Health & Welfare Plans Newsletter |
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| July 21, 2009 \ Compliance \ Costs \ Administration \ Design \ Policy | ||
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[Guidance Overview]
Fifth Circuit Applies MetLife v. Glenn to Trust-Funded Disability Plan Benefit Denial
Excerpt: "Holland v. International Paper, No. 08-30967 (5th Cir.) (July 16, 2009) is the most recent Fifth Circuit assessment of the Supreme Court decision in Glenn on the effect of a structural conflict of interest on judicial review of a benefit claim denial. The case is interesting for several additional points, including the effect of trust funding on a structural conflict of interest, other factors that may mitigate a conflict, and the relevance of prior precedent employing the Fifth Circuit's 'two step' analysis and 'sliding scale' approach." (Roy Harmon III via Health Plan Law)
[Guidance Overview]
Benefit Payments Made from Employer's Zero-Balance Account Did Not Cause STD Plan to Be an ERISA Plan
Excerpt: "EBIA Comment: Certain employer-provided benefits that might technically fit the definition of an ERISA employee welfare benefit plan have been specifically excepted from ERISA by DOL regulation. Foremost among these regulatory safe harbors are those for certain 'payroll practices.' But not all payroll practices are covered by the safe harbor. The exemption for STD benefits only applies to the payment of an employee's normal compensation out of the employer's general assets. While a separate account in a TPA's name may create plan assets, this case illustrates that a separate employer account used to administer benefits generally does not transform employer general assets into ERISA plan assets." (Employee Benefits Institute of America)
[Guidance Overview]
Termination of Plan Coverage Was an Adverse Benefit Determination
Excerpt: "EBIA Comment: The plans' ambiguous terms caused unexpected and unwelcome results for this employer, reminding us once again of the importance of clear plan language, including eligibility requirements. As to the court's analysis on the issue of 'adverse benefit determination,' we note that the definition of this term in the claims regulations provides that a denial or termination of a benefit based solely on ineligibility qualifies as an adverse benefit determination that triggers all the applicable claims procedure requirements. Based on the DOL's position, we don't think the definition of adverse benefit determination under the claims regulations includes a mere determination of eligibility that does not relate to a specific claim for benefits (as in this case). Thus, in our view, this court reached the wrong result by mixing up termination of a specific benefit with generalized termination of coverage . . . ." (Employee Benefits Institute of America)
Democrats May Limit Tax Increases for Health Care Plan
Excerpt: "As President Obama began a new push to overhaul the health system, Democratic Congressional leaders, bowing to unease among lawmakers and governors in their own party, on Monday suggested scaling back a plan to tax top earners to pay for the sweeping legislation and signaled a retreat from their ambitious timetable." (The New York Times; free registration required)
Managing Health Benefits in Challenging Times: Mercer Survey on Recession and Reform
Excerpt: "Mercer's Survey on Recession and Reform explores how the downturn and health care reform efforts are affecting employers' health benefit programs. This Perspective reports the survey's findings on employers' expected health benefit costs in 2009 and cost-control plans for 2010; impact of the recently enacted federal COBRA subsidy, special CHIP enrollment rights and mental health parity expansion; and views on proposals to impose individual-coverage or employer pay-or-play mandates, curb employer deductions for benefits, waive ERISA pre-emption, or create a single-payer health care system. (Perspective, 13 Jul 2009, 11 pages)" (Mercer LLC)
COBRA Expansion Added to House Health Reform Bill
Excerpt: "Employers' obligation to extend COBRA health care continuation coverage to former employees and dependents would be expanded dramatically under an amendment tucked into sweeping health care reform legislation approved by a House panel. The House Education and Labor Committee on Friday approved H.R. 3200. It includes the COBRA expansion amendment proposed by Rep. Susan Davis, D-Calif., which the panel approved in an earlier voice vote." (Business Insurance)
Express Scripts Using Behavioral Economic Theories to Get Customers to Adopt Money-Saving Practices Such As Mail-Order Prescriptions
Excerpt: "Express and rivals such as Medco (MHS) typically try to persuade patients to switch by making mail-order drugs cheaper than store-bought ones. (Some employers require mail order for certain medications.) But incentives don't always work. The reason, says Express Chief Scientist Bob Nease, is a phenomenon known as 'present bias,' one of the principles of behavioral economics, which stresses that humans often act irrationally. People are more inclined to focus on the immediate hassle of changing a habit than the future benefit. So faced with the paperwork to initiate home delivery, most will keep driving to a pharmacy. Express attacked such inertia by forcing Lowe's employees to make a conscious choice. The company contacted employees with letters and phone calls, asking them to choose between mail and retail. If employees didn't make a decision by their third refill, their drug costs would not be covered until they decided. That forced customers to weigh their options." (BusinessWeek)
[Opinion]
Where Do You Draw the Line on Enforced Wellness?
