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Health & Welfare Plans Newsletter

April 19, 2010

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This Webcast addresses the key elements of the Patient Protection and Affordable Care Act and the related provisions. Three industry experts present their views on health care reform legislation, timeline of required compliance dates, impact on stakeholders and plan design implications. This webcast on-demand can be downloaded at any time, so you and your staff can listen to it at your convenience.

[Guidance Overview]
Another COBRA Subsidy Extension Enacted: Involuntary Terminations Through May 31 Now Covered (PDF)
1 page. Excerpt: "Notices will have to be modified to describe the additional subsidy period and the ability to reinstate COBRA for affected individuals. Previous model notices issued by DOL can presumably be modified for this purpose."
(Buck Consultants)

[Guidance Overview]
COBRA Subsidy Period Extended Once Again, to May 31
Excerpt: "This is a scenario that is likely to continue month by month for the remainder of this year until and unless HR 4213 (amended by Senate Amendment 3336) is passed. This bill has been passed by the Senate and is pending in the House. It would extend the subsidy eligibility period through the end of 2010."

[Guidance Overview]
DOD Issues Final Regulations on TRICARE Incentive Prohibition
Excerpt: "EBIA Comment: The TRICARE incentive prohibition applies to all employers (except those with fewer than 20 employees). Employers that are subject to the prohibition will want to familiarize themselves with the final regulations, which are effective June 18, 2010. Each violation of the incentive prohibition can trigger a civil penalty of up to $5,000. In considering the regulations' new exception, employers should keep in mind that making a cafeteria plan available to pay or reimburse premiums for individual insurance policies raises issues under ERISA, COBRA, HIPAA, and other laws."
(Employee Benefits Institute of America)

[Guidance Overview]
CMS Announces Indexed Medicare Part D Amounts for 2011
Excerpt: "On April 5, 2010, the Centers for Medicare & Medicaid Services (CMS) announced the indexed Medicare Part D standard benefit and Retiree Drug Subsidy (RDS) amounts for 2011. This Capital Checkup features charts comparing the 2011 numbers to the 2010 numbers."
(The Segal Group, Inc.)

[Guidance Overview]
Health Care Reform Insights: 'Extension of Dependent Coverage to Age 26' (PDF)
4 pages. Excerpt: "Group health plans that provide dependent coverage for children must make that coverage available to adult children up to age 26 as of the first plan year that begins on or after October 1, 2010. For calendar year plans, the compliance date is January 1, 2011. However, for plan years that begin before January 1, 2014 (i.e., calendar years 2011 through 2013), the requirement only applies to an adult child who is not eligible to enroll in another employer-sponsored health plan."
(The Segal Group, Inc.)

[Guidance Overview]
Health Care Reform Impact on Employer-Sponsored Group Health Plans: Changes for 2010 and 2011
Excerpt: "This Advisory will address the most immediate requirements that will apply to group health plans by the end of next year. The scope of health care reform laws is substantial The majority of the requirements will apply regardless of whether the employer is a governmental employer or a private employer, whether the plan is fully insured or self-insured, and whether the employer is considered large or small."
(Sherman & Howard L.L.C.)

[Guidance Overview]
Retiree Medical: Federal Reinsurance Program to Become Effective June 23
Excerpt: "The Department of Health and Human Services announced that the $5 billion reinsurance program for early retirees mandated by the new health care reform law will become effective on June 23, 2010. In June, under a process similar to that used by the Retiree Drug Subsidy program, employer-sponsored plans will be able to submit an application to participate in the reinsurance program. Established as a temporary arrangement, the reinsurance program is slated to end on January 1, 2014, when early retirees will be able to obtain health coverage through the exchanges."
(Deloitte via

[Guidance Overview]
Oregon Supreme Court Holds that Employers Are Not Required to Accommodate Medical Marijuana Use
Excerpt: "On April 15, 2010, the Oregon Supreme Court ruled that the statute prohibiting disability discrimination in employment does not protect medical marijuana users. The Court based its decision on ORS 659A.124, which states that the protections of the disability discrimination statute do not apply to employees 'engaging in the illegal use of drugs if the employer takes action based on that conduct.' The case, Emerald Steel Fabricators, Inc., v. Bureau of Labor and Industries, originated after an employee who used medical marijuana told his employer, in advance of a drug test, about his medical marijuana card and his medical condition. A week later, the employer terminated the employee."
(Davis Wright Tremaine LLP)

Work Breaks for Nursing Mothers Quietly Becomes the Law
Excerpt: "Because Section 4207 took effect on March 23, 2010, employers covered by the FLSA who are not in a state (like Oregon and 16 others plus the District of Columbia) that already provides protections for nursing mothers must take immediate action to revise practices and policies to ensure compliance with the law."
(Troutman Sanders LLP)

Timeline of Key Health Law Provisions Affecting Large Employers
The target is a timeline, by year, of when key provisions of the new law take effect, accompanied by descriptions of each.
(McGuireWoods LLP)

Small Employers Lead Consumer-Directed Health Plan Adoption in 2009 (PDF)
2 pages. Excerpt: "Small employers were the major driver for the rise in CDHP enrollment in 2009, from 9% in 2008 to 15% in 2009. This increase was a direct result of smaller employees utilizing the cost savings inherent in CDHPs to reduce their overall health care costs."
(American Association of Preferred Provider Organizations)

