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November 30, 2009 \ Compliance \ Costs \ Administration \ Design \ Policy

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[Guidance Overview]
Cancer Insurance Policy Endorsed by Employer and Offered Through Cafeteria Plan Was an ERISA Plan

Excerpt: "EBIA Comment: Employees who choose to participate in a voluntary plan may expect the employer to allow them to pay premiums through the employer's cafeteria plan. Before permitting this, however, the employer must weigh the risk that use of the cafeteria plan may contribute to endorsement, taking the voluntary plan out of the safe harbor and making it subject to ERISA. While it's not clear how much weight the court gave to the employer's use of a cafeteria plan (or to the fact that the policy was apparently the only benefit offered on a pre-tax basis), there will inevitably be additional employer involvement when a cafeteria plan is utilized. And while not at issue in this case, employers should also consider the impact of COBRA, HIPAA, and other laws before allowing coverage to be paid for through a cafeteria plan." (Employee Benefits Institute of America)



[Guidance Overview]
State's Practice of Preventing Insurers from Including Discretionary Clauses in Insurance Policies Not Preempted by ERISA

Excerpt: "EBIA Comment: Discretionary language (sometimes referred to as 'Firestone' language) gives ERISA plan decisionmakers discretionary authority to make benefit determinations and generally requires the courts to apply a standard of review favorable to the decisionmaker when benefit denials are litigated. The National Association of Insurance Commissioners ('NAIC') has opposed their use, arguing that a ban on discretionary language would help mitigate the conflict of interest that exists when a claims adjudicator also pays the benefit. To this end, a number of states (including Montana) have prohibited or restricted discretionary language in insurance policies issued to ERISA plans. The cases are mixed, however, on whether ERISA preempts these state laws." (Employee Benefits Institute of America)



Can I Stay Home from Work with My New Baby?
Excerpt: "According to Marcia McCormick, an associate professor at St. Louis University School of Law and an editor of the Workplace Prof Blog, one of the biggest misconceptions about FMLA is that it is paid leave -- it isn't. FMLA only guarantees that your employer holds your position for you for 12 weeks. While some employers offer more generous parental leave plans that include paid time off, they are not legally required to. 'If you do have some kind of paid leave -- like if you have sick leave or vacation leave -- you can opt to substitute some of that paid leave for the unpaid leave,' she says. 'Or, your employer might require you to use your paid leave as part of your FMLA time period.'" (Harpo Productions, Inc.)



Government Announces $80 Million in Grants to Develop Health Care Information Technology Workforce
Excerpt: "The grants will go to five consortia comprising 70 community colleges nationwide and will create six-month nondegree programs to train 10,000 workers a year to help set up and maintain electronic health record systems." (Workforce Management; free registration required)



COBRA Uncertainty Complicates Administration: Subsidy Extension Likely, But Firms Face Choices
Excerpt: "[F]or many beneficiaries, that subsidy has come to an end. The subsidy expired at the end of November for beneficiaries who have received the nine-month subsidy since it first became available, which generally was March 1. As a result, in December billing statements some employers and plan administrators have asked beneficiaries to pay the full COBRA premium, instead of 35%. 'We have already set up a 100% billing for December,' said Kathy Dupree, benefits manager at Core Laboratories Inc., a Houston-based company that provides services to petroleum companies. But some plan administrators -- especially those that send out payment booklets for COBRA beneficiaries -- say that for now they are not sending out new booklets asking beneficiaries to pay the full premium. 'It is a calculated risk,' acknowledges Linda Anderson, benefit administration consultant in Watson Wyatt's Chicago office." (Business Insurance)



Seven Things You May Not Know About in the Senate Health Bill
Excerpt: "The Senate bill includes a provision designed to ease out-of-pocket costs for retirees who are under 65 but who still get health insurance from their former employer. The bill would create a temporary 'reinsurance' program under which the government would pick up 80 percent of some high-cost insurance claims filed by retirees. Employers would use the savings only to make retirees' coverage more affordable by reducing their share of premiums or other costs. The Senate bill would set aside $5 billion for the program; the House-passed bill, which has a similar provision, has a $10 billion pot. The proposal has wide support among employer groups and labor unions." (Kaiser Family Foundation)



Health Care Reform May Outlaw Reductions in Retiree Medical Benefits
Excerpt: "Employers with retiree medical benefit programs should closely monitor the debates on health care reform, particularly the outcome of any conference committee action to reconcile House and Senate versions of health care reform, and be prepared to take immediate action to amend their retiree medical plans if the retiree medical mandate of H.R. 3962 is included in the bill emerging from the conference committee. As currently proposed, the retiree medical mandate would become effective immediately upon enactment. Accordingly, employers may want to confer with their legal counsel to determine how best to prepare for the prospects and implications of the proposed retiree medical mandate." (Sonnenschein Nath & Rosenthal LLP)



