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December 11, 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 (EBIA)

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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]
Compliance Guide for Qualified Medical Child Support Orders

Excerpt: "A 1993 amendment to the Employee Retirement Income Security Act (ERISA) requires employer-sponsored group health plans to extend health care coverage to the children of a parent/employee who is divorced, separated, or never married when ordered to do so by state authorities. This compliance assistance guide explains these ERISA provisions and describes how to obligate a plan to cover a child." (U.S. Employee Benefits Security Administration)

[Guidance Overview]
American Benefits Council Response to Request for Information on Genetic Information (PDF)

5 pages. Excerpt: "The American Benefits Council (the 'Council') appreciates the opportunity to respond to the Request for Information ('RFI') on the Genetic Information Nondiscrimination Act issued by the Department of Labor, Department of Health and Human Services, and Internal Revenue Service." (American Benefits Council)

[Guidance Overview]
District Court Adopts Agency Principles Deeming Employer Agent of Insurance Carrier

Excerpt: "The Thrall opinion's patina of historical retrospective on prior Ninth Circuit authority veils the court's remarkable decision to elevate state law notions of insurance law over uniformity in ERISA plan administration. The principal issue - when may an employer be deemed an agent of the insurance carrier for purposes of notice of a change in beneficiaries." (Health Plan Law blog by Attorney Roy F. Harmon III)

Why the Mandate Plans Won't Work, and Why Single-Payer 'Medicare for All' Is What We Need
Excerpt: "Single payer offers real tools to contain costs: budgeting, especially for hospitals, planning of capital investments, and an emphasis on primary care and coordination of care. Mandate plans offer only hopes: competition among insurance companies, computerization, chronic disease management. Competition among the shrinking number of insurance companies has already failed to contain costs and, in the absence of single payer and reformed primary care, computerization and chronic disease management will raise costs, not lower them." (Physicians for a National Health Program)

Single-Payer Health System Could Save Billions
Excerpt: "Believe it or not, there is one proposal that could cover all Americans for all needed services and save money. And it is now that we must explore that proposal. Studies have shown that national savings would amount to $350 billion per year. At the national level, this proposal is called Medicare for All, and it is embodied in Congress as Bill HR676. In New York state, it is called Single Payer New York, and it is one of the options now being studied by the governor in Albany. The propagandists call it 'socialized medicine.' But it is not -- because most doctors and hospitals would be private and working in their own facilities." (Rochester Democrat and Chronicle via Physicians for a National Health Program)

Employers Subject to the New Jersey Paid Family Leave Law Must Post Notification by December 15, 2008
Excerpt: "On May 2, 2008, New Jersey Governor John Corzine signed an amendment to the Temporary Disability Benefits Law (TDBL) requiring that employers provide notice to employees of their rights under the TDBL. . . . Although employees cannot claim benefits under the New Jersey Family Leave Insurance Program (the Program) until July 1, 2009, the amended TDBL requires employers to conspicuously post notifications detailing Program information and employee rights to Program benefits by December 15, 2008." (Morgan, Lewis & Bockius LLP)

Making Medical Homes Work: Moving from Concept to Practice
Excerpt: "Among the many proposals for payment and delivery system reform under discussion, the medical home model has gained significant momentum in both the public and private sectors. The concept has been promoted by primary care physician societies. And a broad range of insurers and payers -- for example, United HealthCare, Aetna, the Blue Cross Blue Shield Association, and Medicaid programs -- are developing medical home initiatives. Likewise, Congress has mandated a medical home demonstration in fee-for-service Medicare." (Center for Studying Health System Change)

Availability, Contributions, Account Balances, and Rollovers in Account-Based Health Plans (PDF)
Pages 1-12 of 16 pages. Excerpt: "This report presents findings from the 2008 EBRI Consumer Engagement in Health Care Survey, as well as earlier surveys, examining the availability of HRA and HSA-eligible plans (so-called consumer-driven health plans). It also looks at employer and individual contribution behavior, time enrolled in such plans, account balances, and rollover behavior." (Employee Benefit Research Institute)

