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Health & Welfare Plans Newsletter

August 13, 2010

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[Guidance Overview]
Implementing Parity: The Safe Harbor for Outpatient Benefits (PDF)
2 pages. Excerpt: "A new reform briefing paper looks at the safe harbor for outpatient benefits and augments an earlier discussion about the steps group health plans face as they respond to the new rules."

[Guidance Overview]
New Health Care Claims and Appeal Rules Will Include an Excise Tax
Excerpt: "In contrast to current rules, failure to comply with the Section 503 Regulations as modified by the new internal claims and appeals and external review processes requirements may subject a health plan sponsor or health insurance issuer to a $100 per day per violation excise tax imposed under the Internal Revenue Code, in addition to giving the claimant a green light to file suit."
(Littler Mendelson P.C.)

[Guidance Overview]
The Implications of Losing 'Grandfathered Plan' Status
Excerpt: "What many employers may not know . . . is that under new interim final regulations, if a fully insured health plan loses its grandfathered plan status, it will have to comply with the requirements of the tax code's 'nondiscrimination' provisions, which prohibit a plan's more favorable treatment of highly compensated individuals. Prior to these regulations, these nondiscrimination requirements only applied to self-insured plans."
(Fox Rothschild LLP)

Rise in Health Insurance Costs May Affect Other Benefit Decisions, According to Survey
Excerpt: "[W]hen faced with a 50% increase in health insurance costs, 41% of single heads of household would resort to cancelling their insurance. Employees also showed a willingness to eliminate or decrease contributions to their retirement plans in response to rising health insurance costs."

Electronic Medical Records: Higher Costs Cited by Study
Excerpt: "Contradicting conventional IT wisdom, a team of researchers has found that implementing electronic medical records results in higher costs, more staffing and more medical complications."
(The Fiscal Times)

Health-Care Overhaul Nitty-Gritty: The Medical-Loss Ratio and Taxes
Excerpt: "[R]egulators are now wrestling with the medical-loss ratio -- what percentage of an insurer's revenue is dedicated to health-related expenses, versus administrative costs -- and into which bucket various kinds of costs should fall."
(The Wall Street Journal)

Insurers Defend Limited-Benefit Health Policies in Fight Over Proposed Restrictions
Excerpt: " Insurers can seek a waiver from the government to keep their current limited plans if they can prove that offering better benefits would cause significant premium increases or force employers to drop or severely limit coverage."
(Henry J. Kaiser Family Foundation)

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Benefits in General; Executive Compensation

[Guidance Overview]
Shareholder Approval of Golden Parachute Compensation under Dodd-Frank
Excerpt: "This shareholder vote will not be binding on the company or the company's Board and, according to the statute, may not be construed as (1) overruling their decision, (2) creating or implying any addition or change to their fiduciary duties, or (3) restricting or limiting shareholders' ability to make proposals for inclusion in proxy materials related to executive compensation."
(Michael Melbinger via Winston & Strawn LLP)

Low-Cost, High-Impact Employee Benefits
Excerpt: "No matter how loyal, hard-working, or committed your employees may be, it's hard for them not to feel discouraged or unappreciated when their paychecks shrink. But money isn't the only motivator. Consider creative ways to show appreciation and boost team morale without hurting the bottom line."

Employee Benefits in a Multigenerational Workplace
Excerpt: "Whether your technology company employs members spanning four generations, or even just two generations, this article suggests employee benefits that should be considered to best align your company's productivity goals with the needs and attitudes of its multigenerational workers."
(Epstein Becker & Green, P.C.)

San Francisco Labor Unions Sue to Stop Pension Ballot Measure
Excerpt: "San Francisco's largest city labor unions have filed a lawsuit asking a judge to strip a measure from the November ballot that calls for city employees pay more into the retirement system and to pick up more of the health care costs for their dependents."

Employer Funding a Big Influence on Voluntary Benefits Selection
Excerpt: "In a nationwide survey of more than 2,800 employees, respondents rated the 'Likelihood of Using in the Near Future' as the most important factor influencing their benefits choices, followed by 'Financial Protection Provided.'"

Should Companies Grant Nonqualified Stock Options or Incentive Stock Options to Their Employees?
The writer generally recommends that private companies issue NQOs rather than ISOs for a variety of reasons and explains why.
(Davis Wright Tremaine LLP)

What Effect Will Defense of Marriage Act Cases Have on Benefit Plans?
Excerpt: "Although numerous federal laws are affected by the definition of a spouse, of particular note are those statutes affecting surviving spousal benefits, spousal consent requirements, qualified domestic relations orders, COBRA, flexible spending accounts, and taxation of medical benefits. Under Gill, a plan would be required to recognize the rights granted to a spouse under the relevant statutes."
(Tax Management Inc.)

Press Releases

John Hancock Retirement Plan Services Hires Two Regional VPs
John Hancock Retirement Plan Services

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