Health Care Savings Could Start in the Company Cafeteria
Excerpt: "[S]ticker shock is confronting all kinds of employers, which together provide 160 million Americans with health care coverage. But the cost of delivering that insurance has surged 31 percent over the last five years, representing the fastest-growing single corporate expense, according to Towers Perrin, the management consulting firm. Those costs take a huge bite out of the bottom line and hurt employees, many of whom see their paychecks shrink as employers pass along the extra costs. . . . In home offices around Boston, a shoestring operation of three full-time employees is working on an unusual answer to that question. As the wrangling over trillion-dollar price tags continues on Capitol Hill, a start-up company called the Full Yield is undertaking its own version of health care reform by using a simple, low-tech premise: Eat healthier food and you'll become healthier." (The New York Times; free registration required)




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Links to Items on Executive Comp, Benefits in General

[Guidance Overview]
IRS's Final Employee Stock Purchase Plan Regulations

Excerpt: "ESPP Requirements -- The final regulations clarify that the plan document requirements may be satisfied by the terms of the plan document or the terms of the offering under the plan. In order for a plan to be considered an ESPP, the plan must provide that options will be granted only to employees of the employer corporation or of its related corporations. In addition, the plan must be approved by the granting corporation's stockholders within 12 months before or after the date the plan is adopted." (Deloitte via BenefitsLink.com)


[Guidance Overview]
IRS Releases Updated Version of Publication 521 on Moving Expenses

Excerpt: "EBIA Comment: Code Section 132(g) allows employers to reimburse employees for certain moving expenses on a tax-free basis, so long as the expenses would have qualified for an individual tax deduction under Code Section 217. The types of moving expenses that can be provided tax-free are limited, but some employers go further and reimburse a broader array of moving expenses, resulting in taxable income for employees. Publication 521 provides a brief overview of some of the choices available to employers when designing moving expense benefits for employees, but its main purpose is to help individuals determine which of their moving expenses may qualify for a deduction and how to account for any employer reimbursements." (Employee Benefits Institute of America)


House Panel to Hear Concerns Over Delphi Retirees' Pensions and Benefits
Excerpt: "The U.S. House Education and Labor Committee will conduct a hearing Wednesday on the pensions and benefits that may be cut because of the Delphi Corp. bankrup.tcy. U.S. Rep. Tim Ryan, U.S. Sen. Sherrod Brown and Bruce Gump, Delphi retiree representative, are scheduled to testify. . . . In July, Ryan introduced legislation to provide funding for a Voluntary Employees Beneficiary Association, which would cover Delphi hourly and salaried employees and retirees who lost their health coverage through Delphi and GM's Chapter 11 bankruptcies. Gump, of Howland, testified at a Senate hearing on this issue Oct. 29 and came away from that hearing optimistic that senators will work to restore pension benefits." (Vindy.com)


The Effect of Incentive Pay on Rates of Change in Wages and Salaries
Excerpt: "[F]ollowing steady increases of approximately 3 percent per year from December 2006 through June 2008, private industry wage and salary increases have slowed; the annual rate of change in recent quarters has been around 2 percent or below. This overall trend can mask the effect of incentive-paid workers, who make up about 5 percent of the private workforce, as measured by the BLS Employment Cost Index (ECI). Incentive-paid workers are those who receive some portion of their earnings based on sales or output, rather than a unit of time such as an hourly rate or monthly salary. Examples of incentive-paid work include piece-rate systems found in manufacturing environments and commissions paid to certain sales workers. Because such workers represent a small proportion of total employment, it is difficult to track this volatile segment of the workforce. However, by comparing all workers with those who are not paid by incentive, some trends can be identified." (U.S. Bureau of Labor Statistics)



Press Releases

PBGC Moves to Protect Pensions at Hayes Lemmerz International, Inc.
Pension Benefit Guaranty Corporation (PBGC)

Terrance Power Named One of 401kwire.com's "300 Most Influential Advisors in Defined Contribution"
American Pension Services, LLC

(Click to post your press release)

Employee Benefits Jobs

Plan Administrator for Retirement Plan & ERISA Specialists
for Dana Consulting Group, Ltd.
in IL

Relationship Manager
for Huntington National Bank
in OH, PA

Retirement Plan Benefits Administrator
for Independent Benefit Services
in MD

Benefits Analyst (LOA and Health & Welfare)(SF)(Job ID:21544)
for Morrison & Foerster LLP
in CA

401(k) Plan Consultant
for LAR Pensions, LLC
in CT

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