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| February 16, 2009 |
| 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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| Be Smart by Association with the International Foundation |
| Smart is not a permanent state of being. What's your maintenance plan? Take advantage of the education and information available through the International Foundation of Employee Benefit Plans, a nonprofit educational association, and find out why over 35,000 industry professionals like Ken Bradshaw, CEBS rely on the Foundation to stay informed and educated. Make sure you have the most comprehensive information on health, pension and compensation issues. Be smart by association. |
[Official Guidance]
American Recovery and Reinvestment Tax Act of 2009: Conference Report (PDF)
577 pages. COBRA provisions start on page 396. (U.S. House of Representatives)
[Guidance Overview]
Immediate Action Needed to Implement Stimulus Act Changes to COBRA Coverage
7 pages; excellent. Excerpt: "[D]ecisions and procedures include . . . . Identifying all potential [assistance-eligible individuals, or 'AEIs') -- employees who were covered by the group health plan whose employment was involuntarily terminated (other than for gross misconduct) beginning September 1, 2008 (and their covered spouses and dependents) -- and their last known addresses; Identify which of these individuals are AEIs currently receiving COBRA coverage and which are entitled to the special enrollment period; Adopting the method when developed by the Secretary of Treasury for permitting 'high-income individuals' to permanently waive the premium subsidy. . . . ." (Butzel Long)
[Guidance Overview]
American Recovery and Reinvestment Act of 2009 Affects Group Health Plans, Even If Fewer Than 20 Employees
Excerpt: "The Act provides a subsidy for COBRA coverage and imposes a number of requirements on employers, administrators and insurers. This bulletin summarizes the subsidy as well as the enrollment provisions, notice requirements and employer filing requirements established by the Act. . . . The Act's provisions apply to coverage under both the federal COBRA law and any state 'mini-COBRA' laws (i.e., state continuation laws applicable to employers with fewer than 20 employees). " (Thompson Hine)
[Guidance Overview]
Stimulus Package Includes 65% COBRA Premium Subsidy
Excerpt: "Although the Act omits language from the House bill that would have mandated an extension of COBRA coverage through age 65, it does require employers and other plan sponsors to facilitate this federal subsidy of COBRA premiums. The subsidy will cover 65% of the monthly premium, for a period of up to nine months." (Spencer Fane)
[Guidance Overview]
New Federal Laws Affecting Group Health Plans (PDF)
5 pages. Excerpt: "This bulletin provides a summary of two federal laws that will impact group health plans. The American Recovery and Reinvestment Act of 2009 has been passed by the House, and is expected to be passed by the Senate and signed by President Obama no later than Presidents' Day. The Children's Health Insurance Program Reauthorization Act of 2009 was signed into law on February 4, 2009." (Thompson Hine LLP)
[Guidance Overview]
H.R. 1 Contains COBRA Provisions
Excerpt: "Looks like that huge stimulus package has some COBRA provisions in it, after all. The U.S. House of Representatives, on a largely party line 246-183 vote, approved legislation that includes a provision that would provide a 65% federal COBRA premium subsidy for nine months for employees who are laid off between September 1, 2008, and December 31, 2009. According to Business Insurance, the legislation would, among other things, require employers to locate employees laid off since September 1, 2008, who declined COBRA to tell them they have a new right to opt for the coverage - with the government picking up 65% of the premium." (PLANSPONSOR.com; free registration required)
[Guidance Overview]
Employee Wins Claims for Breach of Fiduciary Duty Against Employer That Failed to Pay Health Plan Premiums to Insurer
Excerpt: "EBIA Comment: This case, which involved ten separate counts for breach of fiduciary duty against the employer and its owners, outlines the panoply of arguments that an employee can make under ERISA when an employer allows health insurance to lapse by failing to make premium payments. Importantly, the court held both the employer and its owners responsible for the consequences. Thus, in addition to illustrating the many potential fiduciary duty claims that can arise from a failure to pay over premiums, this case serves as a stark reminder in a harsh economy that individual officers and employees of a plan sponsor may be subject to personal liability if they are automatic or functional fiduciaries under ERISA." (Employee Benefits Institute of America)
[Guidance Overview]
Health Plan Insurer Could Not Terminate COBRA Coverage When Qualified Beneficiary Became Covered Under Medicaid
Excerpt: "EBIA Comment: Plan administrators often confuse the rules for Medicare under Title XVIII of the Social Security Act (SSA) (which provides health coverage to individuals on the basis of age, disability, or end-stage renal disease), and Medicaid under Title XIX of the SSA (which generally provides health coverage to low-income individuals) and how they interact with employer-sponsored group health plans. As this case illustrates, ERISA broadly prohibits a health plan from taking into account an individual's Medicaid eligibility. On the other hand, COBRA coverage may be terminated early if, after electing COBRA, a qualified beneficiary becomes entitled to benefits under Medicare. Although this court did not specifically address this distinction, this case is a good reminder that the COBRA early termination rule for Medicare entitlement does not extend to Medicaid." (Employee Benefits Institute of America)