Health Care Costs a Growing Burden for Workers
Excerpt: "In 2006, Families USA undertook the first state-by-state analysis of growing health care premiums versus stagnant earnings in the new millennium. Since then, state economies have weakened, while health insurance premiums have continued their upward trend. Health care costs are now an even greater burden on American families. These reports, which are based on data from the U.S. Census Bureau, the Department of Labor, and the Department of Health and Human Services, examine what these trends mean for working families." (Families USA)

2008|2009 Employee Perspectives on Health Care
Excerpt: "As health costs continue to rise and the economy slows, employees are being challenged to take more responsibility for their own health. But, in order to develop effective plans and support programs for employees, employers must first understand what drives their workers' health care decisions. To narrow the gap between desired and actual employee behavior, employers can listen to the voice of the consumer, their employees. This report, the first of two based on the data, discusses the relationship between health, productivity and costs. The second report, which will be published in early 2009, will focus on the links between employee health and performance at work." (Watson Wyatt Worldwide)

Dual-Eligible Medicaid Spending
Excerpt: "For the U.S. Medicare population as a whole, previous studies show that additional medical spending at the margin is ineffective. For the elderly population overall, higher spending on health care does not appear to improve health outcomes or quality of life. The Medicaid literature, however, has shown benefits of increased spending on lower income populations such as single mothers. This suggests that there may be beneficial effects of spending on different segments of the Medicare population, particularly those most at risk - the low-income elderly." (Center for Retirement Research at Boston College)

Public Long-Term Care Insurance and the Housing and Living Arrangements of the Elderly: Evidence from Medicare Home Health Benefits
Excerpt: "We provide empirical evidence on the extent to which long-term care insurance affects the housing and living arrangements of the elderly by examining plausibly exogenous changes in the supply of long-term care insurance through the Medicare program that occurred in the late 1990s. Prior to 1997, Medicare reimbursed home health care agencies on a retrospective-cost basis. Then, starting in October, 1997, as a result of the Balanced Budget Act of 1997 (BBA97), Medicare switched to a system of prospective payments for home health care, which induced state-by-calendar-year variation in the supply of this type of public long-term care insurance." (Center for Retirement Research at Boston College)

Wyden-Bennett Health Bill Sponsors Outline Reform Principles for Obama

Excerpt: "In a November 21 letter to President-elect Barack Obama, 15 Democratic and Republican senators who are cosponsors of the Healthy Americans Act (S. 334) introduced by Senators Ron Wyden (D-OR) and Robert Bennett (R-UT), urged the incoming President to consider seven principles as the basis for health reform in 2009." (The ERISA Industry Committee)

Employer-Based Health Insurance Plans No Longer Work

Excerpt: "'There are very few economists who say that if they were king, the employer-based system is the one they would pick,' said Henry Aaron, a senior fellow at the Brookings Institution who specializes in healthcare. 'The problem is that it's not possible to just walk away from the employer-based system. The 180 million people who currently receive coverage from employers would go ballistic.' In other words, the crappy insurance system you know is better than the newfangled system you don't. This seems like a lame reason to remain wedded to a system that, by and large, fails to serve the interests of both the American people and U.S. businesses." (Los Angeles Times)

Why Tie Health Insurance to a Job? One Thing We Can All Agree on Is That Portable Coverage Is More Secure

Excerpt: "Not many people are buying cars built 60 years ago. No one is watching TV on a set manufactured in the 1940s. Patients are not lining up to see a doctor who hasn't cracked a book since before the polio vaccine was discovered. Why, then, do millions of Americans get their health care through an employer-based system from the 1940s?" (The Wall Street Journal) (Sponsor)

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Links to Items on Executive Comp, Benefits in General

[Guidance Overview]
IRS Publishes Additional 409A Reporting and Withholding Instructions

Excerpt: "According to Section 409A guidance issued Wednesday by the U.S. Treasury Department and the Internal Revenue Service (IRS), an employer is not required to report nonqualified deferred compensation plan amounts until the agencies release further instructions." (; free registration required)

