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March 5, 2010

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[Guidance Overview]
Latest Extension of COBRA Subsidy Also Brings Change in Rules for Handling Reduction in Work Hours
Excerpt: "The IRS [previously said] that a reduction in work hours, although also a COBRA qualifying event, would not constitute an involuntary termination of employment for [purposes of eligibility for the COBRA subsidy] -- unless the reduction in hours was a 'material negative change in the employment relationship' and this caused the employee to resign. . . . The Extension Act was apparently designed to change this result. It does so, however, only for employees meeting all of the following requirements: . . ."
(Spencer Fane Britt & Browne)

[Guidance Overview]
One-Month Extension to COBRA Subsidy Signed into Law on March 2, 2010
Excerpt: "Key provisions are highlighted below, as well as a summary of possible future COBRA subsidy legislation."
(Groom Law Group)

[Guidance Overview]
Clarifications Needed Under New COBRA Subsidy Extension
Excerpt: "* Does the Act require retroactive application where the involuntary termination of employment occurred before March 2, 2010? (It appears that it does not.) * For qualified beneficiaries who elected COBRA on account of the reduction in hours is retroactive application of the subsidy required? (It appears that it is not.) * If a qualified beneficiary wants to retroactively elect and pay for COBRA coverage between the date of the reduction in hours and the involuntary termination of employment, is the group health plan required to allow him/her to do so? (It appears that is not required.)"
(Miller Johnson)

[Guidance Overview]
COBRA Subsidy Law Carries New Enforcement Provision
Excerpt: "To encourage the proper administration of the subsidy, Congress has added additional enforcement provisions. The Act provides that either the Department of Labor or the affected individual can sue an employer to enforce the Department of Labor's decision to overturn a subsidy denial. In addition, the Secretary of Labor now has the authority to impose a penalty of up to $110 per day on the plan sponsor or health insurer for a failure to provide the subsidy within ten days after being notified by the Department of Labor that the denial has been overturned."
(Thorp Reed & Armstrong)

[Guidance Overview]
COBRA Subsidy Extender Includes 'Clarification' on Participants Who Lost Coverage Due to Reduction in Hours (PDF)
Excerpt: "The Temporary Extension Act states that an employee who loses (or will lose) eligibility for health benefits due to a reduction in hours during the time that the COBRA subsidy is in effect (currently between September 1, 2008, and March 31, 2010), and who is involuntarily terminated between March 2, 2010, and March 31, 2010 (unless extended), is potentially eligible for the COBRA subsidy. This is the case even if the employee did not originally elect COBRA, or let his or her COBRA coverage lapse, after the reduction in hours."
(Jones Walker)

[Guidance Overview]
DOL Provides Spanish Version of CHIP Notice
Excerpt: "The Department of Labor's Employee Benefits Security Administration has posted a Spanish version of the Model Notice for employers to use to regarding eligibility for premium assistance under Medicaid or the Children's Health Insurance Program (CHIP)."

[Guidance Overview]
Quality Stores Decision Muddies the Waters on the FICA Tax Treatment of Severance Pay
Excerpt: "After nearly two years of believing the issue was settled, on February 23, 2010, taxpayers were startled to learn that the U.S. District Court for the Western District of Michigan [affirmed a bankrup.tcy court decision that had ruled] that severance payments made to employees pursuant to an involuntary reduction in force were not 'wages' for FICA tax purposes. . . . The U.S. District Court's decision . . . will cause many employers to consider once again whether refund claims should be filed as a protective measure."
(Miller & Chevalier)

[Guidance Overview]
New Mental Health & Substance Abuse Parity Regulations May Require Health Plan Changes This Year
Excerpt: "The regulations are far more complex than anticipated and may require significant effort to ensure timely compliance. . . . Plan sponsors should consider all of their plan design options for complying with the 2008 Act, which may include more generous MH/SA benefits, less generous medical and surgical benefits, or some combination of the two."
(Ivins, Phillips & Barker)

[Guidance Overview]
California Supreme Court Limits Kin Care Law
Excerpt: "California has a leave law known as 'kin care.' It allows employees to use one-half of their annual sick leave entitlement to attend to the illness of a child, parent, spouse or domestic partner. What if a company does not offer an accrued sick leave benefit, but instead offers sickness absence policy, which provides for an uncapped number of paid days off for illness? The California Supreme Court addressed this question . . . ."
(Barker Olmsted & Barnier)