Excerpt: "We've had a lot of discussion on this blog about where to draw the line on wellness - exercise machines in the office, local governments stepping in, extra taxes on unhealthy food - and for most things, I'm usually in favor of more wellness and better health. On one recent issue, though, I think I am actually on the other side. The Pentagon commissioned a report on smoking in the military and is urging the Department of Defense to ban smoking in the military." (Precept Employee Benefits Blog)
[Opinion]
House Bill Would Require Federal Approval of Terms of ERISA Health Plans
Excerpt: "The House bill says that after a five-year grace period all Erisa [sic] insurance offerings will have to win government approval -- both by the Department of Labor and a new 'health choices commissioner' who will set federal standards for what is an acceptable health plan. This commissar -- er, commissioner -- can fine employers that don't comply and even has 'suspension of enrollment' powers for plans that he or she has vetoed, until 'satisfied that the basis for such determination has been corrected and is not likely to recur.'" (The Wall Street Journal)
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Links to Items on Executive Comp, Benefits in General
[Guidance Overview]Elimination of Pensioner Death Benefit Did Not Violate ERISA
Excerpt: "The 10th U.S. Circuit Court of Appeals has upheld a district court's ruling that Qwest Communications did not violate the Employee Retirement Income Security Act when it amended its Death Benefit Plan, eliminating the Pensioner Death Benefit component. The appellate court agreed with the district court's conclusion that 'the Pensioner Death Benefit d[id] not meet ERISA's definition of a pension benefit because it d[id] not provide 'retirement income to employees,' or 'result in a deferral of income.'' The district court also rejected plaintiffs' argument that the Pensioner Death Benefit was a 'retirement-type subsidy' under ERISA's anti-cutback provision." (PLANSPONSOR.com; free registration required)
[Guidance Overview]
Assessing and Avoiding Risk of Adverse Tax Consequences for Partnerships Under the 'Golden Parachute' Payment Rules
Excerpt: "Internal Revenue Code Section 280G denies an income tax deduction for, and Code Section 4999 imposes a nondeductible 20 percent excise tax on, certain compensatory payments (excess parachute payments) to 'disqualified individuals' that are contingent upon a change in the ownership or control, or ownership of a substantial portion of the assets (a change in control), of a corporation.' (Winston & Strawn LLP)
[Guidance Overview]
SEC's Proposed Amendments to Enhance Compensation and Corporate Governance Disclosure (PDF)
6 pages. Excerpt: "The proposed amendments would require a new section in the Compensation Discussion and Analysis (CD&A) covering compensation policies and practices for employees (not limited to named executive officers) if risks associated with those policies and practices could have a material effect on the company. The proposed amendments would also change the method of disclosing the value of stock and option awards in the Summary Compensation Table (SCT) and the Director Compensation Table. Further, the proposed amendments would require new disclosures regarding a company's leadership structure, the board's role in the risk management process, director and nominee qualifications and involvement in legal proceedings, and additional services performed by compensation consultants and their affiliates and associated fees." (Buck Consultants)
Nonqualified Deferred Compensation: Understanding Plan Sponsor and Plan Participant Expectations
12 pages. Excerpt: "As is typical with other workplace retirement savings programs, such as qualified defined contribution and defined benefit plans, participant satisfaction with nonqualified deferred compensation plans is lower than that of plan sponsors. While this is not cause for immediate concern on the part of plan sponsors, it is important that they understand the key drivers of satisfaction for plan participants. Record keepers that offer the ability to deliver quality plan information and reporting, investment options and information, and easy-to-understand education and communications can raise the perceived value of this important employee benefit among participants." (Principal Financial Services, Inc.)
Economy Ratchets Up Value of Effective Education at Open Enrollment
Excerpt: "Economic pressures will make the upcoming open-enrollment season very different from recent years for employers and their employees. Brokers and their clients that can effectively address this year's unique challenges will find that achieving strong employee participation in benefits offerings does not need to be an uphill battle." (Employee Benefit Adviser; free registration required)
Webcasts and Conferences
No-Cost Webinar: Cut Costs and Improve Employee Productivity with Self-Service Enrollment SolutionNationwide on July 23, 2009
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No-Cost Webinar: Improve Employee Morale with Printed or Online Total Rewards Statements
Nationwide on July 23, 2009
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No-Cost Webinar: Learn How to Prepare Total Rewards Statements In-house on Your Own PC
Nationwide on August 5, 2009
presented by Benefit Software Inc.
(Click to post your webcast or conference)
Press Releases
CFDD Launches Web-Hosted Plan Sponsor RFP Tool For Advisor EvaluationCenter for Due Diligence
Web Site and Toll-free Line Will Help Unemployed Workers Appeal Denials of COBRA Premium Assistance Under Recovery Act
U.S. Department of Health & Human Services
UNIFI Companies Retirement Plans Enters RIA and Fee-Based Market
UNIFI Companies Retirement Plans
(Click to post your press release)
Employee Benefits Jobs
Defined Benefit Calculation Analystfor Diversified Investment Advisors, Inc.
in MA
Vice President, Group Benefits Sales / Business Development
for Sapers & Wallack, Inc
in MA
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