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December 16, 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.

HHS Secretary Unveils Guidelines for Health Care IT Privacy
Excerpt: "At the Fifth Nationwide Health Information Network Forum in Washington, D.C., on Monday, HHS Secretary Mike Leavitt released a set of guidelines on health care IT privacy, Healthcare IT News reports. Leavitt said that his eight-point 'doctrine' has not yet been thoroughly vetted through HHS because of time. He added that he plans to launch a public discussion about health IT privacy and expand his doctrine in his remaining 36 days in office." (California HealthCare Foundation)

Single-Payer Insurance Puts More of the Money Spent Into the Health Care Delivered
Excerpt: "The Senate Finance Committee has heard about the problem of overhead. On Nov. 19, Professor Uwe Reinhardt, who is also on the board of trustees of the 900-bed Duke University Hospital, used Duke to illustrate the problem: 'We have 900 billing clerks at Duke. I'm not sure we have a nurse per (each) bed, but we have a billing clerk per bed? It's obscene.' Two days later, the New York Times published his article: 'Why does U.S. Health Care Cost So Much? (Part II): Indefensible Administrative Costs.'" (Helena Independent Record via Physicians for a National Health Program)

Are Health Insurance Markets Competitive?
Excerpt: "This study makes use of a privately-gathered national database of insurance contracts agreed upon by a sample of large, multisite employers between 1998 and 2005. To gauge the competitiveness of the group health insurance industry, I investigate whether health insurers charge higher premiums, ceteris paribus, to more profitable firms. I find they do, and this result is not driven by cross-sectional differences across firms or plans: firms with positive profit shocks subsequently face higher premium growth, even for the same healthplans. Moreover, this relationship is strongest in geographic markets served by a small number of insurance carriers." (National Bureau of Economic Research; paid subscription or individual purchase required to retrieve fulltext)

Mandates and the Affordability of Health Care
Excerpt: "This paper examines the economic rationale of affordability exemptions in the context of a health insurance mandate. On its face, an affordability exemption makes little sense-- it exempts people from purchasing a good that policymakers believe benefits them. I provide an economic definition of affordability and discuss how it is implemented in the contexts of food, housing, and health care. Affordability standards are frequently used in food and housing policy making, but both empirically and theoretically health care operates quite differently than do these other merit goods. These differences help explain why the use of affordability in health policymaking is so different from its use in these other contexts. I conclude with a discussion of the relationship between mandates and exemptions in other health care systems." (National Bureau of Economic Research; paid subscription or individual purchase required to retrieve fulltext)

Drug Spending in the U.S. and Abroad
Articles are titled: The Effect Of Regulation On Pharma.ceutical Revenues: Experience In Nineteen Countries; U.S. Pharma.ceutical Policy In A Global Marketplace; Prescription Drug Spending Trends In The United States: Looking Beyond The Turning Point; Price Controls And Global Pharma.ceutical Progress; and, Two Ideas To Increase Innovation And Reduce Pharma.ceutical Costs And Prices. (Health Affairs)

Can Free Advice on Care Choices Lower Health Costs?
Excerpt: "With a vast database of medical information at her fingertips, [a nurse] is testing the premise that patients can make smart choices about quality even when confronted with overwhelming, high-risk medical decisions. In theory, the collective power of those informed consumers will drive up quality and drive down costs, just as it has done in industries from autos to mutual funds. 'That is the health care debate,' said Rob Webb, head of the Care Solutions division at OptumHealth, the Plymouth-based company that employs Imig. 'Can this be a consumer driven economy?'" (Star Tribune)

Fairness of Medical Insurance Caps Is Questioned
Excerpt: "More than half of all employer-based insurance plans in America have lifetime caps limiting how much can be spent on any one employee, according to a Kaiser Family Foundation survey. Because of rising health-care costs, more Americans appear to be reaching those caps, even though cases are still rare. Insurance companies and employers say by capping lifetime expenses for any one employee, they can afford better benefits to all employees." (The Philadelphia Inquirer)

Providing Health Insurance for All Through Private Health Insurance

Excerpt: "[There are many] reasons to rethink the current system of subsidizing health insurance through the workplace to see if it is adequate for a 21st century economy. Tying health insurance to the workplace leaves out an estimated 45 million people because they don't receive or can't afford coverage at work. And, most importantly, it provides very generous subsidies for the most affluent workers and little or nothing for those at the lower end of the income scale. There is a better way. We could provide direct subsidies to individuals to purchase health insurance of their choice - policies that they can own and keep with them as they move from job to job. This would give them continuity of coverage and more control over selecting health policies that fit their needs, pocketbooks, and values." (Galen Institute)

On Health Care Reform Stimulating the Economy: The Massachusetts Example

Excerpt: "Recently, a somewhat starry-eyed op-ed in the New York Times suggested that a $100 billion annual investment in universal healthcare is just the medicine that our economy needs. The goal, declared Jonathan Gruber, a professor of economics at the Massachusetts Institute of Technology: 'covering every American.' It is an appealing proposition. But let me suggest that we cannot blindly invest billions in an already bloated healthcare system. We need to think through where we want the reform dollars to go. Which sectors of a $2.3 trillion health care economy should we stimulate to insure that patients receive the safest, most effective care at a price that they can afford?" (The Century Foundation)

Who's a Health Care Moderate? And What Would 'Give em Hell' Harry Truman Say Today?

