees Benefits and Financial Services Marketplace
Nationwide on December 9, 2008
presented by ABC Payroll

Newly Posted Press Releases
(Post Yours!)

Companies Step Up Workforce Planning Activity in Response to Economic Slowdown, Watson Wyatt Survey Finds
Watson Wyatt

Prudential Offers Collective Investment Trusts to Retirement Plans
Prudential Financial, Inc.

Integrated Benefits Institute Announces Availability of 2007 IBI Benchmarking Data for Employers to Evaluate Effectiveness of their Health and Productivity Programs
Integrated Benefits Institute

Nurses Reject AHIP Proposal as a 'Marshall Plan for Health Insurers'
California Nurses Association

Bloomberg TV Wins Emmy for "401k Hidden Fees" Investigative Report
Bloomberg Television

Time is Running out to Comply With 403(b) Regs
Great American Financial Resources

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Defined Benefit Pension Administration Manager
for Milliman, Inc.
in NJ

Defined Benefit Pension Administration Team Leader
for Milliman, Inc.
in NJ

Compliance Testing Consultant
for Diversified Investment Advisors
in NY

Manager, Retirement Services
for Wedbush Morgan Securities
in CA

Attorney, Employee Benefits
for Aon Consulting
in NJ

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