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March 23, 2010

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[Official Guidance]
Text of DOL Announcement of Model COBRA Notices, Revised to Reflect March 2, 2010 Extension and Changes (PDF)
3 pages. Excerpt: "In an effort to ensure that the notices include all of the information required under ARRA, as amended, while minimizing the burden imposed on group health plans and issuers, the Department has created several packages. As with those models previously developed by the Department, each of the new packages is designed for a particular group of qualified beneficiaries, and contains all of the information needed to satisfy the content requirements for ARRA's new and amended notice provisions. The packages include the following disclosures: [1] A summary of ARRA's premium reduction provisions. [2] A form to request the premium reduction. [3] A form for plans (or issuers) that permit qualified beneficiaries to switch coverage options to use to satisfy ARRA's requirement to give notice of this option. [4] A form for an individual to use to satisfy ARRA's requirement to notify the plan (or issuer) that the individual is eligible for other group health plan coverage or Medicare. [5] COBRA election forms and information, as appropriate."
(U.S. Employee Benefits Security Administration)

[Guidance Overview]
Federal Government Delay in Enforcement of Certain HITECH Changes to HIPAA Privacy and Security Rules
Excerpt: "[T]he Office for Civil Rights (OCR) within the Department of Health and Human Services, posted a notice on its Web site that appears to indicate that enforcement and compliance regarding certain provisions of HITECH will occur when OCR completes its rulemaking process for those requirements."
(The Segal Group, Inc.)

[Guidance Overview]
Model Notices for the COBRA Subsidy Extension Provisions of the Temporary Extension Act (PDF)
Excerpt: "Insurance issuers that offer group health insurance coverage that is subject to comparable continuation coverage requirements imposed by State law must provide the Alternative Notice to ALL qualified beneficiaries, not just covered employees, who have experienced a qualifying event through March 31, 2010. However, because continuation coverage requirements vary among States, it should be further modified to reflect the requirements of the applicable State law. Issuers of group health insurance coverage subject to this notice requirement should feel free to use the model Alternative Notice, the model Notice of New Election Period, the model Supplemental Information Notice, the model Notice of Extended Election Period, or the model General Notice (as appropriate)."
(Groom Law Group)

[Guidance Overview]
HHS Intention to Issue Additional Regulations Implementing the HITECH Act, Including Business Associate Liability
Excerpt: "EBIA Comment: We note that there is no specific indication in the announcement as to when OCR expects to issue new regulations under the HITECH Act. In light of the strengthened enforcement provisions, health plans and their business associates are well advised to comply with the statutory requirements of the HITECH Act while they await issuance of the regulations."
(Employee Benefits Institute of America)

[Guidance Overview]
Claim for Failure to Provide COBRA Notice Should Have Been Brought Under PHSA, Not ERISA
Excerpt: "EBIA Comment: Because the PHSA's enforcement provision is narrower than ERISA's, the employee in this case may receive less relief than anticipated. Note also that the FMLA prohibits employers from discriminating or retaliating against employees or prospective employees for exercising their FMLA rights. For example, employers cannot use the taking of FMLA leave as a negative factor in employment actions, such as hiring, promotions, or disciplinary actions."
(Employee Benefits Institute of America)

[Guidance Overview]
DOL's New and Updated COBRA Premium Subsidy Notices and Updated Fact Sheet
Excerpt: "EBIA Comment: We previously raised the question of whether an individual who elects COBRA after a reduction of hours and continues it through the date of a subsequent involuntary termination of employment will be entitled to any period of subsidy. The new guidance and notices make clear that these individuals will be AEIs entitled to the premium reduction. But when does the premium reduction begin? This question is not addressed explicitly in the guidance, but based on our reading of ARRA's basic premium subsidy right and these notices, we think the subsidy begins at the point of the involuntary termination . . . ."
(Employee Benefits Institute of America)

