Health & Welfare Plans Newsletter
December 24, 2009

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THE DEFINED CONTRIBUTION PLANS SUMMIT

THE DEFINED CONTRIBUTION PLANS SUMMIT

The Defined Contribution Plans Summit taking place February 24-25, 2010 in New York, NY is the perfect platform for corporate and public DC plans to hear from their plan sponsor peers, leading policymakers and top investment executives. Attendees will share ideas through tailored interactive roundtables, benchmark their DC plans through case studies, and network with fellow plan sponsors and investment professionals. For more information please visit – www.dcplanssummit.com

IQPC


[Official Guidance]
Text of Revised Fact Sheet by EBSA on COBRA Premium Reductions (Subsidies)

Dated December 23, 2009. Excerpt: "To qualify, individuals must experience a COBRA qualifying event that is the involuntary termination of a covered employee's employment. The involuntary termination must occur during the period that began September 1, 2008 and ends on February 28, 2010. The premium reduction applies to periods of health coverage that began on or after February 17, 2009 and lasts for up to 15 months." (Employee Benefits Security Administration, U.S. Department of Labor)


[Official Guidance]
Text of Section 1010 of Department of Defense Appropriation Act, Extending COBRA Premium Reduction

Published as part of EBSA's web pages information employers and employees about COBRA. (Employee Benefits Security Administration, U.S. Department of Labor)


[Guidance Overview]
Employers Will Need to Quickly Respond to New COBRA Legislation by Notifying Affected Beneficiaries (PDF)

Excerpt: "BUCK COMMENT. Employers will need to provide notices that describe this additional subsidy period and the ability to retroactively reinstate COBRA coverage as soon as possible. In addition, special notice and administrative procedures may be needed for January COBRA payments, because plan sponsors may receive these payments before they are able to communicate information about the COBRA extension. It is unclear whether DOL will issue new model notices in the near future so employers may need to draft their own notices." (Buck Consultants)


Employers Warn of Cuts to Benefits Due to Tax Treatment of Medicare Part D Benefits
Excerpt: "Some of the biggest employers in the U.S. are warning that a provision in the Senate's proposed health-care overhaul could lead to cuts in retiree benefits and a sharp reduction in reported earnings next year. Companies including Boeing Co., Deere & Co., MetLife Inc. and Xerox Corp. plan to lobby Democratic leaders to drop the provision, which would change the tax status of payments for retiree health benefits." (The Wall Street Journal)


COBRA Enrollment Rises After Subsidy Enacted
Excerpt: "Average monthly COBRA enrollment rates increased by 20 percentage points since the federal COBRA premium subsidy program took effect, according to a Hewitt Associates Inc. analysis." (Workforce Management; free registration required)


Study Notes Many Firms Unprepared for H1N1 Outbreak
Excerpt: "A Mercer study on how employers are handling the challenges of the H1N1 influenza virus found that more than half of the respondents have local contingency plans in place, but only 25 percent of those respondents have integrated contingency plans in the event of an outbreak." (Workforce Management; free registration required)


Assessing the COBRA Subsidies for Laid-Off Workers
Excerpt: "Initial reports about the new COBRA premium subsidy program for recently laid-off workers indicate that enrollment in COBRA continuation coverage has increased substantially, with a healthier mix of individuals enrolling than before. Moreover, implementation has gone smoothly, and most eligible people have heard about the subsidy. Still, many of those who are eligible cannot afford to purchase COBRA coverage, even with the 65 percent premium subsidy. Very high subsidies and very easy enrollment are likely needed to enroll all, or nearly all, newly unemployed people who lack another source of affordable coverage." (The Commonwealth Fund)


Health Reform Side-by-Side Comparison Now Reflects Senate Bill As Passed December 24, 2009
Excerpt: "This interactive side-by-side compares the leading comprehensive reform proposals across a number of key characteristics and plan components." (Kaiser Family Foundation)


Comparison of Take-up Rates in Employer-Provided Medical Care Plans: State and Local Government and Private Industry
Excerpt: "Data from the 2009 National Compensation Survey (NCS) reveal that take-up rates for employer-provided medical care plans differ between private industry workers and State and local government workers. Take-up rates also vary among workers in their respective private and State and local government sectors, by worker and establishment characteristics. This article discusses the concept of a take-up rate and presents take-up rate comparisons among workers in two major sectors of the economy, utilizing the March 2009 NCS estimates on take-up rates for employer-provided medical plans." (U.S. Bureau of Labor Statistics)


