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March 4, 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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[Guidance Overview]
CHIP Expansion Affect on Employer Health Plans

Excerpt: "CHIP . . . is a federal-state program designed to increase the number of low-income children who have health coverage. States may still provide that coverage directly. Under the expanded CHIP, however, states now have the option of subsidizing the cost of coverage available to eligible children under employer-sponsored health plans. This premium assistance provision of CHIP takes effect as of April 1st. This premium subsidy may be paid either to the employee or to the sponsoring employer, although an employer may opt out of receiving these payments. In that event, the subsidy would go to the employee, who would be expected to use the subsidy to help pay for the child's health coverage. . . . Employers cannot opt out of the other CHIP requirements." (Spencer Fane Britt & Browne LLP)


[Guidance Overview]
New COBRA Rules Require Immediate Attention by Employers, Insurers and Third Party Administrators

Excerpt: "There will be several types of notices required within 60 days after the Act was enacted: First, employees whose employment terminated between Sept. 1, 2008, and Feb. 17, 2009, and who are not currently covered by COBRA have 60 days to elect COBRA after receiving notice. Employers should use this time: (1) to consider whether they want to issue a notice before the DOL provides a model notice (to start the clock on the terminated employee's right to choose COBRA); and (2) identify which employees were 'involuntarily terminated.'" (Sonnenschein Nath & Rosenthal LLP)


[Guidance Overview]
Employer Obligations Under the Children's Health Insurance Program Reauthorization Act of 2009

Excerpt: "CHIPRA's main purpose is to provide reauthorization funding for the State Children's Health Insurance Program ('SCHIP') that was set to expire on March 31, 2009. In addition to providing for this additional funding, however, CHIPRA adds new special enrollment period rules to HIPAA and new notice and disclosure obligations to the SCHIP program with which employers and their group health plans must comply. Although the new notice and disclosure obligations have a delayed effective date, employers and their group health plans will need to begin complying with the new HIPAA special enrollment period rules as of April 1, 2009." (Utz, Miller, Kuhn & Eickman, LLC)


[Guidance Overview]
Recent Enforcement Actions and Significant Amendments to HIPAA Privacy Rule Compel Employers to Revisit HIPAA Compliance Efforts

Excerpt: "Two recent enforcement actions and significant amendments to the HIPAA Privacy Rule, enacted as part of the federal government's massive economic stimulus bill (the 'American Recovery and Reinvestment Act of 2009' (ARRA)), should re-focus employers on their HIPAA compliance efforts. Within the past seven months, the U.S. Department of Health and Human Services (HHS) has obtained a settlement payment of $100,000 from a hospital system that suffered five reported security incidents in approximately 18 months and a $2.5 million settlement from a pharmacy chain that allegedly discarded pharmacy records without shredding or otherwise rendering the information irrecoverable. Consistent with this increased emphasis on enforcement, ARRA requires that HHS conduct 'periodic' compliance audits of entities subject to regulation under HIPAA." (Littler Mendelson P.C.)


[Guidance Overview]
ARRA Privacy and Security Provisions 'Up the Ante' for Covered Entities, Business Associates and Non-Covered HIPAA Entities (PDF)

14 pages. Excerpt: "This advisory highlights the key changes to the HIPAA Rules mandated by [The American Recovery and Reinvestment Act of 2009] and the implications of these changes on covered entities and on non-covered entities, such as business associates and vendors. In addition, to illustrate these changes, a chart summarizing changes from existing law is included at the end of this advisory." (Alston & Bird LLP)


[Guidance Overview]
Changes to the HIPPA Privacy and Security Rules (PDF)

Pages 1-2 of 7 pages. Excerpt: "The amount of the civil penalties for HIPPA violations have been increased, and range from $100 per violation (with a maximum of $25,000 per year), to a maximum of $50,000 per occurrence (with a maximum penalty of $1.5 million per year). A portion of any penalty assessed under HIPPA will be distributed to individuals harmed by the violation." (Miller & Chevalier Chartered)


[Guidance Overview]
Glenn Ruling Has Far-Reaching Effects on How Courts Treat Plaintiffs' Denied Requests for LTD Benefits

Excerpt: "Between the district and appellate courts' reviews [of this case], the U.S. Supreme Court issued a significant ruling about LTD plans that are covered by ERISA. That decision, in Metropolitan Life Insurance v. Glenn (2008), said that any conflict of interest -- such as that of First Unum in this case -- must automatically be weighed as a factor in whether the insurer's decision was reasonable. First Unum had lied to McCabe, first in telling him a physician had reviewed all his records during the appeal and then in concealing the fact that the nurse had rejected the memo because McCabe's doctor didn't sign it." (Business & Legal Reports, Inc.)