Vagueness of New Milwaukee Paid Sick Leave Law Creates Potential Legal Hurdle
Excerpt: "In issuing the temporary injunction, the judge made it clear that he was doing so as a precaution, recognizing the potential for a long legal battle and, if the ordinance were to be overturned, some employees could be burdened with paying back the benefit they had received." (HR Policy Association)
Employers Prepare for Surge in COBRA Enrollees
Excerpt: "Employers will have to scramble to comply with federal legislation providing a federal subsidy of COBRA health insurance premiums to laid-off employees. Employees who were laid off from Sept. 1, 2008, through Dec. 31, 2009, will be eligible for a 65% federal subsidy of their COBRA premiums under provisions in the massive economic stimulus bill." (Business Insurance)
'Evidence-Based Medicine': Rationing Care and Hurting Patients (PDF)
16 pages. Excerpt: "At first glance, this concept seems to make sense. Any term with the word 'evidence' automatically confers a sense of scientific authority. Assuming that to be true, the United States Congress and some state legislatures have begun adding 'evidence-based' requirements to health care laws. Several laws even link physician payment for medical services to compliance with EBM in an initiative called 'pay for performance.' Of concern to patients and doctors, the terms 'evidence-based medicine' and 'evidence-based guidelines' are often not defined in these laws, access to individualized care is not preserved, and the integrity of medical decisionmaking has not been protected." (American Legislative Exchange Council)
Assessing the Future Basis of Drug Pricing (PDF)
2 pages. (Milliman)
Fear of Union Litigation Gives Whirlpool Standing in Retiree Benefit Suit
Excerpt: "The U.S. District Court for the Southern District of Iowa has denied a motion to dismiss Whirlpool's lawsuit seeking the right to modify retiree medical benefits set forth in a now-expired collective bargaining agreement. U.S. District Court Judge James E. Gritzner pointed out in his opinion that 'In the absence of an alleged actual injury, a plaintiff seeking a declaratory judgment must show that 'it is in immediate danger of sustaining threatened injury traceable to an action of [the defendant],' and in the present case the potential injury is litigation. Gritzner agreed with the company that it had a reasonable uncertainty that it could modify retirees' benefits without the affected parties suing based on the local chapter of the International Union, United Automobile, Aerospace, and Agricultural Implement Workers' (UAW) refusal to bargain and UAW's frequent litigation in cases with identical facts." (PLANSPONSOR.com; free registration required)
Retiree Benefit Cutbacks Roil Courts: Circuits Split on Benefit Promises
Excerpt: "A bad economy, aging workers and long-ago company promises of lifetime health benefits for retirees have combined to produce a spate of conflicting federal appellate standards as companies try to cut back those benefits. In a dozen cases, the 6th U.S. Circuit Court of Appeals, based in the heavily unionized Rust Belt, has embraced broad acceptance of the premise that retiree benefit rights vest if evidence is bolstered by evidence outside the contract. The 7th Circuit is tougher. It generally assumes that benefit promises expire with the labor contract. And the 3d and 4th circuits take an even harder line, requiring retirees to show a 'clear and express' contract statement that benefits vest. 'It's a mess,' said James P. Baker, co-chairman of the Jones Day employee benefits practice in the firm's San Francisco office." (The National Law Journal)
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Links to Items on Executive Comp, Benefits in General
[Guidance Overview]
Final Executive Compensation Provisions of American Recovery and Reinvestment Tax Act of 2009
Excerpt: "The Final Version of the 'Stimulus' Bill is now available and officially known as the American Recovery and Reinvestment Tax Act of 2009. There were just a few interesting changes to the final ARRTA from the Senate version I described in detail on Tuesday. Rather than describe the ARRTA executive compensation provisions in full again, I will only highlight the two significant changes from the Senate Bill." (Michael S. Melbinger via Winston & Strawn LLP)
[Guidance Overview]
Section 409A: A Second Chance to Comply, Especially for Government and Exempt Employers
Excerpt: "The IRS mandated full compliance with Code section 409A's requirements for deferred compensation plans by January 1, 2009. Did you miss the deadline? You may have some relief! This article discusses how employers may still bring plans into compliance without adverse consequences, provided that none of the participants' benefits became vested after 2004." (Chang, Ruthenberg & Long PC)
[Guidance Overview]
Revised Executive Compensation Requirements for Participants Under the Troubled Assets Relief Program
