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Health & Welfare Plans Newsletter

March 24, 2010

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[Official Guidance]
Application for Expedited Review of Denial of COBRA Premium Reduction
Updated to reflect the March 2, 2010 extension. Excerpt: "The applicant (person requesting review of a denial of premium assistance) may either be the former employee or a member of the employee's family who is eligible for COBRA continuation coverage or the COBRA premium assistance through an employment-based health plan. The employee and his/her family members may each elect to continue health coverage under COBRA, request the premium assistance, and request a review of a denial of premium assistance."
(U.S. Employee Benefits Security Administration)

[Official Guidance]
FAQs on the COBRA Premium Reduction Extension Provisions
31 FAQs on the COBRA Premium Reduction Extension Provisions Related to The Temporary Extension Act of 2010.
(U.S. Employee Benefits Security Administration)

[Guidance Overview]
HIPAA Covered Entities Face Complex Challenges with Medical Records of Minors
Excerpt: "HIPAA's approach to minors and PHI may be one of the clearest in theory, but its application can get tricky. HIPAA defers to state laws, which generally allow parents access to their children's medical records until they're 18 -- with some exceptions."

[Guidance Overview]
Amended COBRA Subsidy Notices
Excerpt: "As you know, with the passage of the Temporary Extension Act of 2010 (the 'Act'), eligibility for the 15 month COBRA subsidy was recently extended by Congress to cover involuntary terminations occurring through March 31, 2010. As detailed in our most recent communiqué, the Act also added a new subsidy eligible qualifying event based upon a reduction of hours followed by an involuntary termination, as well as new enforcement provisions. The Department of Labor has now issued amended notices to comply with the Act's changes."
(Thorp Reed & Armstrong, LLP)

[Guidance Overview]
TPA Did Not Function As ERISA Fiduciary, Leaving it Open to State Law Breach of Contract Claims
Excerpt: "As health care costs continue to rise, and employers become more vigilant about policing benefit costs, it is perhaps inevitable that lawsuits by employers against their plan's TPA are likely to increase. A recent such case, W.E. Aubuchon Company, Inc. v. BeneFirst, LLC, 2009 WL 3272491 (D. Mass.), illustrates this trend. In its Complaint, Aubuchon alleged that BeneFirst committed claim processing errors that cost the Aubuchon Plan millions of dollars."
(Passion for Subro!)

[Guidance Overview]
Third Circuit Says Lay and Medical Evidence Sufficient to Show a 'Serious Health Condition' Under FMLA
Excerpt: "A federal appeals court in Philadelphia has ruled that an employee may use a combination of lay and medical testimony to establish that she has a 'serious health condition' under the Family and Medical Leave Act, even though lay testimony alone (her own) would not suffice to establish that such condition resulted in her incapacitation. Schaar v. Lehigh Valley Health Servs. Inc., No. 09-1635 (3d Cir. Mar. 11, 2010)."
(Jackson Lewis LLP)

The Health Reform Bill: What Do Employers Need to Know?
Excerpt: "The Bill contains broad reforms that make numerous significant changes to the ways in which healthcare is accessed, delivered and financed. Some of the noteworthy changes (and effective dates) for employers to consider are the following: Employers with 200 or more employees that sponsor a health plan must automatically enroll all employees in the employer-sponsored plan. Employees may opt-out of the employer plan if they demonstrate they have coverage from another source. (January 1, 2014) . . . ."
(Porter Wright Morris & Arthur LLP)

More Companies Plan to Use the Stick Approach for Employees Who Resist Corporate Wellness Efforts
Excerpt: "Corporate wellness programs will likely retain their popularity when health-care reform is implemented, say experts. In fact, the bill signed into law by President Obama on Tuesday contains limited incentives for employers to provide them. But to ensure that wellness programs are effective, companies are increasingly making them less voluntary, penalizing employees who choose not to participate."

Cost-Cutting Tactics Could Lead to More Heated Contract Disputes Between Plans and Providers
Excerpt: "Shrinking enrollment among health insurers -- combined with staffing shortages and rising medical costs among hospitals -- could lead to increasingly contentious contract negotiations in some parts of the country. Strict prior-authorization requirements and charge audits are being used more frequently by health plans to reduce reimbursements, according to several provider groups queried . . . ."

