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Health & Welfare Plans Newsletter

March 16, 2010

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[Official Guidance]
Text of Updated Fact Sheet on COBRA Premium Reductions
Excerpt: "The premium reduction for COBRA continuation coverage is available to 'assistance eligible individuals'. An 'assistance eligible individual' is the employee or a member of his/her family who elects COBRA coverage timely following a qualifying event related to an involuntary termination of employment that occurs at any point from: September 1, 2008 through March 31, 2010; or March 2, 2010 through March 31, 2010 if: the involuntary termination follows a qualifying event that was a reduction of hours; and the reduction of hours occurred at any time from September 1, 2008 through March 31, 2010."
(U.S. Employee Benefits Security Administration)

[Guidance Overview]
Insurance Company Not a Proper Defendant in ERISA Benefit Claim Lawsuit
Excerpt: "EBIA Comment: Many employers prefer to insure, rather than self-insure, their employee benefits, in part because they assume that the insurance company, which is obligated under its policy to pay plan benefits, will be the defendant in benefits litigation. Under the reasoning of this decision, however, the employer may be the proper defendant, because in most cases the employer is the plan administrator. This decision relies on appeals court precedent in the Ninth Circuit (which covers nine Western states, including California). Appeals courts in other parts of the country permit benefit claimants to sue insurance companies, but an employer that finds itself as the only defendant in benefits litigation may wish to explore other procedural methods of bringing its insurer back into the case."
(Employee Benefits Institute of America)

[Guidance Overview]
No Disability Extension for Employee Who Failed to Give Timely Notice of SSA Determination
Excerpt: "EBIA Comment: This case highlights that courts may strictly enforce the notice obligations imposed on qualified beneficiaries in order to receive the 11-month disability extension under COBRA. But keep in mind that plan administrators may be limited in their ability to enforce such provisions unless qualified beneficiaries have been informed, through the plan's SPD or COBRA initial notice, about the plan's notice deadlines and procedures."
(Employee Benefits Institute of America)

[Guidance Overview]
Extension and Expansion of the COBRA Premium Subsidy Program (PDF)
Excerpt: "Plan sponsors and administrators should consider the following immediate action items: Identify New AEIs Due to Expanded Definition. Plan administrators will have to identify any Reduced Hours AEIs, and provide a new notice to them. An individual in this group may be eligible for the special election period if, upon a reduction in hours the individual did not elect, or elected and later discontinued, COBRA. Notices. Plan administrators should update their COBRA notices and other plan communications to include the extension of the eligibility period to March 31, 2010, and a description of the expanded coverage of Reduced Hours AEIs."
(Drinker Biddle & Reath LLP)

[Guidance Overview]
IRS's Updated Version of Publication 463 on Travel, Entertainment, Gift, and Car Expenses
Excerpt: "EBIA Comment: Publication 463 covers a lot of ground, but it is especially detailed and useful in its handling of the deductions for business use of an employee's vehicle. Those deductions will not apply if the employee's expenses are reimbursed under an accountable plan, in which case the employer reimbursements are excluded from income and the vehicle expenses are not deductible by the employee."
(Employee Benefits Institute of America)

Preparing for Health Reform: The Role of the Health Insurance Exchange (PDF)
9 pages. Excerpt: "This Issue Brief provides readers with an overview of the potential role of a health insurance exchange, state-specific issues that should be considered before establishing an exchange, and the different ways in which an exchange might be structured and operated. Regardless of the outcome of national health reform, a number of states are contemplating creating a health insurance exchange as a way to improve the individual and small group markets."
(Robert Wood Johnson Foundation)

Piecemeal COBRA Health Insurance Subsidy Extensions Puzzle Laid-Off Workers
Excerpt: "Every day, dozens of confused, laid-off workers call the privately-run COBRA Help Center in Long Island, N.Y., which administers COBRA group health insurance plans. They're struggling to understand whether they're eligible for federal subsidies. It's not surprising, says George Fox, a field underwriter for the company Planning Financial Futures Inc., that runs the center on behalf of employers and consumers."
(Henry J. Kaiser Family Foundation)