Former Execs of Bankrupt HSA Administrator Accused of Fraud
Excerpt: "The FBI also alleges that the men used phony bank statements to conceal the diversion of approximately $19 million from HSAs and FSAs to Canopy's operating accounts in 2009, which they then misappropriated for their own use."
(Workforce Management)

Medical Tourism Can Generate 20% to 80% Savings for Employers
Excerpt: "There is growing interest by self-funded and fully insured employers in offering medical tourism as an option in their benefit packages. In medical tourism, patients go overseas for hip replacements and other non-emergency procedures. The patients often combine the treatment with a vacation, then return home for follow-up care."
(Thompson Publishing Group)

Health Advocacy Services Poised for Growth As Next-Generation Elder Care Benefit
Excerpt: "[S]ome employers are recognizing that health advocacy services -- which help employees battle with health care bureaucracies over the care they provide to the employees themselves or their family members -- can be a valuable elder care benefit. That's because health advocacy services say their counselors are happy to go to bat for employees' aging parents."
(Employee Benefit News)

Wisconsin Bill Would Require Listing of Medical Procedure Costs
Excerpt: "The state Senate and Assembly have passed legislation that will require hospitals to disclose average prices for the 75 most common inpatient services and 75 most common outpatient services based on their contracts with commercial health plans. The legislation also requires the same information be disclosed for the 25 most common services provided by free-standing outpatient facilities, such as surgical and imaging centers, and by doctors."
(Milwaukee Journal Sentinel)

13 Questions to Ask On-Site Health Clinic Vendors
Excerpt: "How can you evaluate which clinics are the best? Here, in the opinion of a health care analyst and clinic company advisor, are some questions and rationales to help identify the vendors that will be most likely to provide the best possible experience, quality improvement and savings."
(Workforce Management)

Work-Site Clinics Gain Favor as Retail Sites Lag
Excerpt: "Several years ago, pharmacies embraced retail clinics over work-site clinics with the thinking that as more employers used high-deductible health plans, more employees would be interested in low-cost alternatives for basic health care, like flu shots. That's beginning to change."
(Workforce Management)

Medical Tourism Grows; Hold On We're In For a Wild Ride
Excerpt: "[A]s long as these were private choices, the potential reach of medical tourism was muted, as was the controversy. But every healthcare insurer and large employer is now actively scrutinizing the concept, and many find it quite appealing. Of course, sensitive to the politics, it is unlikely that any of them will flat-out force their customers/employees to travel to Thailand or Singapore."
(The Health Care Blog)

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

RiskMetrics Group Releases Governance Risk Indicators (GRId) Tool to Measure Governance-Related Risk (PDF)
Excerpt: "GRId will measure the level of risk in the following four governance categories at three different 'concern' levels . . . 1. Audit; 2. Board; 3. Compensation; 4. Shareholder Rights"
(Frederick W. Cook & Co., Inc.)

Reish & Reicher ERISA Controversy Report, March 2010 (PDF)
Articles include 'Issues In Terminating Defined Benefit Plans', 'IRS Audits and Bonding for 401(k) Plans', and 'The Litigation Benefits of a Self-Funded Disability Plan."
(Reish & Reicher)

Proposal for Reducing the Federal Deficit: Make 2011 Be a 'No COLA' Year
Excerpt: "I propose that we designate 2011 as the No COLA year. Under this proposal, in 2011 no cost-of-living adjustments would be implemented in the federal budget or tax law. When COLAs resume for 2012, any inflation which occurred in 2010 will be permanently disregarded. In a spirit of universal sacrifice, the suspension of COLAs in 2011 would be across-the-board. . . . The alternative of doing nothing is worse and will, in the long run, result in greater taxes and more disruption to entitlement and other spending programs."
(Prof. Edward Zelinsky via

Webcasts and Conferences

2009 Schedule C Reporting - Make Sure You're Ready! Webcast
Nationwide on April 12, 2010
presented by Thompson Interactive

2010 Los Angeles DC/401k Evaluation Summit
in California on April 13, 2010
presented by Xponential Growth Solutions

Press Releases

U.S. Labor Department Sues Trustees of Westra Construction Retirement Plan in Waupun, Wis., Over Plan Losses
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

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