Key Employment-Related Provisions in Federal Health Care Reform Legislation
Excerpt: "For the first time, employers will be subjected to taxes if they do not offer coverage to employees or if the coverage fails an affordability test. In some cases within a few months, employers will have to change the design of their plans to comply with a wide range of new requirements, such as continuing coverage to employees' adult children. Some benefit programs, such as flexible spending accounts, will have to be cut back; others, most notably prescription drug plans provided to Medicare-eligible retirees, will lose tax breaks."
(Workforce Management; free registration required)

Employer Responsibilities Under Health Care Reform
Preventive care is examined.
(Wolters Kluwer)

House Subcommittee to Examine Strategies to Support a Healthy Work-Life Balance
This hearing has been postponed. Excerpt: "Achieving a healthy work-life balance is a real challenge for many American families. On Tuesday, March 23, the Workforce Protections Subcommittee of the House Committee on Education and Labor will examine the Work-Life Balance Award Act of 2010 (H.R. 4855). The legislation, authored by subcommittee chairwoman Rep. Lynn Woolsey and committee chairman Rep. George Miller, recognizes on an annual basis exemplary employers that provide their employees the ability to achieve a work-life balance through the creation of a Work-Life Balance Award within the Department of Labor."
(U.S. House of Representatives, Committee on Education & Labor)

Uncertainty Reigns on Health Care Reform
Excerpt: "The bulk of the changes involved in the healthcare reform bill approved by the House on Sunday as well as the soon-to-be-acted-upon reconciliation in the Senate won't impact employers until 2014 and 2018. And with fierce opposition continuing, a wise HR leader may opt to just take a wait-and-see attitude. A few changes will go into effect later this year, however."
(Human Resource Executive Online)

Health Care Reform Update, as of March 22, 2010 (PDF)
27 pages. Excerpt: "[This] chart summarizes key provisions [of the Patient Protection and Affordable Care] Act in the areas of insurance market reform, the individual and employer mandates, the Exchange provisions, and tax 'revenue raisers.'"
(Groom Law Group)

Overhaul of Health Care Will Cause Many Companies Pain for the Short Term, But Not As Much As Originally Feared
Excerpt: "[T]he reconciliation bill raises the penalty for companies that do not offer health-care coverage to $2,000 per employee, up from $750 per employee in the original version. Part-time workers must also be considered when companies determine whether or not they must provide insurance or pay a penalty. On the positive side, the bill modifies the excise tax on high-value or 'Cadillac' plans, pushing out its implementation to 2018 and creating the possibility that the coverage levels that would trigger the tax will be reset according to standard policy rates eight years from now."

Paid Sick Leave in the United States (PDF)
4 pages. Excerpt: "This issue of Program Perspectives takes a closer look at paid sick leave benefits, including both the percentage of employees with access to paid sick leave benefits and employer costs for sick leave. Short-term disability plans are also discussed."
(U.S. Bureau of Labor Statistics)

The Patient Protection and Affordable Care Act, H.R. 3590, Passed by Congress Sunday, Contains Numerous Tax Provisions
Excerpt: "The act requires employers to disclose on each employee's annual Form W-2 the value of the employee's health insurance coverage sponsored by the employer, effective for tax years beginning after Dec. 31, 2010. The act requires businesses to file an information return (e.g., a Form 1099) for all payments aggregating $600 or more in a calendar year to a single payee, including corporations (other than a payee that is a tax-exempt corporation). The provision is effective for payments made after Dec. 31, 2011."
(American Institute of Certified Public Accountants)

Small Business Owners Unclear on Health Care Impact
Excerpt: "The health care bill will affect businesses of all sizes -- from mega corporations to those with just one or two workers. And it will affect them in dramatically different ways. For instance, provisions exist for companies that have fewer than 10 employees -- and for those with fewer than 100. 'For small and medium business owners, the impact is not going to be immediate,' says Dave Osterndorf, chief actuary of consulting firm Towers Watson's global health and welfare practice. A look at some of the provisions and their effects . . . ."

Health Care: What You Could See This Year and the Years Ahead
Excerpt: "The health care bill sent to President Obama and the House-passed changes the Senate is considering would dramatically change how health care is delivered in the USA over the next decade. USA TODAY's John Fritze and Eugene Kiely look at some of the major provisions in the legislation and when they would take effect. [Expand the 'years' to read the provisions.]"

