Health & Welfare Plans Newsletter
January 18, 2010

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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 –


[Guidance Overview]
Government Subsidy for COBRA Premiums: Updated Model Notices

Excerpt: "The DOL notes that some individuals may be entitled to multiple notices. To satisfy the notice requirements, plan administrators may provide these individuals with a single notice that includes all of the required information so long as the notice is provided by the earliest date required." (Troutman Sanders LLP)

[Guidance Overview]
Employers Must Modify COBRA Notices

Excerpt: "Action Items: Identify individuals that must receive a revised notice. Specifically, employers should look for: Individuals in a 'transition period'; Individuals who were terminated on or after October 31, 2009 (particularly paying attention to individuals terminated in December 2009); Individuals who were on subsidized COBRA coverage as of October 31, 2009; and New terminations moving forward. Prepare modified COBRA election forms. Send required notices to such individuals." (Michael Best & Friedrich LLP)

[Guidance Overview]
Updated Mandatory Reporting User Guide Clarifies and Eases HRA Reporting Requirements, Among Other Changes

Excerpt: "EBIA Comment: RREs and service providers involved with HRAs will welcome the partial exemption, no retroactive reporting, and clarifications about what constitutes an HRA for reporting purposes. Some questions still remain, such as those relating to concepts of free-standing and linked coverage and the meaning of HRA effective dates. Note: Other technical, non-HRA changes were made in the Guide that will be of interest to individuals on the front line of MSP reporting." (Employee Benefits Institute of America)

[Guidance Overview]
DOL's Revised Fact Sheet, Revised Model Notices, and New FAQs on Cobra Premium Subsidy Extension

Excerpt: "[I]f the plan administrator has already provided an election notice updated for the 2010 DOD Act subsidy extension, no additional notice should be required." (Employee Benefits Institute of America)

Tax on Fully Insured Health Plans Would Hit California Hard; Has Relatively Fewer Self-Insured Employer Plans
Excerpt: "An arcane provision in the Senate health bill calls for paying for expanded health benefits in part by taxing health insurers, like Kaiser Permanente, which covers about 6.6 million Californians, while exempting plans offered by large employers who pay their employees' claims." (San Francisco Chronicle)

Congress Negotiating Final Details of Proposed Requirements That Employers Pay Substantial Share of Employees' Health Insurance or Subsidize Coverage of Uninsured (PDF)
7 pages. Excerpt: "As this brief is published, congressional leaders are attempting to reconcile the differences in the bills passed by the House and Senate. It is not yet clear whether what emerges from the next stages of the process will be similar to or different from either of the proposals discussed in this brief." (Health Affairs)

Preemption Provisions of ERISA Allow Fully Insured Health Plans That Discriminate in Favor of Highly Compensated
Excerpt: "For a full three decades, employers with fully insured health plans have been able to provide tax-free medical benefits just to executives because discrimination laws are different for insured plans than for self-funded plans. However, under the Senate's health reform proposal (which adds a new Sec. 2716 to the Public Health Service Act), this plan design will be prohibited." (Wolters Kluwer)

The Top 10 Questions Employers Should Ask About Health Care Legislation
Excerpt: "While the final legislation is expected to more closely reflect the Senate bill, which is generally less onerous on employers, the bill President Obama hopes to sign early in 2010 would impose significant new responsibilities on employers nationwide and could, over time, fundamentally alter the nature of employer-sponsored health care." (Littler Mendelson P.C.)

Agreement Over Taxing High-Priced Health Insurance Policies Is Reasonable Solution

Excerpt: "The agreement treats unionized workers far more favorably than nonunion workers, the price for the support of important Democratic constituencies. But it would preserve the tax's crucial role in slowing the rise in health care costs for decades to come." (The New York Times; free registration required)

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Executive Compensation; Benefits in General

[Guidance Overview]
Who is Entitled to Life Insurance Benefits and Top-Hat Benefits from an ERISA Plan Following a Divorce or a Marital Separation?

Excerpt: "ERISA plans generally need not follow state-court orders. On the other hand, ERISA plans must follow the designation terms of those DROs which are qualified domestic relations orders ('QDROs'). Questions have been raised about whether life insurance plans and top-hat plans (which are pension plans maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees), must follow the designation terms of a DRO that 'satisfies the QDRO requirements,' but contradicts a designation made pursuant to the plan terms." (NYSBA Family Law Review Newsletter via Social Science Research Network)

[Guidance Overview]
Notice with Plan Document Correction Procedures for 409A Goes Way Beyond Correction Procedures

Excerpt: "On January 5, 2010, the IRS issued Notice 2010-6, Relief and Guidance on Corrections of Certain Failures of a Nonqualified Deferred Compensation Plan to Comply with § 409A(a) (the 'Notice'). Importantly, the Notice does much more than just offer correction methods. It contains numerous examples of situations that the 409A final regulations do not clearly address - and provides for significant penalties for many plan provisions that a normal person might view as a foot fault." (Michael Melbinger via Winston & Strawn LLP)

[Guidance Overview]
Document Correction Guidance Under Section 409A

Excerpt: "Groom principals, Brigen Winters and Jeffrey Kroh, provide an overview of Notice 2010-6, which provides 'reasonable solutions' on how to fix Section 409A plan document failures. In addition to discussing the various types of corrections available and summarizing substantive guidance provided in the notice, the authors identify significant advantages to making corrections in 2010 under the notice's special transition rules." (Groom Law Group)

Official Summary of the Wall Street Compensation Reform Act of 2010 (PDF)
3 pages. (American Benefits Council)

Employee Ownership Update for January 15, 2010
Corey Rosen discusses the following: Promoters are offering to install ERSOPs (employee retirement stock ownership plans) at a low cost, but you should get a second opinion. A bill would exclude from gross income compensation received by employees in the form of employer stock held for at least 10 years. Some object to recent stock option repricings. The change in basis step-up rules for 2010 has implications for the estates of those who sold to an ESOP and elected the Section 1042 tax deferral. (National Center for Employee Ownership)

Press Releases

National Federation of Nurses Applauds Agreement to Exempt Union Health Plans from Tax on Worker’s Healthcare Benefits
National Federation of Nurses

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