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February 24, 2010

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[Guidance Overview]
Medicare Mandatory Reporting Requirements Update
Excerpt: "First, a recurring problem for [a Responsible Reporting Entity] is obtaining HICN or SSN information of participants and their dependents. Because of heightened awareness of the risks of identity theft, individuals may be reluctant to provide HICN or SSN information. In response to this problem, CMS has issued guidance advising participants and dependents to cooperate with RRE requests for HICN or SSN information. CMS issued a revised model collection form in August 2009 that RREs may use to assist them in obtaining individuals' HICN or SSN information."
(Warner Norcross & Judd LLP)

[Guidance Overview]
Banking Kin Care: Employer Kin Care Leave Obligations Arise Only When Policies Provide Accrual-Based Sick Leave
Excerpt: "California has a 'kin care' statute, Labor Code section 233, which requires that employees entitled to accrued sick leave can use some of it to care for ill relatives. On February 18, 2010, in McCarther v. Pacific Telesis Group, the California Supreme Court ruled that section 233 does not apply to paid sick leave policies that provide for an uncapped number of compensated days off. In other words, the Court concluded that the kin care statute does not apply to all forms of compensated time off for illness, but only to 'sick leave' as defined by the statute."
(Seyfarth Shaw LLP)

[Guidance Overview]
Supreme Court Won't Review Whether Unisys Misled Participants
Excerpt: "The U.S. Supreme Court has denied a petition to decide whether Unisys Corp. breached its fiduciary duties by telling a dozen former workers that they could get lifetime benefits for free or at a low cost, but not disclosing that Unisys could change the retirees' health coverage."

[Guidance Overview]
Mental Health and Substance Abuse Benefits Must Meet New Parity Rules
Excerpt: "Sweeping regulations implementing the Mental Health Parity and Addiction Equity Act of 2008 give long-awaited guidance to ensure group health plans do not discriminate in benefits for mental health and substance abuse. While clarifying permitted and prohibited benefit features, the regulations set out data-intensive, numerical parity tests that may complicate evaluating certain plan designs. Other tests are more subjective, leaving uncertainty about some design elements. This Update answers basic questions about the new rules and offers practical dos and don'ts for employers to consider."
(Mercer LLC)

[Guidance Overview]
Sixth Circuit Rules That Equitable Lien Does Not Attach to Social Security Benefits
Excerpt: "[U]nder 42 U.S.C. § 407(a) (generally prohibiting alienation or attachment of future Social Security payments), courts are not permitted to place a lien directly on Social Security benefits themselves. The equitable lien in this case must therefore be limited to a specifically identifiable fund (the overpayments themselves) within Hall's general assets. The Plan cannot have a claim to Hall's Social Security benefits prior to the point at which they are in her possession. Thus, the Court concluded that the lien in question, imposed directly on Hall's Social Security benefits, is not permitted."
(Passion for Subro!)

[Guidance Overview]
New Form 8928 Issued for Reporting Group Health Plan Excise Taxes
Excerpt: "New Form 8928 has been issued for employers and plan administrators to self-report their failure to comply with various group health plan requirements. Effective with the 2010 plan or taxable year, reporting is required for the failure to comply with COBRA, HIPAA, Parity in Mental Health and Substance Use Disorders, the comparable contribution requirement for Health Savings Accounts and Archer Medical Savings Accounts, and others."
(Deloitte via

[Guidance Overview]
No COBRA Election Notice Was Required for Employee Who Canceled Her Insurance Coverage Shortly Before She Was Terminated
Excerpt: "EBIA Comment: Termination of employment is one of seven possible 'triggering events' that can lead to a COBRA election notice requirement, if other qualifying event conditions are present. But when, as here, the termination of employment doesn't cause a loss of coverage, no COBRA qualifying event occurs. Furthermore, cancellation of coverage is not one of the seven possible triggering events."
(Employee Benefits Institute of America)

House to Vote on Ending Insurer Antitrust Exemption Today
Excerpt: "Dow Jones Newswires/The Wall Street Journal: 'The bill, which the U.S. House of Representatives will vote on Wednesday, would remove insurers' long-time exemption to competition laws, which Democrats hope will lower premiums in insurance markets by giving consumers more choices.' The White House Office of Management and Budget said 'this bill will benefit the American health-care consumer by ensuring that competition has a prominent role in reforming health insurance markets throughout the nation.'"
(Kaiser Family Foundation)

Insurance Coverage for Treating Kids' Obesity Gets More Comprehensive
Excerpt: "Parents of overweight and obese children face a heavy burden in navigating a complex health-care system that does little to help them change their kids' course. But a growing number of employers and health insurers are trying to make it easier to get such help."
(MarketWatch, Inc.)