[Guidance Overview]
December 31, 2008, Deadline Looms for Code Section 409A Compliance (PDF)

2 pages. Excerpt: "In this client advisory, Partner Raymond D. Sinnappan discusses the impending end of the era of 'good faith' compliance and transition relief for Section 409A of the Internal Revenue Code (Section 409A). The author details actions that employers will need to take to ensure compliance with all deferred compensation arrangements subject to Section 409A's final regulations, which become effective January 1, 2009." (Jenner & Block LLP)

Oral Argument Recap, AT&T v. Hulteen, Which Involves Service Credit for Pregnancy Leaves Taken in 70s, Which Affected Retirement Benefits
Excerpt: "[T]his case presents a number of complicated and technical questions on some very abstract issues, and it would have been great to have seen the issues put in their most basic terms. The argument was very bogged down in the technicalities, though. Counsel for AT&T began by focusing on the staleness of the claims here, presumably (although not explicitly) arguing that the plaintiffs' cause of action arose either 1. at the time of adoption of the policy that required employees to take personal leave (no service credit for seniority) for pregnancy-related leave while allowing employees to take disability leave for other disabilities (service credit); or 2. at the time that the employees took the leave. If that were true, the 180 day filing limit would have passed over 30 years ago. That made AT&T's argument flow a little strangely: first, the plaintiffs should have sued in the 1970s when they knew that something illegal had happened; but this wasn't a violation of Title VII then anyway." (Workplace Prof Blog)

Older Workers and the Recession
Excerpt: "During previous downturns, relatively few older Americans were counted as unemployed. Although many lost their jobs, they generally retired instead of looking for work. During the severe 1981-82 recession, seniors' unemployment rate grew by just 0.8 percentage points - only about one-fourth the increase for prime-age workers (25 to 54). Today, however, seniors are nearly as likely as their juniors to join unemployment lines, because pink-slipped seniors can no longer afford to put their feet up. Shrinking Social Security benefits, traditional pension plans, and 401(k) balances combine with soaring health care costs to force them to keep pounding the pavement." (Richard W. Johnson via Urban Institute)

Loosen Pension-Funding Rules, Consultants Ask Congress
Excerpt: "With the value of defined-benefit pension plan assets plummeting, a group of benefit-actuarial consulting firms sent a letter on Monday to the Senate Finance Committee asking for an emergency temporary relaxation of Pension Protection Act of 2006 funding rules. . . . The letter asks for changes to the PPA to give plan sponsors adequate time 'to address the abrupt unprecedented increase to and volatility of funding requirements.' It stresses that 'we are not suggesting any form of financial assistance or arguing that full funding of pension plans is not appropriate or expected.'" (

ESOPS Likely to Suffer First in Tribune Bankrup.tcy
Excerpt: "Chicago is NOT the place to be these days - especially if you are a corrupt politician or a financially-stressed newspaper. On the newspaper side of things - Elizabeth Dale (Florida) writes to tell us that the ESOP angle of the The Tribune Company bankrup.tcy is truly a mess. She points us to this story from the New York Times Deal Book . . . ." (Workplace Prof Blog)

How Is the Financial Crisis Affecting Retirement Savings? December 3, 2008, Update (PDF)
1 page. Excerpt: "The stock market lost 47 percent of its value between September 30, 2007 and December 2, 2008, a roughly $11 trillion drop. The loss has reduced the retirement savings of many Americans, particularly older adults. This fact sheet examines the impact of the ongoing economic turmoil on older households and presents estimates of the retirement account losses to date." (Urban Institute)

Demographic Change and Consequences for Businesses
Excerpt: "Over the past years, different publications clarified that many older employees will have to stay in the workforce because they simply cannot be replaced due to a lack of qualified, or even existing, young workers. Moreover, 'future leaders are likely to face not simply a labour shortage, but a knowledge shortage, as organisations bleed technical, scientific, and managerial know-how at unprecedented rates' (DeLong 2004: 18). It therefore is of utmost importance that businesses start emphasising special retention strategies for retaining older employees such as constant provision of good training as well as motivation and energy. The aim of this master's thesis comprises of the evaluation and comparison of different strategies to cope with demographic challenges." (Social Science Research Network)