Health Care Reform Enacted: Reconciliation Continues (PDF)
12 pages. Excerpt: "The Patient Protection Act contains numerous revenue provisions, some affecting individuals, others affecting medical device manufacturers, others affecting services (e.g., indoor sun tanning). The [last chart on the target document] summarizes revenue provisions that will have a direct impact on employers generally . . . ."
(Vedder Price P.C.)

Health Care Reform Has Arrived As Have New Mandates on Employers and Medical Service Providers
Excerpt: "Employer Mandate. Effective January 1, 2014, the Reform Act assesses a fee of $750 per full-time employee (30+ hours per week) on employers with 50 or more employees that do not offer health coverage and that have at least one full-time employee who receives a premium tax credit. For employers that impose a waiting period before employees can enroll in coverage, there will be a penalty payment of $400 for any full-time employee in a 30-60 day waiting period and $600 for any full-time employee in a 60-90 day waiting period. The length of permitted waiting periods is particularly important for employers with a high turnover workforce."
(Proskauer Rose LLP)

Health Care Reform Legislation: Impact on Employers
Excerpt: "Employers should carefully review H.R. 4872, which, if enacted, will affect employer-sponsored group health plans. . . . [The target page] is a preliminary summary of important features of the act as they affect employer-sponsored group health plans."
(McDermott Will & Emery)

Health Care Reform: What are Key Considerations for Employers?
Excerpt: "The new law will impose significant new responsibilities on employers nationwide that could, over time, fundamentally alter the nature of employer-sponsored health care and the employer-employee relationship. As employers look ahead to understand the implications of this sweeping legislation, we have provided questions and answers below to some of the most pressing issues they are likely to face. Additionally, Littler Mendelson is committed to educating employers about this legislation. To this end, we will be providing additional publications relating to how these new rules affect the following . . . ."
(Littler Mendelson P.C.)

President Signs Health Care Reform Law (PDF)
3 pages. Excerpt: "On Sunday night, the House of Representatives passed the Patient Protection and Affordable Care Act (H.R. 3590), which President Obama has now signed into law. In addition, the House passed the Health Care and Education Affordability Reconciliation Act, which makes several changes to H.R. 3590. Some of the changes that would most directly impact plan sponsors are described [in this document]."
(Buck Consultants)

Health Care Reform Enacted: A Look at What to Expect (PDF)
12 pages. Excerpt: "Generally speaking, health care reform is not effective until 2014; however, there are a number of reforms that are effective for plan years that begin on or after six months after the enactment date, and there are a number of tax provisions with varying effective dates. Irrespective of the effective date, immediate action is required to ensure compliance with the new 'law of the land.' The following is an overview of the relevant, health-plan-related provisions of PPACA. We have also identified the changes proposed by the Reconciliation Bill to PPACA . . . so that you will have an understanding of the changes that will take place if the Reconciliation Bill passes as expected."
(Alston & Bird)

What Health Reform Means for Your Retirement
Excerpt: "How will the new health-care reform law signed by President Obama this week affect older Americans and those planning for their retirement years? There are three main ways. . . . [One is] a new insurance program for long-term care. Starting next year, workers can set aside money from their paychecks to pay for services and supports that many will need in their old age or if they become disabled. The new system is meant to help offset the high costs of home-based care, assisted-living facilities and nursing homes, which mostly come out of people's savings. It's voluntary, but workers who don't want to participate have to opt out."
(MarketWatch, Inc.)

Health Measure's Opponents Plan Legal Challenges
Excerpt: "Officials in a dozen states who oppose the health care bill say they hope to block it in court by arguing that requiring people to buy health insurance is an unprecedented intrusion by the federal government into people's lives -- the equivalent of going a step beyond simply regulating automobiles to requiring people to buy a car."
(The New York Times; free registration required)

First Wave of Health Care Changes Will Target Insurers with New Rules
Excerpt: "[T]he most direct effect will be on insurers. Over the next several years, health insurance will evolve into something more closely resembling a publicly regulated utility: It will have a guaranteed base of customers, thanks to the coverage requirement, but it will be bound by much tighter restraints than today's individual insurance market, where regulations vary widely from state to state."
(The Washington Post; free registration required)

DOL to Address ERISA Preemption of State Health Reform Efforts in Proposed Regulations
Excerpt: "The Department of Labor has notified the Office of Management and Budget (OMB) that it proposes to issue regulations regarding when health care reform efforts on the part of state and local governments are subject to ERISA preemption."
(Deloitte via

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Executive Compensation; Benefits in General

