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August 17, 2009 \ Compliance \ Costs \ Administration \ Design \ Policy

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[Guidance Overview]
SPD Disclaimer Does Not Cure Conflict in Plan Documents Regarding Grant of Discretionary Authority

Excerpt: "EBIA Comment: Because ERISA requires full disclosure in the SPD of any material terms that could affect benefits, most courts do not give weight to SPD disclaimers. Note that the bottom line in this case -- that there was no unambiguous grant of discretionary authority -- could have a tremendous impact on the outcome of this litigation. More than one court, after applying the less deferential de novo standard of review, has overturned a benefit denial only to observe that the result would have been different if the arbitrary and capricious standard had been applied." (Employee Benefits Institute of America)


Employer Mandate Directs Health Care Reform Debate
Excerpt: "Supporters say that requiring coverage by all employers beyond a yet-to-be-determined size threshold is a crucial step toward covering the uninsured and stemming runaway costs. But opponents fear Uncle Sam won't stop at determining which employees must be covered and what employers must pay. They worry that their ability to control costs through plan design and adjustments would get mandated away. The question is: Whose message will make the most impact when debate resumes in Congress next month?" (Kansas City Business Journal via bizjournals.com; free registration required)


Administrative Expenses of Health Plans (PDF)
28 pages. Excerpt: "An independent analysis by Sherlock Company of health plan administrative costs finds that prior estimates do not reflect the actual administrative costs for Blue Cross and Blue Shield Plans and other major health plans. Based on our review of actual health plan administrative expenses, we find that: Private health plan administrative expenses are grossly overstated in previous reports. Based on combined data from 36 health plans participating in our performance benchmarking studies in 2008 (2007 data) and other data, administrative expenses for all commercial products represented 9.18% of premiums. Administrative costs are 11.12% of premiums for the small group market and 16.35% of the individual market, amounts that are nearly one-half and in some cases nearly one-third of other estimates." (Sherlock Company via Blue Cross and Blue Shield Association)


Health Care Reform Update
Excerpt: "This is another in a series of regular health care reform updates from Spencer's Benefits Reports. Included are links to items already covered, brief summaries of actions taken by the federal government, recent reports and studies on health care reform, policy statements by major stakeholders, and other recent health care reform activity." (Wolters Kluwer)


Outline of Individual and Employer Coverage under House Health Care Reform Bill
Excerpt: "This Tax Foundation Fiscal Fact provides a brief outline of the House health care reform bill entitled 'America's Affordable Health Choices Act.' The information provided is based upon our interpretation of the Congressional Budget Office (CBO) and Joint Committee on Taxation (JCT) descriptions of the bill. Some of the text is taken directly from the CBO report. There are obviously costs and benefits to each of the provisions in the bill (the key ones are listed below), but this report does not assess those and is merely designed to provide the public with information on how the bill would treat different scenarios of health insurance coverage." (Tax Foundation)


[Opinion]
What Neither Side Will Admit About Health Care 'Rationing'

Excerpt: "Democrats are against health care rationing if it's done by insurance companies. Republicans are against it if it's done by government. What neither side will admit is that medical rationing is part of the future. We can't afford a system where everybody gets whatever care they want regardless of cost and effectiveness. The only question is whether we'll ration intelligently and fairly. Or not. We ration health care today. Medicare fully pays for only three weeks of rehab after a hospital stay. That's rationing. When your insurance company covers only 30 days of inpatient psychiatric treatment, that's rationing. When Medicaid covers people making a certain portion of poverty-level income but rejects those making slightly more -- ditto." (The Baltimore Sun via AARP)


[Opinion]
President Barack Obama: Why We Need Health Care Reform

Excerpt: "We will put an end to [some health insurance company] practices. Our reform will prohibit insurance companies from denying coverage because of your medical history. Nor will they be allowed to drop your coverage if you get sick. They will not be able to water down your coverage when you need it most. They will no longer be able to place some arbitrary cap on the amount of coverage you can receive in a given year or in a lifetime. And we will place a limit on how much you can be charged for out-of-pocket expenses. No one in America should go broke because they get sick." (President Barack Obama via The New York Times; free registration required)