Updated Interactive Tables on Health System and Insurance Reforms
View interactive tables for side-by-side comparisons of the system reforms and insurance coverage provisions in the congressional health reform bills -- including President Obama's proposal and the reconciliation bill.
(The Commonwealth Fund)

Congress Passes Major Health Care Reform; Senate to Take Up Reconciliation Bill This Week
Excerpt: "[March 21], the House of Representatives passed the Senate's Patient Protection and Affordable Care Act (H.R. 3590), as well as the Health Care & Education Affordability Reconciliation Act of 2010 (H.R. 4872). President Obama is expected to sign H.R. 3590 into law, while H.R. 4872 is expected to move to the Senate for a vote this week. These comprehensive reform bills mark the most significant change to the nation's health care laws in at least four decades, although the final details of health care legislation remain subject to additional political maneuvering."
(Seyfarth Shaw LLP)

House Extension of COBRA Subsidy Through April
Excerpt: "The COBRA subsidy program set to expire at the end of March would allow individuals to qualify for the subsidy through April 30, 2010, under a bill (HR 4851) passed by the House March 17. The House proposal must be reconciled with a Senate-passed measure with a Dec. 31, 2010, end-date. How and when the chambers might do so is unclear; a June 30, 2010, end-date proposal passed by the House last year may also be in the mix. While the White House wants to extend the program through the end of the year, the limited duration House proposals underscore concerns about the program's costs."
(Mercer LLC)

Employer Health Costs Rise, Despite Zero Inflation
Excerpt: "The analysis from Thomson Reuters looked at medical claims data from 144 companies that provide health benefits to 9.5 million people from 2007 to 2009. The rate of health care inflation accelerated in 2009 for employers, increasing from 6.1% in 2008 to 7.3% in 2009. The increase is particularly striking, given that the overall U.S. inflation rate, as measured by the Consumer Price Index, declined by 0.4% in 2009."
(Employee Benefit News; free registration required)

Health Care Reform in a Nutshell
Excerpt: "Many employees will look to their employers for an explanation of the immediate and long-term impact of the legislation, and will want to know how (and when) their employer-provided benefits may change. Employers should craft their communications carefully to avoid making any promises which could trigger ERISA liability in the future. Here is a short Q&A which describes the key elements of the final bills . . . ."
(Ivins, Phillips & Barker, Chartered)

House Passes Historic Two-Part Health Care Reform Legislation
Excerpt: "Congress's seemingly endless march toward enacting comprehensive health care reform legislation is coming to a close with a very large and complex new law as the outcome. The new law will have significant strategic and tactical implications for employers' reward strategies and employee health plans in the years to come."
(Towers Watson)

Patient Protection and Affordable Care Act Passed by House on March 21, 2010
This issue of 'Stat! Health Reform Weekly' summarizes the significant aspects of the Act that plan sponsors will need to focus on immediately.
(The Segal Group, Inc.)

States Take Aim to Block Health Care Plan
Excerpt: "Bills and resolutions have been introduced in at least 36 state legislatures seeking to limit or oppose various aspects of the reform plan through laws or state constitutional amendments, according to the National Conference of State Legislatures."
(Reuters via Yahoo!News)

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Executive Compensation; Benefits in General

[Official Guidance]
Text of IRS Notice 2010-27: Adjusted Limits for Section 911 Foreign Earned Income and Housing Exclusions (PDF)
Notice 2010-27 provides adjusted limitations on housing expenses for tax year 2010 for purposes of the foreign earned income and housing exclusion, section 911 of the Internal Revenue Code. These increases reflect areas with higher housing costs, relative to housing costs in the United States. Generally, this guidance is issued annually.
(Internal Revenue Service)

[Guidance Overview]
VEBA Barred from Allocating Investment Income to Payment of Benefits to Avoid Tax on Unrelated Business Income
Excerpt: "A voluntary employees' beneficiary association (VEBAs) may not allocate investment income to the payment of member benefits in order to avoid the limit on 'exempt function' income, and thus avoid the tax on unrelated business income, the U.S. Court of Appeals for the Federal Circuit (CA-FC) has ruled in CNG Transmission Management VEBA v. United States."
(Wolters Kluwer)

