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December 9, 2008

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

Employee Benefits Institute of America (EBIA) (Sponsor)

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Keep up with the latest developments!

EBIA’s Cafeteria Plans manual provides detailed coverage of all legal requirements for cafeteria plans, health FSAs, and DCAPs.

EBIA’s Consumer-Driven Health Care manual is the country's best HSA and HRA Guidebook.

With both manuals, subscribers get EBIA's top-notch analysis, copies of critical source documents, examples, administration tips, and sample documents. For more information, visit Cafeteria Plans manual and Consumer-Driven Health Care manual.

[Guidance Overview] Moving Retirees to VEBA-Funded Retiree Medical Plan Could Require New Application for Retiree Drug Subsidy
Excerpt: "The CMS believed that it was necessary to issue this guidance in light of the current trend of employers sponsoring retiree medical benefits that stop providing the coverage and instead contribute to a VEBA trust established specifically to cover such benefits. This trend has arisen out of labor union agreements, bankrup.tcy, and litigation." (Wolters Kluwer)

[Guidance Overview] New FMLA Rules Require Significant Changes to Policies and Procedures
Excerpt: "[E]mployers will need to make significant changes to their FMLA policies, employee handbooks, and FMLA request processing practices in order to comply with the revised FMLA regulations. Although this Employment Law Alert provides highlights of the necessary changes, the revised regulations address a great number of detailed circumstances that are beyond the scope of this Alert. Additionally, along with the revised regulations, the DOL has also published more than 100 pages of background information and comments addressing the changes, some of which may prove helpful to employers when a particular problem arises." (Nixon Peabody LLP)

Why Does U.S. Health Care Cost So Much? - It Is not an Aging Population
Excerpt: "[R]esearch around the world has shown that the process of the aging of the population by itself adds only a very small part -- usually about half a percentage point -- to the annual growth in per-capita health spending in industrialized societies, which tends to range between 5 and 8 percent, depending on the country and the period in question. The bulk of annual spending growth can be explained by overall population growth (about 1.1 percent per year), increases in the prices of health care goods and services, and the availability of ever more new, often high-cost medical products and treatments used by all age groups." (The New York Times and Uwe E. Reinhardt via Physicians for a National Health Program)

The Tax Exclusion for Employer-Provided Health Insurance: Policy Issues Regarding the Repeal Debate (PDF)
26 pages. Excerpt: "The federal income tax exclusion -- the focus of this report -- is criticized for several reasons. Since it reduces the after-tax cost of insurance in ways that are not transparent, it likely results in people with insurance obtaining more coverage than they otherwise would. Not being explicitly capped or limited, it does little to restrict the generosity of the insurance or annual premium increases. These attributes contribute to what some economists argue is a welfare (or efficiency) loss from excess health insurance for those with coverage and also contribute to rising health care costs and spending. In addition, the income tax exclusion often is criticized since it gives greater tax savings to higher income individuals and families, an outcome that strikes many observers as wasteful and inequitable." (U.S. Congressional Research Service)

Survey Says 2009 Health Premium Cost Increases to Range from 8.4% to 12%
Excerpt: "HMOs and fully insured preferred provider organizations estimate rate increases for 2009 renewals at 8.4%. High deductible health plans (HDHPs) for PPOs are expected to increase 10.7%, and lower deductible health plans for PPOs are expected to increase 12.1%, according to Milliman's 2008 Group Health Insurance Survey. The premium increase from July 2007 to July 2008, not including any changes in benefit or cost-sharing levels, was 9.7% for HMOs, 10.3% for HDHP PPOs, and 10.7% for lower deductible PPOs." (Wolters Kluwer)

Industry Observers Predict Obama Administration, New Congress May Try to Dismantle HSAs
Excerpt: "Since January 2004, heath savings accounts (HSAs) have been a key component of the Bush administration's health policy. But some industry observers contacted by AIS predict that the incoming Obama administration and 111th Congress could work to dismantle the accounts, or at least erect barriers to make them less attractive. Others contend that the Obama administration and Congress are more likely to simply ignore account-based coverage, which is not likely to fit into any of their health reform efforts." (

Bills Mandating Paid Sick Days and Family Leave Collide with Financial Crisis
Excerpt: "There's no timetable yet for work/family legislation to be pushed in the new Congress, but activists predict relatively prompt action on the Healthy Families Act, which would require businesses with at least 15 employees to provide seven paid sick days per year. Most American workers are eligible for paid sick days through individual company policies, but more than 46 million workers are not -- including about three-quarters of low-wage workers." (

Obama Hopes to Avoid Clinton Health Care Reform Missteps
Excerpt: "President-elect Barack Obama and his aides are determined not to repeat the mistakes the Clinton administration made 15 years ago in trying to revamp the nation's health care system. That means applying some of the lessons learned -- moving fast, seizing momentum and not letting it go." (AP via Yahoo! News)