A Consumer's Guide to Health Reform
Excerpt: "Now that the Senate has passed a hotly debated health care bill, Congress is headed to the next step: House-Senate negotiations in January to hammer out a final version. Given the Senate's difficulty in passing a bill, the final legislation is likely to tilt strongly toward that chamber. Here's where things stand and how you might be affected." (National Public Radio)


Businesses Brace for Health Bill's Costs
Excerpt: "Companies are alarmed at potentially costly provisions in the Senate health-care bill, many of which they hope will be scrapped during a final round of negotiations early next year. A scramble to massage the hefty measure, instead of pushing to kill it, reflects the view of many in the business community that a sweeping remake of the U.S. health-care system now appears inevitable." (The Wall Street Journal)


State and Local Government Retiree Health Benefits: Liabilities Largely Unfunded, but Some Governments Taking Action (PDF)
49 pages. Excerpt: "The total unfunded OPEB liability reported in state and the largest local governments' CAFRs exceeds $530 billion. However, as variations between studies' totals show, totaling unfunded OPEB liabilities across governments is challenging for a number of reasons, including the way that governments disclose such data." (U.S. Government Accountability Office)




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Executive Compensation; Benefits in General

[Guidance Overview]
SEC Adopts Substantial Changes to Executive Compensation and Corporate Governance Disclosure Requirements for Public Companies (PDF)

8 pages. Excerpt: "As a result of the additional disclosure requirements for directors, companies should review their current forms of director questionnaires or other processes for gathering such information to expand the scope of required disclosure items. Any systems or processes that verify such information should be modified to include the new areas of disclosure." (Orrick, Herrington & Sutcliffe LLP)


[Guidance Overview]
SEC's Final Amendments to Enhance Compensation and Corporate Governance Disclosure (PDF)

5 pages. Excerpt: "On December 16, 2009, the Securities and Exchange Commission (SEC) released final amendments to its disclosure rules to enhance compensation and corporate governance disclosures in proxy and information statements, annual reports, and registration statements under the Securities Exchange Act of 1934, and registration statements under the Securities Act of 1933 and the Investment Company Act of 1940. Also under the amendments, the requirements to report shareholder voting results are being transferred from Forms 10-Q and 10-K to Form 8-K." (Buck Consultants)


[Guidance Overview]
New California Supreme Court Decision Schachter v. Citigroup Upholds Forfeiture Provision in Key Employee Stock Purchase Plan

Excerpt: "The Schachter decision is important in several respects. First, it validates forfeiture provisions in a stock purchase plans similar to provisions of the Citigroup plan. Second, the Court reaffirmed the prospective and bilateral rights of employers and employees to change compensation and other terms of employment. Third, the Court endorsed the principle that employers can enforce conditions to receiving incentive compensation, such as continued employment for a specified time period. Finally, the Court's recognition of contingent future rights as a permissible part of an employer's compensation package may provide some indirect support for the use of clawback provisions in incentive compensation programs." (Cooley Godward Kronish LLP)


Federal Employee Benefit Changes and Improvements in 2009
Excerpt: "[2009] was a big year for federal pay and benefits. Congress passed long-delayed changes to federal benefits policy and rolled back the Pentagon's controversial pay-for-performance system. A new leadership team at the Office of Personnel Management embarked on potentially wide-ranging reforms to the pay and hiring processes." (GovernmentExecutive.com)


The Regulatory Systems for Employee Benefits
Excerpt: "Employee Benefits Law is complex and often misunderstood. This article explains the regulatory systems developed by Congress over nearly a century. Initially Congress created tax preferences to encourage employers to offer retirement and healthcare benefits to employees. Several decades later, Congress enacted the Employee Retirement Income Security Act of 1974 ('ERISA'), providing substantive regulation under labor law and tax law. Since ERISA, there have been about three dozen public laws which have changed the systems." (Social Science Research Network)



Press Releases

Senator Sanders and Colleagues Propose New, and Effective, Ideas to Save American Jobs
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