Health Reform 2010: Patient Protections
Excerpt: "So what's included in Sec. 10101(h) of the Affordable Care Act, concerning patient protections? Group and individual health insurance plans must allow plan enrollees to select, when the plan requires it, any primary care provider that participates in the plan's network."
(Wolters Kluwer)

Health Care Voucher Provision May Inflate Employer Costs
Excerpt: "The provision, which has gotten little attention, would have its biggest impact on employers with large numbers of low-paid workers who are required to pay a high percentage of the premium."
(Business Insurance)

Health Reform Provisions of Interest to Employers
Excerpt: "Kurt Lawson of Hogan & Hartson LLP, Washington, D.C., offers a detailed rundown of provisions of greatest interest to employers in the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act, which made significant substantive changes to PPACA. Lawson looks at insurance reforms under the new laws, including immediate actions to expand coverage and changes coming in 2014, the required creation of exchanges through which individuals and employers may purchase coverage under qualified health plans, coverage mandates affecting individuals and employers, and revenue provisions included in the measures."
(Tax Management Inc.)

Company Health Care Perks May Be Harder to Come By
Excerpt: "Hundreds of thousands of Americans who get their health insurance through their employers have gotten used to company perks such as reduced-cost gym memberships, free weight-loss or smoking-cessation programs, or getting cash back for filling out health-assessment profiles. But a new survey reports that a small but growing group of firms will be imposing tougher requirements to get the incentives, such as actually losing weight or quitting smoking."
(Los Angeles Times)

San Francisco Increases Required Employer Health Spending
Excerpt: "San Francisco employers will have to dig a little deeper in their pockets next year to pay for the required health care spending under the city's controversial health coverage law. A posting on the city's Web site said employers with 100 or more employees in San Francisco will be required to spend $2.06 per hour per covered employee on health care beginning January 1, 2011, up from $1.96 in 2009. Employers with between 20 and 99 employees will have to spend at least $1.37 per hour, up from $1.31. Employers with fewer than 20 employees are exempt from the requirement."

Will Write-Offs for Retiree Health Care Kill Jobs?
Excerpt: "For starters, we should note that the, say, $1 billion in asset write-offs reported by AT&T is merely a book entry, and is not immediately matched by a like-sized cash outflow. Rather, as I explained in the previous post, that $1 billion is basically the sum of much smaller, additional future annual cash payments to the Internal Revenue Service, over the next 10 to 20 or perhaps even 30 years. Employers will have to make these added tax payments, because they will no longer be able to deduct from their taxable income that part of their outlays on prescription drugs for retirees that will actually be paid for by government in the form of a 28 percent federal subsidy."
(Uwe E. Reinhardt via The New York Times; free registration required)

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Executive Compensation; Benefits in General

How to Nudge Workers Toward Desired Path in Health Care and Lifestyle Choices and Retirement Savings
Excerpt: "Some innovative employers have found that 'behavioral economics,' a longstanding consumer marketing strategy, can be used in managing and communicating benefits to 'nudge' employees to save for retirement, be better health care consumers and adopt healthier lifestyles."
(Business Insurance)

Recent Developments in Employee Benefits and Executive Compensation, April 2010
The newsletter describes recent developments on DOL's Proposal for Rules Effecting 401(k) Plan Investment Advice, Deadline to Adopt Restated Retirement Plan Documents, DOL's Final Regulations Governing Requirement that Multiemployer Pension Plans Furnish Information Upon Request, and the New Self-Reporting Requirements and Taxes for Failure to Satisfy COBRA and Other Federal Group Health Plan Mandates.
(Blank Rome LLP)

Broadening Your Employee Benefits Portfolio with Elective Benefits (PDF)
5 pages. Excerpt: "Employers are taking a fresh look at incorporating elective benefits strategies as an option when core benefits are being reduced in the current economic climate. This is leading to an array of new elective benefit programs. Today's landscape includes offerings to fill gaps in health care coverage linked directly to an employer's plan, or new features that encourage healthy lifestyles. Employers are likely to incorporate these plans since the value of the benefit has increased and the need for choice is more evident."
(Aon Consulting)

Employee Benefits Still Top Cost Concern for CFOs
Excerpt: "A national survey of U.S. CFOs and senior comptrollers conducted by Grant Thornton LLP found their number one cost concern (still) is the cost of employee benefits. In terms of pricing pressure, 68% are most concerned about the price of employee benefits. Six months ago, 77% of CFOs surveyed cited this as their number one concern . . . ."

Webcasts and Conferences

Form 5500 Software - A Review and Update
Nationwide on April 20, 2010
presented by

Form 5500 Software - A Review and Update
Nationwide on April 28, 2010
presented by

Form 5500 Software - A Review and Update
Nationwide on May 13, 2010
presented by

Tax Aspects of Health Care Reform: What You Need to Know Now About the Patient Protection Act Webcast
Nationwide on April 23, 2010
presented by CCH, a Wolters Kluwer business

Press Releases

Statement of Assistant Secretary Phyllis C. Borzi on Extension of COBRA Subsidy Eligibility to May 31, 2010
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

The No-Brainer Benefit
Accor Services North America

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