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Links to Items on Executive Comp, Benefits in General

[Guidance Overview]
IRS Letter Ruling Finding That Expense Reimbursement Arrangement Satisfies Accountable Plan Rules

Excerpt: "EBIA Comment: For guidance about designing a successful reimbursement plan, this private letter ruling is a must-read! The IRS has previously addressed tool reimbursement plans that fail to qualify as accountable plans -- largely due to recharacterization of wages, which violates the business connection requirement, and lax substantiation requirements." (Employee Benefits Institute of America)


[Guidance Overview]
Headlines in Employee Benefits Law E-Alert, August 2009 (PDF)

6 pages. The alert contains Select Compliance Deadlines and Reminders; Retirement Plan Developments; and, Health and Welfare Plan Developments. (Reinhart Boerner Van Deuren s.c.)


U.S. Pay Czar Says He Can 'Claw Back' Executive Compensation
Excerpt: "Kenneth Feinberg, the Obama administration's pay czar, said on Sunday he has broad and 'binding' authority over executive compensation, including the ability to 'claw back' money already paid, and he is weighing how and whether to use that power." (Reuters via The New York Times; free registration required)


IRS Internal Memo on 162(m) and Backdated Options
Excerpt: "In Internal Memo, AM 2009-006, the IRS concluded that a stock option whose exercise price was less than the fair market value of the stock at the date of grant ('discounted stock option') does not, and could not be modified to, qualify as performance-based compensation under Code Sec. 162(m)(4)(C), where the executive reimburses the employer for the excess of the fair market value on the date of grant over the exercise price (or the parties otherwise agree to an increased exercise price)." (Michael Melbinger via Winston & Strawn LLP)


Corporations Not Significantly Scaling Back on Domestic Employee Relocations
Excerpt: "For corporate America, with its continuing need to match talent to locations, the real estate situation has become the top concern in domestic relocation. As the real estate market went from bad to worse, companies began re-evaluating policies and adjusting programs in their struggle to get needed employees to the right sites while also controlling relocation costs. . . . Despite the domestic real estate slump, corporations are forging ahead with relocation programs, with relatively few anticipating major reductions. As a result, relocation spending will likely continue rising throughout 2008." (Workforce Management; free registration required)



Webcasts and Conferences

A Day with Sal Tripodi
in California on August 25, 2009
presented by San Diego County Chapter of NIPA

Surviving the New 403(b) Regulatory Environment
Nationwide on August 19, 2009
presented by Cammack LaRhette Consulting

(Click to post your webcast or conference)

Press Releases

Employee Benefits Industry Organizes to Protect Flexible Spending Accounts from Elimination or Contribution Limits
Employers Council on Flexible Compensation (ECFC)

ERIC Calls IRS "Substantial Business Hardship" Requirement Unnecessary and Burdensome
ERIC (ERISA Industry Committee)

BPAS Rolls Out Annual Plan Review Report with Benchmarking Focus
BPAS

Bert Carmody is Awarded the AIF® Designation
Fiduciary Risk Management, LLC

(Click to post your press release)

Employee Benefits Jobs

Employee Benefits Sales Specialist
for CUNA Mutual
in TX

Compliance Analyst - ERISA
for T. Rowe Price
in MD

Account Executive - Group Benefits
for Lenox Advisors, Inc
in NY

Retirement Plan Administrator
for Pension Advisory Group, Ltd.
in IL

Secretary / Administrative Assistant
for Jennings Law Firm, Ltd. / Dana Consulting Group, Ltd.
in IL

(Click to post your job opening | View all jobs | RSS feed for jobs RSS feed of all jobs )


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