Health & Welfare Plans Newsletter

February 8, 2010

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[Official Guidance]
Concerning Compensation Paid to Pharmacy Benefit Managers: Text of Newly Added FAQs 26 and 27 to DOL's Previously Issued FAQs on the Form 5500 Schedule C
(Scroll down to end of the target web page to see the two newly added questions.) FAQ 26 is "Pharmacy Benefit Managers (PBMs) provide services to plans and are compensated for these services in various ways. How should this compensation be reported?"; FAQ 27 is "PBMs may receive rebates or discounts from the pharmaceutical manufacturers based on the amount of drugs a PBM purchases or other factors. Do such rebates and discounts need to be reported as indirect compensation on Schedule C?"
(U.S. Employee Benefits Security Administration)

[Guidance Overview]
Agencies Issue Long-Awaited Mental Health Parity and Addiction Equity Act of 2008 Regulations for Group Health Plans
Excerpt: "EBIA Comment: There are many helpful examples and much detail in the new regulations -- we've only captured some of the key points. There are also some surprises, such as the rules for nonquantitative limitations and rules under which combinations of medical/surgical benefits and mental health or substance use disorder benefits may be treated as a single plan. Plan sponsors and service providers should start analyzing the impact of the rules soon in order to comply by the applicability date."
(Employee Benefits Institute of America)

[Guidance Overview]
DOL Model Employer CHIP Notice to Notify Employees Regarding Eligibility for Premium Assistance
Excerpt: "EBIA Comment: The provision of an Employer CHIP Notice is a brand-new disclosure obligation -- therefore, employers and their advisors will want to review the applicable requirements carefully. For instance, the delivery requirements provide that a separate mailing is not necessary. Thus, plans could furnish this notice along with other items, such as open enrollment materials or plan SPD, so long as it is timely provided to all employees entitled to the notice (however, this notice must appear separately and in a manner that ensures that an employee could reasonably be expected to appreciate its significance)."
(Employee Benefits Institute of America)

[Guidance Overview]
IRS Issues New Form 8928 on Excise Taxes for Failures to Comply with HSA Comparability, COBRA, HIPAA, and Other Group Health Plan Mandates
Excerpt: "EBIA Comment: This Form's publication likely signals increased focus on excise tax assessment for noncompliance with these various mandates. To help keep the excise tax risks to a minimum, cautious plan sponsors (and others, like TPAs and insurers, who may be liable) will follow an approach to compliance designed not only to prevent mistakes from happening but also to catch and correct the ones that inevitably fall through the cracks."
(Employee Benefits Institute of America)

States Look to Forestall Hypothetical Health Insurance Mandate
Excerpt: "Health care legislation in Washington may be stalled, but that has not stopped legislatures in more than two-thirds of the states from objecting to one of its central planks: a requirement that everyone buy health insurance. The objections, many of them driven by the Tea Party movement, may turn out to be largely symbolic. But they nonetheless serve notice to President Obama and the Democrats of real anger over their health care plans and signal the potential for political upheaval down the road."
(The New York Times; free registration required)

The Odds of a Disability Are Themselves Odd
Excerpt: "Welcome to the disability insurance funhouse, where the odds of an injury or illness that would keep you out of work for more than three months range wildly, depending on where you look for guidance. . . . So what are the actual odds? They're not clear-cut, as you may have guessed. But let's start with what they aren't."
(The New York Times; free registration required)

Report Compares Universal Health Care in Maryland to Massachusetts Model
Excerpt: "The report compared Maryland resources with the Massachusetts model of universal health care. It proclaims the private sector has resources in place to expand health care and urges to build on what's in place before creating a new state agency."
( via

Top 10 Health Law Issues for 2010
Excerpt: "The year 2010 brings heightened health care focus on compliance, reform efforts and enforcement."
(McDermott Will & Emery)

Podcast: Interview with PricewaterhouseCoopers on What Employers Want from Their Health Insurance Providers
Excerpt: "Kathryn Stein, managing director in PricewaterhouseCoopers' human resource services practice, discusses the firm's study about how satisfied employers are with their health insurance provider and what employers want in health benefits programs."

The Antitrust Exemption for Health Insurers: Meaningful or Meaningless?
Excerpt: "Proponents say that the legislation would spur competition among insurers and bring down costs for consumers. Reps. Tom Perriello, D-Va., and Betsy Markey, D-Colo., who are sponsoring the bill, said in a press release it would 'end special treatment for the insurance industry that allows them to fix prices, collude with each other, and set their own markets without fear of being investigated.'"
(Kaiser Family Foundation)

COBRA Subsidy Extension Included in Proposed Fiscal 2011 Budget
Excerpt: "Experts say employers should brace for another extension of the federal subsidy of COBRA health insurance premiums for involuntarily terminated employees, with the president and top Senate Democrats adding their support last week."
(Business Insurance)

Complete Benefits Law Guidance from Law Journal Press

The nation's workforce and health care system are constantly evolving and so are the legal issues. Law Journal Press helps you handle any benefits law question with up-to-date, authoritative books on all aspects of the field. Get legal and practical advice from leading experts on everything from COBRA to ERISA, "contingent" employees to family and medical leave, and more. Browse our product listings for detailed information and special offers.

Executive Compensation; Benefits in General

Four Creative, Low-Cost Ways to Educate Employees About Benefits
Excerpt: "One of the biggest challenges employers face when adding new benefits or conducting open enrollment is finding the time to educate employees about the changes or options. Here are some year-round tips for implementing effective benefits-education initiatives without breaking the bank."
(Workforce Management; free registration required)

Placement of the Compensation Risk Disclosure in the Proxy Statement
Excerpt: "'The new rules do not specify where the disclosure should be presented. However, to ease investor understanding, the staff recommends that Item 402(s) disclosure be presented together with the registrant's other Item 402 disclosure. The staff would have concerns if the Item 402(s) disclosure is difficult to locate or is presented in a fashion that obscures it.'"
(Michael Melbinger via Winston & Strawn LLP)

How to Get the Country to Solvency on Entitlements
Excerpt: "In 2013, when President Mitch Daniels, former Indiana governor, is counting his blessings, at the top of his list will be the name of his vice president: Paul Ryan. The former congressman from Wisconsin will have come to office with ideas for steering the federal government to solvency."
(George F. Will via The Washington Post; free registration required)

Current Economic Situation No Excuse for ERISA Shortcuts
Excerpt: "Business owners and leaders who are facing financial challenges should consider a mounting series of recent court orders and federal prosecutions as strong reminders of the personal risk they may face for mismanaging employee benefit programs governed by the Employee Retirement Income Security Act of 1974."
(Employee Benefit News; free registration required)

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