Retiree Health VEBAs: A New Twist on an Old Paradigm
Excerpt: "This issue brief . . . provides an overview of stand-alone [Voluntary Employees' Beneficiary Association (VEBA)] trusts, vehicles through which employers have been able to rid themselves of future obligations to pay retiree health benefits in exchange for making a significant payment to designed to approximate the projected cost of these benefits. The paper looks at three case studies, including the Big Three VEBAs, and highlights some of the pros and cons of such arrangements for retirees, unions and employers." (Kaiser Family Foundation)


Senate Committee Hearing on Health Care in an Aging America, March 4, 2009
The subject of the hearing is long-term care services and support. (U.S. Senate Special Committee on Aging)


Health Care, Health Insurance, and the Relative Income of the Elderly and Nonelderly
Excerpt: "In this paper we combine health care spending and insurance reimbursement data in the Medical Expenditure Panel Study with cash and noncash income data in the Current Population Survey to assess the impact of health insurance on the distribution of income and, in particular, on the age profile of income. Our estimates imply that gross money income and disposable cash and near-cash income significantly understate the resources available to finance household purchases. The estimates imply that a more complete measure of resources would show less inequality than the income measures that are currently used. The addition of estimates of the value of health insurance to countable incomes reduces measured inequality in the population and the income gap between young and old." (Center for Retirement Research at Boston College)


House Subcommittee Hearing, March 3, 2009: Encouraging Family-Friendly Workplace Policies
Excerpt: "The hearing will explore how family-friendly policies, such as grants to support state paid leave programs, paid leave, expansions to the Family and Medical Leave Act, and paid sick days make sound economic sense not only in good times, but during recessionary times as well." (U.S. House of Representatives Committee on Education & Labor)


U.S. House Member Reintroduces Family-Friendly Workplace Act
Excerpt: "U.S. House Representative Cathy McMorris Rodgers (R-Washington) in February reintroduced the Family-Friendly Workplace Act (H.R. 933), a measure that would allow workers to opt for paid time off as compensation for overtime hours. The Family-Friendly Workplace Act amends the Fair Labor Standards Act to allow private sector employers to offer employees the choice of paid time off in lieu of cash wages for overtime hours worked if the employee prefers to take compensatory time instead of overtime pay, according to a press release on the Education and Labor Committee Republican Web site." (PLANSPONSOR.com; free registration required)


House and Senate Lawmakers Introduce Bill To Raise Lifetime Coverage Caps to $10M
Excerpt: "Lawmakers in both the House and Senate have introduced a bill to raise lifetime health insurance caps to $10 million, CQ HealthBeat reports. Reps. Anna Eshoo (D-Calif.) and Jim Langevin (D-R.I.) introduced the legislation in the House, while Sens. Byron Dorgan (D-N.D.) and Olympia Snowe (R-Maine) sponsored the bill in the Senate." (Kaiser Family Foundation)


[Opinion]
Patient Power: Solving America's Health Care Crisis

Excerpt: "The thesis of this book is simple: If we want to solve the nation's health care crisis, we must apply the same common-sense principles to medical care that we apply to other goods and services. In a 1991 New York Times/CBS News poll, almost 80 percent of the respondents agreed that the American 'health care system is headed toward a crisis because of rising costs.' The irony is that health care costs are rising because, for individual patients, medical care is cheap, not expensive. On the average, patients pay only 5 cents out-of-pocket for every dollar they spend in hospitals. The remainder is paid by private and public health insurance. Patients pay less than 19 cents out-of-pocket for every dollar they spend on physicians' services, and they pay less than 24 cents out of every dollar they spend on health care of all types. [The book was originally published in 1992 by The Cato Institute. The target page links to the full book and also has separate links to each chapter.]" (National Center for Policy Analysis)



