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Health & Welfare Plans Newsletter

August 30, 2010

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[Guidance Overview]
Guidance Provided on Federal External Review Procedures for Self-Insured Plans; Model Notices Issued
Excerpt: "Though this latest guidance provides self-insured plans a fuller picture of what satisfying the external review rules will entail, the resulting compliance burden is daunting, given how soon these changes go into effect."
(Employee Benefits Institute of America)

Private Exchanges Have Potential to Breathe New Life Into VEBAs
Excerpt: "Caterpillar is one of many Fortune 500 clients of Extend Health, Inc., the country's largest private Medicare insurance exchange. . . . Founded in 2004, Extend Health 'operates a private Medicare exchange that helps employers or firms provide insurance choices to their retirees to buy their own individual plans using funds in a health reimbursement arrangement,' says Bryce Williams, CEO of Extend Health."
(Employee Benefit News)

Caution Advised Before Rushing Into Wellness Incentives
Excerpt: "More employers are hitting workers in the pocketbook by adopting financial penalties to curb risky health behaviors such as smoking or, conversely, using incentives to encourage healthy habits like losing weight. Experts say careful program design is key to avoiding legal and privacy issues."

High-Deductible Plans Grow, but Not Everyone Should Get on Board
Excerpt: "In exchange for picking up a larger share of their own health care costs, employees pay lower insurance premiums and are allowed to use pretax dollars to pay out-of-pocket costs. But many consumers embracing the plans have discovered there are pitfalls aplenty, including out-of-pocket expenses they cannot afford."
(New York Times; free registration required)

Comments to HHS by Employers Council on Flexible Compensation, on Application of Patient Protection and Affordable Care Act to Health Reimbursement Arrangements (PDF)
4 pages. Excerpt: "Given that HRAs are not set up with a bright line annual limit and that they are most often used in conjunction with primary overage as a supplemental benefit, ECFC urges the agencies to exempt all HRAs from the prohibition on annual limits. The exemption should apply regardless of whether or not primary coverage is offered through the individual's employer or is obtained through another avenue, such as a spouse's employer."
(Employers Council on Flexible Compensation)

It's Time for Washington State Workers to Help Pay More for Healthplan Coverage
Excerpt: "Labor negotiators for Gov. Chris Gregoire told state and higher-education employees last week that state workers must increase their contribution to health-care premiums from the current 12 percent to as much as 26 percent or reshape their health-care benefits package. The governor, at long last, has it right."
(Seattle Times)

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Benefits in General; Executive Compensation

[Official Guidance]
Text of Proposed DOL Regs Restating and Amending Procedures for Prohibited Transaction Exemptions (PDF)
22 pages. Excerpt: "[T]he Department would require the disclosure of the following information from a qualified independent fiduciary: A copy of such fiduciary's engagement letter with the plan describing the duties the fiduciary will undertake on behalf of the plan; a detailed explanation of why the proposed transaction is in the interests of the participants and beneficiaries; a statement that, in instances where the transaction is ongoing, the fiduciary agrees to monitor the proposed transaction throughout its duration on behalf of the plan, taking any appropriate action to safeguard the interests of the plan; what qualifications the fiduciary has to perform these duties on behalf of the plan and the level of ERISA experience the person has; and a representation to the effect that such fiduciary understands and acknowledges his or her ERISA duties and responsibilities in acting as a fiduciary on behalf of the plan. . . . As a general matter, an independent fiduciary retained in connection with an exemption transaction must receive no more than a de minimis amount of compensation from the parties in interest to the transaction or their affiliates."
(Employee Benefits Security Administration, U.S. Department of Labor)

[Guidance Overview]
New Form 5500 FAQs Address Permitted Special Characters and Submission of Schedule H Attachments
Excerpt: "The DOL has added three new questions to its FAQs on EFAST2, the all-electronic filing system required for 2009 plan year filings (due in 2010 for most plans). . . . The two FAQs relevant to welfare and 401(k) plans address permitted special characters and the handling of combined attachment files for Schedule H (large plan financial information). "
(Employee Benefits Institute of America)

Do You Know Your GRId Assessment Scores?
Excerpt: "Whether company boards view GRId as the latest marketing gimmick from RiskMetrics or as a viable tool that will be used by investors to gain insight into the corporate governance of a company, each company and its advisors should take time to understand how the company's assessments were derived by RiskMetrics and what actions by the board might influence those assessments."
(DLA Piper)

Time is Now for Changes to Municipal Government Pensions and Health Plans in Massachusetts
Excerpt: "[I]n many towns Massachusetts taxpayers subsidize medical services that are available to all retirees under Medicare. Yet feckless local boards, under the thumbs of unions, refuse to enact even basic economies."
(Boston Globe)

Webcasts and Conferences

Health Reform's Internal Claims and Appeals New Rules - Changes You Must Make Now
Nationwide on September 29, 2010
presented by Thompson Interactive

Press Releases

KS Health and Welfare Team Starts Blog
Kilpatrick Stockton LLP

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