[Guidance Overview]
IRS Explanation of Rule Limiting Qualified Tuition Reductions to Education Below the Graduate Level
Excerpt: "EBIA Comment: Although this letter cannot be relied on as precedent, it offers a helpful and succinct summary of the criteria that determine when courses qualify for nontaxable tuition discounts under Code Section 117(d). The discussion of joint-degree programs is particularly interesting in light of the growing interest in these programs. Educational organizations that are frustrated by their inability to use the qualified tuition reduction rules for graduate-level education unfortunately will have few alternatives. Code Section 132(l) generally prevents them from providing courses as nontaxable fringe benefits under Code Section 132 (e.g., as no-additional-cost services or as qualified employee discounts)."
(Employee Benefits Institute of America)

[Guidance Overview]
One-Time Severance Payment Was Not Subject to ERISA, According to Court
Excerpt: "EBIA Comment: The 'ongoing administrative program' standard for determining whether a severance benefit is subject to ERISA is easier to state than to apply. The simplicity of the arrangement in this case appears to have made the trial court's determination easy. However, small variations in the facts can affect the outcome, so employers should tread carefully in this area."
(Employee Benefits Institute of America)

[Guidance Overview]
IRS Update of Amount of Excludable or Deductible Foreign Housing Expenses for 2009 and 2010
Excerpt: "The [IRS] has published adjusted limitations on the housing expense tables for purposes of Code Sec. 911(c)(2)(A). The guidance provides adjusted limitations on housing expenses for 2010, includes a table that identifies locations within countries with high housing costs relative to housing costs in the U.S., and provides an adjusted limitation on housing expenses for qualified individuals with housing expenses in one or more high-cost locations in 2008. Outside the high-cost areas, the annual limitation is $27,450."

[Guidance Overview]
Ninth Circuit Holds 'Off-the-Clock Activities' and 'Commute Time' May Be Compensable
Excerpt: "The district court granted summary judgment in favor of the employer, holding that the time was not compensable under either Federal or California law. The Ninth Circuit disagreed and vacated the judgment, explaining that the end-of-day activities may be compensable under the Employee Commuter Flexibility Act (ECFA), and the commute time may be compensable under California law."
(Deloitte via

[Guidance Overview]
Ninth Circuit Reverses Course in New Xilinx Opinion, Grants Significant Victory to Taxpayer
Excerpt: "A three-judge panel of the Ninth Circuit Court of Appeals by a 2-1 vote has affirmed the opinion of the Tax Court in Xilinx, Inc. v. Commissioner that employee-stock-option (ESO) expenses should not be taken into account in the context of cost-sharing arrangements. The decision, which effectively reverses a prior withdrawn opinion by the same three-judge panel, stands as a reaffirmation of the arm's-length standard and another example of transfer-pricing litigation being decided on the basis of evidence of actual arm's-length dealings rather than economic theories."
(Miller & Chevalier Chartered)

Financial Consumer Protection Agency in Senate Bill Could Regulate Retirement Plan Service Providers
Excerpt: "A revised financial regulatory reform bill from Senate Banking Committee Chairman Chris Dodd, D-CT, would create a new consumer protection agency that could have some jurisdiction over retirement and benefit plan service providers. Department of Labor (DOL) and IRS authority over retirement plans would remain untouched, but the new agency could regulate services provided to employer-sponsored plans if requested to do so jointly by DOL and IRS."
(Mercer LLC)

Webcasts and Conferences

Chicago Advanced Pension Conference
in Illinois on August 30, 2010
presented by SunGard Relius

Health Care Reform Nears the Finish Line
Nationwide on March 30, 2010
presented by Buck Consultants

Health Care Reform: What Employers Need to Know Webinar
Nationwide on March 29, 2010
presented by Ballard Spahr LLP

March Smartcast: New Health Care Reform Law with Craig J. Davidson, CEBS
Nationwide on March 25, 2010
presented by FutureOffice Network

The Brave New World of 403(b) Plans: Issue Spotting for the Future
Nationwide on April 20, 2010
presented by Seyfarth Shaw LLP

Press Releases

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Newly Posted Employee Benefits Jobs

401k Guide Reporter
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Retirement Plan Coordinator
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Defined Benefits Client Manager
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in CT

Benefit Education Specialist - Remote - Upper Peninsula of Michigan
for Municipal Employees' Retirement System of Michigan
in MI

Defined Contribution/401(k) Administrator
for Associates in Excellence
in CA

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