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Health & Welfare Plans Newsletter

February 17, 2010

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[Official Guidance]
Text of Updated Application for Expedited Review of Denial of COBRA Premium Reduction
The Department of Labor's Employee Benefits Security Administration has posted an updated Application for Expedited Review of Denial of COBRA Premium Reduction for the amendments to ARRA under the Department of Defense Appropriations Act, 2010. The application is available at
(U.S. Employee Benefits Security Administration)

[Guidance Overview]
Can't Keep Up with the FMLA-Military Amendments? Apparently, Neither Can the DOL
Excerpt: "The DOL website does not mention the latest amendments to the FMLA, and the mandatory FMLA poster doesn't comply. More importantly, the recommended certification forms for military caregiver or qualifying exigency leave have not been updated to conform with the latest amendments, and reliance upon the forms that are currently in use could cause an employer to unknowingly violate the law by denying leave to an employee who is entitled to leave."
(Constangy, Brooks & Smith, LLP)

[Guidance Overview]
Extension of Health Benefits to Children and Domestic Partners Who Are Not Tax Dependents
3 pages. Excerpt: "An employer could avoid the issues noted [in this article] by requiring employees to pay the entire cost of coverage of Non-tax Dependents from their own pockets with after-tax dollars. For plans not subject to ERISA, state law should be reviewed to determine if the employer could require the employee to pay the entire amount."
(von Briesen & Roper, s.c.)

[Guidance Overview]
Employers Offering Mental Health/Substance Use Benefits Should Evaluate Group Health Plan Design to Ensure Compliance with Requirements of Interim Final Regulations
Excerpt: "Specifically, group health plans must ensure that the financial requirements (such as copayments and deductibles) and treatment limitations (such as a limit on covered office visits) applicable to mental health and/or substance use disorder benefits are no more restrictive than the predominant requirements and limitations applied to substantially all medical and surgical benefits. The interim final regulations clarify that substantially all means at least two-thirds and predominant means more than one-half."
(McDermott Will & Emery)

Some Heart Care Costs Stay Outside Insurance Coverage; Lowe's Does National Comparison Shopping For Employees' Heart Surgery
Excerpt: "[H]ardware store chain Lowe's has decided to shop nationally for 'the best deal in heart surgery for its employees and it landed at the Cleveland Clinic,' The Cleveland Plain Dealer reports. 'The nation's second-largest home improvement retailer reached a three-year agreement with the Clinic. The deal was praised widely as a groundbreaking business effort to purchase health care based on documented quality and value."
(Kaiser Family Foundation)

National Health Expenditure Accounts: Insights for Plan Sponsors
Excerpt: "Spending by private-sector employers on health insurance grew quite slowly in 2008, reflecting both declining enrollments and greater cost sharing with employees and retirees. (These trends, however, have not been seen as yet in the government sector's health spending for its workers and retirees.) Overall, both price and especially nonprice factors in health care spending growth showed real restraint in 2008."
(Towers Watson)

Health Insurers Break Profit Records as 2.7 Million Americans Lose Coverage
Excerpt: "The five largest U.S. health insurance companies sailed through the worst economic downturn since the Great Depression to set new industry profit records in 2009, a feat accomplished by leaving behind 2.7 million Americans who had been in private health plans. For customers who kept their benefits, the insurers raised rates and cost-sharing, and cut the share of premiums spent on medical care."
(Health Care for American Now via Physicians for a National Health Program)

Employed Caregivers' Health Problems Cost Companies $13.4 Billion Annually
Excerpt: "Workers in the U.S. who are caring for an older relative are more likely to report health problems such as depression, diabetes, hypertension, or heart disease, boosting employers' health care costs by an estimated average 8%, or $13.4 billion per year, according to the MetLife Study of Working Caregivers and Employer Health Care Costs."
(Wolters Kluwer)

'Willful Neglect' Is Difficult to Pin Down, but Can Result in Enormous HIPAA Penalties
Excerpt: "A privacy breach due to 'willful neglect' that was corrected within 30 days and affected 100 individuals, which would have cost an organization $10,000 in prior years, will now cost a minimum of $1 million. Covered entities (CEs) -- and also business associates, who are now subject to civil and criminal penalties as of this month -- need to know what actions (or lack thereof) can push them into the 'willful neglect' category, which carries the most severe fines."

Democratic Leaders Say Extensions of Unemployment Insurance and COBRA Subsidy Should Be Emergency Spending
Excerpt: "With current extensions of unemployment and COBRA benefits set to expire at the end of the month and the jobless rate still near 10 percent, Democratic lawmakers want to pass the extensions quickly, without having to find offsets for the costs."
(The Hill)

The News Media Failed on Health Care Reform
Excerpt: "In the 2009 debate over health care reform, it can be argued that there was one particular factor that contributed to the current situation. It was not conservative opposition to liberal legislation or complex health-policy questions. In any substantive debate those problems would have existed, no matter which way the sides or issues were rotated. Rather, what failed in one of the first significant policy debates of the 21st century was the news media. Between the weblogs, television and newspapers, the amount of disinformation and gossip that was produced swallowed any substantive discussion that could have taken place."
(The Tufts Daily)

An Actuarial Rorschach Test for Health Care: The Latest 'Pulling It Together from Drew Altman'
Excerpt: "In his latest column, the Kaiser Family Foundation's President and CEO and Foundation colleagues Larry Levitt and Gary Claxton examine what the latest health spending projections from the Centers for Medicare and Medicaid Services tell us about trends in the nation's health care system and debunk the idea that they are further evidence of a government takeover of the health care system."
(Kaiser Family Foundation)

The World Congress 7th Annual World Health Care Congress | April 12 - 14, 2010 | Washington, DC
The MUST attend event for health care government and corporate leaders to formulate business strategies in a new era of reform and market competition!
Sponsored by World Congress

Executive Compensation; Benefits in General

[Guidance Overview]
SEC's Changes to Proxy Disclosure Rules
Excerpt: "Observation: Because the compensation committee does not sign off on the section with the compensation risk disclosure, the committee is not required to review the riskiness of compensation programs for employees other than NEOs. However, the higher profile of compensation risk and the separate disclosure of the board's involvement in risk management suggest the board should have some perspective on this issue. Similarly, the regulations suggest that compensation committees take a more active role in balancing the extent to which NEO compensation programs pay for performance versus encourage risk taking."
(Towers Watson)

[Guidance Overview]
Compensation Committees Should Reevaluate Bonus Plans as New IRS Deductibility Rules Take Effect (PDF)
1 page. Excerpt: "As compensation committees meet to set performance targets for 2010, they should keep in mind that the new IRS position regarding the deductibility of bonuses that may become payable if an executive is terminated, resigns, or retires during the performance period goes into effect for 2010 annual bonuses, and that multi-year LTIP performance periods begin January 1, 2010."
(Seyfarth Shaw LLP)

DOL Cracking Down on Employee Misclassification
Excerpt: "As part of its stepped-up enforcement of workplace laws, the Obama administration plans to crack down on companies that treat workers as independent contractors when their job duties are similar to those of an employee. In its proposed budget for fiscal 2011, the Department of Labor is allocating $25 million for a joint initiative with the Department of the Treasury to hire 100 investigators to target employers who misclassify their workforce."
(Workforce Management; free registration required)

Webcasts and Conferences

COBRA Compliance Workshop
in California on March 23, 2010
presented by U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

Interactive Online Voluntary Fiduciary Correction Program Workshop
Nationwide on February 23, 2010
presented by U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

Press Releases

Experts Agree a Tax on Health Plans Likely to Cut Benefits
Employee Benefit Research Institute (EBRI)

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