Stock Options: Project Delay Results in Vesting, to Company's Chagrin
Excerpt: "It's hard to predict the future. Which makes it especially hard to describe the future in a legal document. One company's inability to anticipate the degree to which a project might be scaled back has apparently allowed an executive to vest in more options than the company intended. This was the result in Lewitton v. ITA Software, Inc., 585 F.3d 377 (7th Cir. 2009)."
(Utz, Miller & Eickman, LLC)

New SEC Staff Guidance Addresses Nonequity Award and Consultant Fee Disclosure
Excerpt: "The latest proxy disclosure guidance from SEC staff includes new Compliance & Disclosure Interpretations (C&DIs 119.25 and 119.26) addressing how to handle voluntarily forfeited nonequity incentive plan awards and discretionary bonuses. Another new C&DI (133.12) clarifies what 'additional services' may trigger consultant fee disclosure."
(Mercer LLC)

Employment and Training Administration Clarifies Effect of HEART Act on FUTA Provisions
Excerpt: "The U.S. Employment and Training Administration (ETA) has issued a letter clarifying the application of the Heroes Earnings Assistance and Relief Tax Act of 2008 (HEART Act) to the provisions of the Federal Unemployment Tax Act (FUTA), specifically for certain foreign subsidiaries of U.S. companies under contract with the U.S. government. Since the HEART Act amended federal law to cover services performed outside the U.S. for FICA, but did not amend FUTA, differences now exist between FICA and FUTA for coverage of these services."
(International Foundation of Employee Benefit Plans)

The Hiring Incentives to Restore Employment Act Boosts Workforce, Increases Compliance Issues
Excerpt: "'The intent of the HIRE Act by Congress and the administration is to reinvigorate the workforce. While these measures will certainly be welcome by employers, staying compliant in this complex and quickly changing business environment can be a burden for companies of all sizes,' says Gary Butler, CEO of ADP, an outsourced HR, payroll and benefits administration services provider."
(Employee Benefit News; free registration required)

Follow-Up on Top-Hat Plans Blog
Excerpt: "After my Blog last week on 'Review the Coverage of Your Top-Hat Plan, Before Someone Else Does . . .,' several readers [asked] for a list of some of the relevant cases - which I sent them. It is a long list. However, if you want to get up to speed quickly by reading just one case, I suggest Fishman v. Zurich American Insurance Company, 539 F.Supp. 2d 1036 (N.D.IL 2008). Maybe I am biased, but I think that one of the best and most recent summaries of the case law in this area is from the courthouse down the street us."
(Michael Melbinger via Winston & Strawn LLP)

Webcasts and Conferences

"401(k) Plan Workshop: Current Issues and New Developments" - Boston
in Massachusetts on April 22, 2010
presented by SunGard Relius

"401(k) Plan Workshop: Current Issues and New Developments" - New York
in New York on April 23, 2010
presented by SunGard Relius

"Form 5500/EFAST2 Workshop" - Boston
in Massachusetts on April 21, 2010
presented by SunGard Relius

"Form 5500/EFAST2 Workshop" - Indianapolis
in Indiana on April 21, 2010
presented by SunGard Relius

"Form 5500/EFAST2 Workshop" - Madison
in Wisconsin on April 22, 2010
presented by SunGard Relius

"Form 5500/EFAST2 Workshop" - New York
in New York on April 22, 2010
presented by SunGard Relius

After Health Reform: Reduce Costs and Simplify Open and Ongoing Enrollment (No-cost Webinar)
Nationwide on April 8, 2010
presented by Benefit Software Inc.

COBRA Provisions in ARRA and HIPAA Compliance Webcast
Nationwide on March 24, 2010
presented by U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

Press Releases

ASPPA Commends Move to Protect Retirement Income from Medicare Tax
American Society of Pension Professionals & Actuaries (ASPPA)

Pension Solutions, Inc. Is Certified To Industry Best Practices
Centre for Fiduciary Excellence (CEFEX)

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