Excerpt: "[The health care plan Harry S. Truman pushed . . . . was a universal health care plan. Government-run. Business interests like General Motors killed it by arguing that Americans don't trust government to run health care. They argued that private interests do it better -- private insurers, and private companies that offer the insurance plans to employees. Six decades later, companies like GM are struggling to stave off bankrup.tcy in part because of out-of-control health care costs." (New Haven Independent via Physicians for a National Health Program)

Special Message to the Congress Recommending a Comprehensive Health Program

Originally published November 19, 1945. Excerpt: "Millions of our citizens do not now have a full measure of opportunity to achieve and enjoy good health. Millions do not now have protection or security against the economic effects of sickness. The time has arrived for action to help them attain that opportunity and that protection." (Harry S. Truman via Physicians for a National Health Program) (Sponsor)

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Links to Items on Executive Comp, Benefits in General

[Guidance Overview]
Final Regulations Phase-In Form 5500 Filing Requirements (PDF)

Excerpt: "These regulations do not change the basic filing requirement for plan years that began in 2007 (generally, filing Form 5500 in 2008). Special rules may apply for situations involving short plan years and small plan (fewer than 25 participants) filings. The regulations delay the PPA electronic filing requirement for one year. As a result, electronic Form 5500 filing will first be required for all plans for plan years beginning in 2009 (i.e., filed in 2010)." (Prudential Retirement)

[Guidance Overview]
401(k), Pension, and Welfare Plans: 2008 Year-End Compliance Matters (PDF)

5 pages. Excerpt: "With the year rapidly coming to an end, it is timely for retirement and welfare plan sponsors to consider updating their plans to reflect recent changes in applicable law. This alert provides information about four developments from 2008 that should now be on the radar screen for plan sponsors. (1) Code Section 415; [(2) Proposed Section 125 (Cafeteria Plan) Regulations; (3) Mental Health Parity; (4) The HEART Act.]" (Paul, Hastings, Janofsky & Walker LLP)

[Guidance Overview]
Advance Informational Copies of 2008 Form 5500 and Instructions

Excerpt: "The IRS, PBGC, and Employee Benefits Security Administration (EBSA) have released advance informational copies of the 2008 Form 5500 and instructions. Modifications to note are the new Schedules SB and MB, new information required on Schedule R, and short plan year filing provisions." (Wolters Kluwer)

[Guidance Overview]
Interim Guidance on Reporting, Wage Withholding Requirements for Deferred Compensation

Excerpt: "In Notice 2008-115, the Internal Revenue Service provides interim guidance to employers and payers on their reporting and wage withholding requirements with respect to amounts includible in gross income under IRC Sec. 409A. The notice also provides interim guidance to employers and payers on their reporting requirements with respect to all deferrals of compensation under Sec. 409A, and provides guidance to service providers on their income tax reporting and tax payment requirements with respect to amounts includible in gross income under Sec. 409A." (Wolters Kluwer)

[Guidance Overview]
Further Delays on Tax Reporting for Compliant Deferred Compensation (PDF)

1 page. Excerpt: "On December 10, 2008, the IRS issued Notice 2008-115, which provides that tax reporting for 2008 will not be required for deferrals of compensation under nonqualified deferred compensation arrangements that comply with § 409A of the Internal Revenue Code. The Notice also provides guidance to employers and taxpayers regarding reporting and amounts includable in income in the case of non-compliant deferred compensation subject to § 409A." (Sutherland)

Federal Government Releases FY 2008 Financial Report; Social Security, Medicare Costs Continue to Climb
Excerpt from press release: 'Over the next two decades, Social Security and Medicare expenditures are projected to increase from their current 8 percent of GDP to about 11 percent. Without reform, the cost of these programs is projected to approach 18 percent of GDP by 2080." (Treasury Department; Office of Management and Budget)

Employee Ownership Update for December 15, 2008
NCEO Executive Director Corey Rosen discusses the Tribune Company bankrup.tcy and the Tribune ESOP; employee ownership in LLCs; and applying for the Winning Workplaces awards. (National Center for Employee Ownership)

Newly Posted Events
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The SPARK Institute Schedules 403(b) Webcast On Common Remitter Issues
Nationwide on December 19, 2008
presented by SPARK Institute

Newly Posted Press Releases
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U.S. Government Releases FY 2008 Financial Report
U.S. Treasury Department

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