Excerpt: "On February 13, 2009, Congress passed the American Recovery and Reinvestment Act of 2009 ('ARRA'), widely described as the Stimulus Bill. President Obama is expected to sign ARRA into law shortly, and the following summary assumes that ARRA will become law. ARRA significantly expands the executive compensation requirements previously imposed under the Emergency Economic Stabilization Act of 2008 ('EESA'), which established the Troubled Assets Relief Program ('TARP'). ARRA's executive compensation restrictions apply to any entity that has received or will receive financial assistance under TARP (a 'TARP Recipient'), and generally will continue to apply for as long as any obligation arising from financial assistance provided under TARP remains outstanding (the 'TARP Assistance Period')." (Jones Day)
Compensation Objectives and the Organization-Wide Use of Non-Cash Pay
Excerpt: "This study investigates the effects of attraction, retention, and incentive objectives on the organization-wide use of two non-cash pay elements: benefits and broad-based equity (stock and stock option) grants. Recent economic theories lead to conflicting implications for the use of various non-cash pay elements in achieving these objectives. Data from the European operations of 185 large firms indicate that benefits are primarily provided for retention purposes. Broad-based option grant eligibility is positively associated with incentive and attraction purposes, but negatively associated with retention objectives, despite claims that options' vesting provisions enhance their retention advantages. Stock grant eligibility is also positively associated with incentive objectives, but has little relation with either attraction or retention objectives." (Social Science Research Network)
Stimulus Plan Places New Limits on Wall St. Bonuses
Excerpt: "A provision buried deep inside the $787 billion economic stimulus bill would impose restrictions on executive bonuses at financial institutions that are much tougher than those proposed 10 days ago by the Treasury Department. The provision, inserted by Senate Democrats over the objections of the Obama administration, is aimed at companies that have received financial bailout funds. It would prohibit cash bonuses and almost all other incentive compensation for the five most senior officers and the 20 highest-paid executives at large companies that receive money under the Treasury's Troubled Asset Relief Program, or TARP." (The New York Times; free registration required)
Employee Benefits Survey on Nonproduction Bonuses
Excerpt: "The National Compensation Survey is publishing corrected estimates of worker access to nonproduction bonuses for each of its 2003 through 2008 publications on employee benefits in the United States. The previously published estimates were calculated such that workers with more than one of a given type of nonproduction bonus were counted multiple times. For example, if a worker had two attendance bonuses, then the worker was included in the numerator twice while only included in the denominator once. The result was the overestimation of the percent of workers with access to specific types of nonproduction bonuses." (U.S. Bureau of Labor Statistics)
IRS Employee Plans FY 2009 Work Plan of Operating Priorities (PDF)
15 pages. Excerpt: "The work plan provides the strategic Operating Priorities for Employee Plans (EP) for FY 2009, as well as specific program guidance for Examinations, Rulings & Agreements and Customer Education & Outreach employees. In fulfilling EP's mission of protecting retirement plan assets and the benefits of plan participants, it is incumbent that the EP organization fosters and promotes plan sponsors compliance with the applicable Internal Revenue Code provisions. While the Determination, Voluntary Compliance and Technical Activities programs are designed to assist plan sponsors compliance with the Internal Revenue Code (IRC), EP Examinations and the EP Compliance Unit also play an integral role in ensuring compliance through their enforcement actions." (Internal Revenue Service)
When Is $100 Worth $155? If You're in 28 Percent Tax Bracket, That's the Value of Paying for Personal Expenses with Pre-Tax Dollars
Excerpt: "Any time you take advantage of a tax savings opportunity, less of your hard-earned money goes to taxes and, therefore, more ends up in your pocket. So, let's . . . review some of the tax breaks available to you these days." (The Boston Globe)
Newly Posted Events
Consumer Driven Care Web Summit
Nationwide on March 19, 2009
presented by MCOL
Money Talks: Getting the Best Return from Your Employee Compensation Budget Webcast
Nationwide on March 11, 2009
presented by Buck Consultants, an ACS Company
New COBRA Provision in Economic Stimulus Legislation Webcast
Nationwide on February 26, 2009
presented by International Foundation of Employee Benefit Plans
Welfare Benefit Plans Webcast
Nationwide on February 18, 2009
presented by Retiree Medical Solutions
Welfare Benefit Plans Webcast
Nationwide on February 19, 2009
presented by Retiree Medical Solutions
Newly Posted Press Releases
New Booklet Helps Women Navigate the Complicated Terrain of Dividing Retirement Benefits at Divorce
Women’s Institute for a Secure Retirement (WISER)
Newly Posted or Renewed Job Openings
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Retirement Plan Administrator
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in MA
DC Plan Administrator
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in IL
Handy Links:
- View Today's Active Message Threads
- Using the Web for Employee Benefits Research (hypertext article)
- Employee Benefits Library
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