Bill Seeks Transparency in Federal Employees' Health Program
Excerpt: "Bringing more transparency to the program is a prime objective of legislation considered during a hearing Tuesday by the House Oversight and Government Reform subcommittee on the federal workforce, Postal Service and the District. It followed another hearing in June and a forum in September on what subcommittee Chairman Stephen F. Lynch (D-Mass.) called 'an opaque and flawed health benefit design' that results in higher drug costs than are found in other federal programs."
(The Washington Post; free registration required)

Purchasing Value in Health Care: Selected Findings from the 15th Annual National Business Group on Health/Towers Watson Survey Report
Excerpt: "The results of this year's survey . . . show employers are frustrated by employees' poor health habits and are struggling to effectively motivate behavior change. Additionally, they are uncertain about the future of employer-sponsored benefits, especially in light of the potential for health care reform legislation. Against this backdrop, employers are doing more to hold the line on costs and achieve better health and productivity outcomes."
(Towers Watson)

Workers with Depression, Although Treated, Have More Disability Absences, According to Study
Excerpt: "Depressed workers who are already receiving treatment are twice as likely as their 'healthy' counterparts to use short-term disability and disability leave, according to an article published in the February issue of the Journal of Occupational and Environmental Medicine."
(Wolters Kluwer)

White House Health Reform Proposal Makes Changes to the Senate Bill (PDF)
1 page. Excerpt: "On February 22, the White House released 'The President's Proposal,' which largely follows the Senate health care reform bill, but includes several significant modifications reflecting priorities of the House and the Administration."
(Buck Consultants)

Interview With Douglas A. Grimm: Will Privacy Concerns Slow Electronic Health Record Adoption Rates? (PDF)
4 pages. Excerpt: "Since electronic health records are designed to follow patients wherever they might seek care, HIPAA covered entities and business associates must act in concert, otherwise they will simply become the weakest link in the chain. Ideally, effective data protection practices will be further strengthened by the widespread adoption of electronic health records, and will unlock the means for caregivers to improve patients' lives and for administrators to significantly reduce overhead and administration costs."
(ALEXeSOLUTIONS, INC. via Pillsbury Winthrop Shaw Pittman LLP)

VEBA Benefits Paid During Year Don't Reduce Unrelated Business Income, Court Confirms
Excerpt: "A voluntary employees' beneficiary association (VEBA) can't avoid unrelated business income tax by treating its annual costs as paid first from the VEBA's investment income and second from contributions, according to a recent federal appeals court decision . . . . The ruling, by the US Court of Appeals for the Federal Circuit, affirms a lower court's ruling. The appellate court's ruling differs from that issued in a similar case by the Sixth Circuit appeals court."
(Mercer LLC)

Bust the Health Care Trusts
Excerpt: "Congress should repeal the health insurance industry'sexemption from federal antitrust laws."
(Robert B. Reich via The New York Times; free registration required)

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Sponsored by ALM

Executive Compensation; Benefits in General

[Guidance Overview]
IRS Information Letters Address Qualified Nonpersonal Use Vehicles
Excerpt: "EBIA Comment: Since the inquiries were not submitted under the process for requesting formal rulings, these information letters provide only general information. Nevertheless, they put some meat on the bones when it comes to interpreting the scope of the exception for qualified nonpersonal use vehicles. As both letters illustrate, the exception is narrow, and in most cases an employee's personal use of an employer-provided vehicle will be includible in income."
(Employee Benefits Institute of America)

TARP Rules for Financial Institutions Trigger Broader Risk Assessment of Compensation Policies
Posted with the permission of the North Carolina Banking Institute journal, published at the University of North Carolina School of Law. Excerpt: "The world of executive compensation will never be the same for financial institutions after 2009. In fact, due to the crisis in the world's financial markets in 2009, the world of executive compensation most likely will never be the same for any publicly traded corporation."
(Winston & Strawn LLP)

RiskMetrics Group Addresses New SEC Pay and Governance Disclosures
Excerpt: "To address the SEC's new pay and corporate governance disclosure rules, proxy adviser RiskMetrics Group (RMG) has published frequently asked questions (FAQs) on changes related to (i) potential risks created by compensation programs; (ii) compensation consultant fees; and (iii) director qualifications, diversity policies, board leadership and risk oversight."
(Mercer LLC)

Brief for the United States As Amicus Curiae supporting respondents in Conkright, et al., petitioners v. Paul J. Frommert
Excerpt: "1. Whether, in this case under Section 502(a)(1)(B) of the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. 1132(a)(1)(B), the court of appeals correctly held that plan administrators were not entitled to deference to their second interpretation of the plan when the court had found that their prior interpretation of the same plan terms was arbitrary and capricious and violated ERISA. 2. Whether the court of appeals correctly upheld the district court's choice of remedy under an abuse-of-discretion standard."
(U.S. Department of Labor)

West Virginia County School Boards File Suit over OPEB Funding
Excerpt: "A lawsuit has been filed on behalf of 50 of West Virginia's 55 county boards of education regarding the reporting and funding of Other Post Employment Benefits (OPEB). A report on news station WBOY's Web site said the boards argue in the suit that they should not be obligated to contribute more to the West Virginia Retiree Health Benefit Trust Fund than the amount of funding they receive from the state to take care of those OPEB costs."

Cost Benefit Analysis on Proposed Regulations Requires a Long View
Excerpt: "Most of us do not want to be burdened by more rules. However, new guidance needs to be evaluated through a cost-benefit analysis over the long term. The message to both the DoL and fiduciaries is that they need to focus more on the long-term issues for improving retirement benefits and less on short-term cost -- so long as the long-term value is there."

Webcasts and Conferences

"409A Forgiveness: Round 2" Web Seminar - Date Change
Nationwide on March 4, 2010
presented by SunGard Relius

New Regulations Require Immediate Attention From 403(b) Plan Sponsors
Nationwide on March 10, 2010
presented by RSM McGladrey, Inc.

Press Releases

Texas Business Owner Sued by U.S. Department of Labor Over Misuse of 401(k) Contributions and Loan Repayments
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

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