Drug Plan Sponsors Have Little Price Negotiation Leverage With Specialty Drug Companies
Excerpt: "Plan sponsors reported having little leverage to negotiate price concessions from manufacturers for most specialty tier-eligible drugs under Medicare Part D when there were few or no other treatment options, according to a recent report from the Government Accountability Office."
(Wolters Kluwer)

Paid Leave Benefit Costs in Private Industry, March 2009
Excerpt: "In December 2009, private industry employer costs for paid leave benefits averaged $1.86 per hour worked. Paid leave benefit costs were highest for management, professional, and related occupations, $4.05 per hour. Costs were lowest among service occupations, 58 cents per hour."
(U.S. Bureau of Labor Statistics)

Novel Health Plans Try To Help Uninsured
Excerpt: "The approach is called 'three share' because the $180 monthly premium is divvied up equally among the employer, the worker and the community. In Pueblo, two local hospitals pay the community portion."
(Henry J. Kaiser Family Foundation)

Carrot-and-Stick Health Plans Aim to Cut Costs
Excerpt: "Workers at a Portland, Ore., steel mill soon will be able to pick a new type of insurance that offers free care for some illnesses, such as diabetes or depression, but requires hefty extra fees for treatments deemed overused, including knee replacements, hysterectomies and heart bypass surgery. The insurance, which will be offered by five different insurers in Oregon, is the most far-reaching and potentially controversial step in an effort by employers nationally to rein in medical spending by redesigning health benefits."
(National Public Radio)

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]
IRS's New Section 409A Correction Program
Excerpt: "Notice 2010-6 provides a 'second chance' for employers to bring their deferred compensation arrangements in compliance with the Section 409A requirements. In our experience, some employers have 'discovered' deferred compensation arrangements that were not previously identified as being subject to Section 409A. Further, some Section 409A plans may still include provisions that do not satisfy the applicable requirements or may have not been operated in compliance with Section 409A."
(Miller, Johnson, Snell & Cummiskey, P.L.C.)

Employee Communications: Trends, Fads and What's Next
Excerpt: "Communication plays a critical role in engaging employees. Social media, eco-friendly, Web 2.0, traditional--which strategies and tactics connect most effectively with today's workforce?"
(Employee Benefit Adviser; free registration required)

Trends in the Employee Financial Picture (PDF)
15 pages. Excerpt: "From high deductible medical plans to shrinking pension and retirement plan contribution formulas, employees are increasingly faced with tough decisions about short-term and long-term finances. Many are in jeopardy when it comes to retirement planning yet may not realize it. Budgeting and savings calls are on rise, and for the first time since we began studying employee trends, they were on parity with debt calls."
(Financial Finesse, Inc.)

Options on the Flex-Work Menu
Excerpt: "Work-life experts caution that many flex-work programs appear more generous on paper than in practice and can be highly dependent on individual supervisors."
(National Public Radio)

More Employers Make Room for Work-Life Balance
Excerpt: "First, more and more employers are discovering that loosening the traditionally rigid work schedule pays off. Sleep says her retention rate over 16 years is an astonishing 95 percent. And study after study shows productivity also shoots up. More than half of companies now say they offer flextime, and one-third allow telecommuting at least part-time. On the other hand, research also shows that employees don't find their workplaces nearly as flexible as managers report."
(Morning Edition via National Public Radio)

Webcasts and Conferences

Fiduciary Education Webcast
Nationwide on March 18, 2010
presented by U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

Fiduciary Education Webcast
Nationwide on March 24, 2010
presented by U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

New Mental Health Parity and Addiction Equity Act Regulations: What You Need to Do to Comply
Nationwide on March 11, 2010
presented by EBIA / Thomson Reuters

Retirement Plan Option Webcast
Nationwide on March 25, 2010
presented by U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

Retirement Plans Determination Letter Program Phone Forum (Free)
Nationwide on March 31, 2010
presented by Internal Revenue Service (IRS)

Press Releases

U.S. Labor Department Sues Owner of Delaware-based Stover Industries to Recover Workers’ 401(k) Contributions
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

Recipient of 2010 Morningstar—ASPPA 401k Advisor Leadership Award Recognized
American Society of Pension Professionals & Actuaries (ASPPA)

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