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Links to Items on Executive Comp, Benefits in General



[Guidance Overview]
New Executive Compensation and Governance Standards for Recipients of Federal Financial Support and SEC Guidance on Say-on-Pay Requirements

Excerpt: "For any company receiving TARP funds, the stimulus package effectively: Prohibits all termination pay for the top ten executives. Prohibits any bonuses, retention awards and incentive compensation for up to 25 top executives, except for limited amounts of restricted stock. Expands both the scope and the depth of required clawback provisions. Prohibits compensation that encourages earnings manipulation. Requires companies to have a policy on luxury and excessive expenditures. Requires companies to permit non-binding shareholder say-on-pay votes. Imposes new compensation committee requirements. Requires annual certifications of compliance from both CEOs and CFOs. The stimulus package also shortens the period during which TARP recipients must comply with these standards and gives TARP recipients added flexibility to repay the assistance received and exit TARP. A table comparing EESA's requirements to the new requirements appears at the end of this alert." (Sonnenschein Nath & Rosenthal LLP)


[Guidance Overview]
Stimulus Act Expands Executive Compensation Restrictions for TARP Recipients

Excerpt: "Compliance Certification. The CEO and CFO of each TARP Recipient must provide written certification that the TARP Recipient has complied with the restrictions listed . . . . Publicly traded companies must provide such certification in their annual filing, and private companies must provide such certification to the Treasury Secretary. The SEC stated that its view is that TARP recipients do not have to comply with this requirement until the Treasury Secretary establishes the 'executive compensation and corporate governance standards' to which the certification applies." (Katten Muchin Rosenman LLP)


[Guidance Overview]
PowerPoint Presentation: Consequences of Violating 409A

14 slides. The presentation was made before the Employee Benefits Committee of the American Bar Association, Labor and Employment Section, Charleston, South Carolina, on February 20, 2009. (Janich Law Group)


Practical Approaches to Executive Incentives in Challenging Economic Times
Excerpt: "Now is the time to ensure that your executive incentive plans are designed to effectively drive performance. Performance metrics: What types? Which ones? Measured how? An organization needs appropriate measures or indicators of how it is doing, but it's more important to identify and implement the right kind. Keep the following in mind when choosing performance metrics to be used in determining executive incentive payments." (Watson Wyatt Worldwide)


National Employee Benefits Day is April 2
Excerpt: "The International Foundation of Employee Benefit Plans (IFEBP) is encouraging benefits professionals to use National Employee Benefits Day as an opportunity to educate themselves and their participants on the importance of retirement security. . . . [T]he Foundation will be offering two free video presentations featuring Dallas Salisbury, president of EBRI, and Brett Hammond, chief investment strategist with TIAA - CREF, reflecting on what the current economy means for benefit plan sponsors and the future of retirement security. The video presentations will be available at www.ifebp.org/benefitsday, the National Employee Benefits Day Web site." (PLANSPONSOR.com; free registration required)




Newly Posted Events



A Case Study: Instilling a Culture of Wellness Webcast
Nationwide on March 19, 2009
presented by International Foundation of Employee Benefit Plans

Claims Procedures for Self-Funded Health Plans, Health FSAs and HRAs: What to Do, What to Avoid, and How to Monitor Claims Administration
Nationwide on February 26, 2009
presented by EBIA / Thomson Reuters

Effective Communications: What Your Participants Need to Know (60-Minute Power Series)
Nationwide on March 17, 2009
presented by International Foundation of Employee Benefit Plans



Newly Posted Press Releases



PSCA Says President Obama's Budget is an Affirmation of 401(k) Plans But Careful Analysis is Required
Profit Sharing/401(k) Council of America (PSCA)

U.S. Department of Labor Publishes Information to Help Employers, Workers and Families Understand the COBRA Stimulus Provisions
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

National Employee Benefits Day To Be Celebrated on April 2, 2009
International Foundation of Employee Benefit Plans



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