Yahoo Changes Severance Plan in Settling Lawsuit
Excerpt: "Yahoo Inc on Wednesday revised an expensive employee and executive severance plan it had adopted following a takeover bid by Microsoft Corp, settling a lawsuit brought by shareholders. The new terms cut the potential costs to an acquirer and make clear that the sale of Yahoo's search business -- which Microsoft still covets -- would not invoke severance benefits." (Reuters via The New York Times; free registration required)

How to Obtain Employee Benefit Plan Documents from DOL
Excerpt: "You may call, write or visit the EBSA Public Disclosure Room for copies of the documents mentioned. Generally, requests made in person may be picked up on the same day. To help locate your plan documents, please provide enough information to assist EBSA in identifying the document, such as the name of the plan and the city and state in which it is located, the name of the multiple employer welfare arrangement, the approximate date of the hearing, etc., as relevant to the document. Written and phone requests are generally filled within 5 working days. Requests for documents related to more than five plans may take more time to process. SPD requests that require contact with the plan to obtain a copy may take 30 to 60 days." (U.S. Employee Benefits Security Administration)

Compensation Costs Per Hour Worked in Private Industry, September 2008
Excerpt: "In September 2008, private industry employer compensation costs averaged $27.07 per hour worked. Private industry employer wages and salaries averaged $19.14 per hour (70.7 percent), while total benefits averaged $7.93 (29.3 percent)." (U.S. Bureau of Labor Statistics)

Japanese Government Pushes to Meet Deadline for Conversion of Pension Plans
Excerpt: "The Japanese government is growing more and more concerned with the large backlog of tax-qualified pension plans (QPPs) that have yet to be converted into other types of retirement plans. Japanese legislation requires conversion of all QPPs before March 31, 2012." (Towers Perrin)

French Legislation May Impact Payouts for Retirement Indemnities
Excerpt: "Legislation adopted by lawmakers in France could lead to an increase in the minimum indemnities payable upon voluntary retirement, although the original intent was apparently to target only severance payments. The legislation was intended to make it more difficult for employers to carry out involuntary retirements. However, the text was vaguely written, leading some companies and industries to take the view that the higher severance indemnities are required for voluntary retirements as well." (Towers Perrin)

Newly Posted Events
(Post Yours!)

2009 MidWinter Tour: Advanced IRA
in Georgia on January 21, 2009
presented by Ascensus

2009 MidWinter Tour: Advanced IRA
in Minnesota on January 21, 2009
presented by Ascensus

2009 MidWinter Tour: Advanced IRA
in Wisconsin on January 28, 2009
presented by Ascensus

2009 MidWinter Tour: Advanced IRA
in Wisconsin on January 30, 2009
presented by Ascensus

2009 MidWinter Tour: IRA Essentials
in Georgia on January 20, 2009
presented by Ascensus

2009 MidWinter Tour: IRA Essentials
in Minnesota on January 20, 2009
presented by Ascensus

2009 MidWinter Tour: IRA Essentials
in Wisconsin on January 27, 2009
presented by Ascensus

2009 MidWinter Tour: IRA Essentials
in Wisconsin on January 29, 2009
presented by Ascensus

Newly Posted Press Releases
(Post Yours!)

Great-West Retirement Services® Wins Marketing and Communication Awards
Great-West Retirement Services

U.S. Workers Taking Steps To Lower Medical Costs, Watson Wyatt Survey Finds
Watson Wyatt

Hewitt Provides Recommendations on Solving Current Pension Funding Crisis
Hewitt Associates LLC

Newport Introduces More Resources for Spanish Speaking Plan Participants
Newport Group, The

Council Applauds House Passage Of Pension Relief
American Benefits Council

Economic Downturn Hitting Holiday Perks in the Office, Reveals Survey

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