The Pathway to Covering America: Ensuring Quality, Value and Access
Excerpt: "With this report, the Blue Cross and Blue Shield Association (BCBSA) lays out detailed recommendations to improve the quality and value of our healthcare system, while simultaneously expanding access and coverage to all Americans. Achieving better healthcare quality and value and expanded coverage begins with America undertaking five initiatives . . . . [The full report is linked from the target page.] " (Blue Cross and Blue Shield Association)

[Opinion] Proposed Coverage Mandate Will Fail As a Health Care Reform Plan
Excerpt: "It's time for Congress to stop getting carried away with financial bailouts for big industries, especially when it comes to some of the most-profitable and least-responsible companies: the health-insurance giants. Two major trade lobbies, America's Health Insurance Plans and the Blue Cross-Blue Shield Association, have announced that they would be willing to end their disgraceful practice of excluding people from coverage based on their health or age. In exchange, they want the federal government to force uninsured Americans to buy private insurance." (The Philadelphia Inquirer via Physicians for a National Health Program)

ALM (Sponsor)

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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] Milliman's Monthly Benefit News and Developments, December 2008 (PDF)
2 pages. The newsletter provides a summary of the previous month's legislative, regulatory, and judicial information on employee benefits. (Milliman)

[Guidance Overview] Emergency Economic Stabilization Act Includes Employee Benefit Measures (PDF)
2 pages. Excerpt: "The Emergency Economic Stabilization Act of 2008 (EESA), enacted on October 3, 2008, contains expanded mental health and substance abuse parity rules that will affect most employer health plans that offer these benefits. Additionally, the program by the U.S. Treasury to purchase troubled assets from financial institutions may include pension plans." (Employee Benefit Plan Review via Winston & Strawn LLP)

[Guidance Overview] Sixth Circuit Opinions Applying Estoppel In ERISA Cases - An Anthology
Excerpt: "The Sixth Circuit has proven to be receptive to the incorporation of estoppel principles into the federal common law of ERISA. In this recent unpublished opinion, the Sixth Circuit panel found the requirements of estoppel met. [Smiljanich v. GMC 2008 U.S. App. LEXIS 24605 (December 5, 2008)] The Court employed a two part test to find that interim employment with other employers did not defeat the bridging of service credits." (Health Plan Law blog by Attorney Roy F. Harmon III)

[Guidance Overview] Executive Compensation Measures in the Emergency Economic Stabilization Act: Troubled Assets Relief Program (PDF)
5 page chart. (Winston & Strawn LLP)

[Guidance Overview] Correction Program Expansion for Section 409A Operational Errors
Excerpt: "On Friday, the IRS released a new correction program for inadvertent and unintentional Section 409A operational errors in nonqualified deferred compensation plans on and after January 1, 2009. All such plans must be properly documented by the end of 2008 to comply with Section 409A, as the correction program is not available for documentation errors." (Ballard Spahr Andrews & Ingersoll, LLP)

Silicon Valley Companies Looking to Reprice Underwater Stock Options
Excerpt: "As the trading price of many tech stocks has plummeted in recent months, thousands of Silicon Valley workers have seen the value of their employee stock options sink rapidly underwater. The cost of exercising some options is now higher than the value of the company stock for about 4,600 workers at Advanced Micro Devices -- which means those options are currently worthless. One analyst has estimated the same is true for 6,400 workers at Google. It's been a problem for 1,100 employees at VMware, which this fall offered to exchange old options for new ones with a lower strike price. 'It's a huge issue in the tech industry,' said analyst Brett Harsen of the compensation advisory firm Radford Surveys and Consulting, who noted that Silicon Valley has long relied on stock options to recruit and reward top talent and even mid-level employees. He predicted a wave of tech companies will ask shareholders for authority to address the issue by repricing or exchanging old options in coming months." (San Jose Mercury News)

What Will Happen to the ESOP in the Tribune Bankrup.tcy?
NCEO Executive Director Corey Rosen discusses the fate of the Tribune Company's ESOP and places it in context. (National Center for Employee Ownership)

[Opinion] UAW Workers Cost the Big Three Automakers $70 an Hour
Excerpt: "The United Auto Workers (UAW) wants Congress to bail out General Motors, Ford, and Chrysler to prevent their undergoing restructuring in bankrup.tcy proceedings. In bankrup.tcy, a judge could order union contracts to be renegotiated to reflect competitive realities. Many analysts have objected that hourly autoworkers at the Big Three are some of the most highly paid workers in America, costing the Big Three over $70 an hour in wages and current and future benefits. All taxpayers should not be taxed to preserve the affluence of a few." (The Heritage Foundation)

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

Newly Posted Press Releases
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Benefit Software Inc. Launches Initiative Designed to Promote “Green” Printed Total Compensation and Benefit Statements
Benefit Software Inc.

EBRI Marks 30th Anniversary of Providing Benefits Research
Employee Benefit Research Institute (EBRI)

ERIC Warns Congress about Inaction on Pension Funding Relief
ERIC (ERISA Industry Committee)

ING Realigns US Retirement Services Operations
ING Group

BioIQ and Alere to Provide At-Home Biometric Screening Tests to Employees

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