What's New on BenefitsLink - Week of 4/14/97

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4/18: Watson Wyatt's Insider for March, 1997 includes articles on:

Benefits and Workplace Issues High on Congressional Agenda
New York's Health Care Reform Act: Deregulation?
Companies Say Their Traditional Reward Plans Aren't Working
New IRS Policy Helps Plans Avoid Penalties and Disqualification
Democrats Reopen Debate on Retirement Security
HR Departments Embrace Web-Based Technology
Small Plan Audits: The IRS Lost the Battle But May Have Won the War

4/18: Excess Benefit Plans for Public Employees, from Milliman & Robertson's PERiScope for March, 1997. Excerpt:
State and local governments are now permitted to establish excess benefit plans to provide benefits otherwise lost due to the benefit ceilings of section 415 of the tax code, under the Small Business Job Protection Act of 1996. Public employers had long sought the ability to set up excess benefit plans, in part to maintain parity with private employers, which commonly use excess benefit plans. Meanwhile, Congress has relaxed many of the public plan section 415 ceilings themselves, in some cases eliminating the need for an excess plan.

4/18: In today's Federal Register the Department of Labor issues proposed rules that would adjust ERISA's civil monetary penalties ("CMPs") for increases due to inflation. These adjusted penalties would apply only to violations occurring after the date of publication of the final rule in the Federal Register.

Here's an edited table, taken from the proposed rules:

Only CMPs that are specified by statute or regulation in dollar amounts are adjusted
under the 1990 Act, as amended. CMPs that are specified as percentages are not
adjusted. The statutory citations for each of the CMPs under Title I of ERISA that
would be adjusted by the proposed rule contained in this Notice are set forth in
columns (A) and (B) of Table A. Column (C) briefly describes the nature of the
violations associated with these citations. Column (D) of Table A indicates the dollar
amount of each CMP to be adjusted, and Column (E) sets forth the year that each penalty
was established by law or last adjusted. Columns (F), (G), and (H), (I), and (J)
contain the intermediate results of applying the series of steps mandated by the 1990
Act, as amended. [Columns (E) through (J) not shown here -- BenefitsLink editor.]
Reference should be made to Column (K) of Table A to determine the dollar amounts of
the final penalty adjustments that would be effected by the proposed rule contained in
this Notice pursuant to the requirements of the 1990 Act, as amended.
Table A.--Inflation Adjustment of Civil Monetary Penalties
Under Title I of ERISA
U.S. Code citation  ERISA Title I    Nature of        Penalty amount
                       section       violation        to be adjusted    Capped penalty
(A)                 (B)              (C)                (D)              (K)
---------------------------------------------------------------------------------------
29 USC              209(b)           Failure to         $10 per          $11 per
1059(b)                               furnish or        employee         employee.
                                      maintain records.
29 USC              502(c)(1)(A)     Failure to notify  Up to $100       Up to $110
1132(c)(1)(A)                         plan              a day            a day.
                                      participants of
                                      group health
                                      benefits under
                                      COBRA.
                                     Failure to notify  Up to $100       Up to $110
                                      participants and  a day            a day.
                                      beneficiaries
                                      re: asset
                                      transfer.
29 USC              502(c)(1)(B)     Refusal to         Up to $100       Up to $110
1132(c)(1)(B)                         provide required  a day            a day.
                                      info in timely
                                      manner.
29 USC              502(c)(2)        Failure or         Up to $1,000     Up to $1,100
1132(c)(2)                            refusal to file   a day            a day.
                                      an annual report.
29 USC              502(c)(3)        Failure to notify  Up to $100       Up to $110
1132(c)(3)                            participants and  a day            a day.
                                      beneficiaries
                                      re: failure to
                                      meet minimum
                                      funding
                                      requirements.
                                     Failure to notify  Up to $100       Up to $110
                                      certain persons   a day            a day.
                                      re: transfer of
                                      excess pension
                                      assets to health
                                      account.
-------------------------------------------------------------------------------------

4/18: Finally -- an online index of employee benefits documents, sites and resources, where you can find stuff using a familiar, alphabetic index format but with the convenience of hypertext links! The new custom-written software runs on BenefitsLink, and is called Benefits from A to Z. It actually allows you to add your own links to the index (even commercial links), at no charge! We expect to have the entire BenefitsLink site indexed within the next few weeks, and then we move on to other benefits sites. (Perhaps a better name for the new index would be the BenefitsLink Borg: Resistance is futile. You will be assimilated. )

4/18: BenefitsLink is in the process of adding "drop-down menus" to the top left corner of principal pages, so that you can move quickly from one part of BenefitsLink to another. New on the drop-down menu is a page called Trouble? -- feel free to use it to report bad links or other trouble you might be having with this site.

4/17: The Inte-Greater, version 97.0, is now available. Version 97.0 incorporates the 1997 taxable wage base ($65,400) and the 1997 cap on compensation for benefit purposes ($160,000). This peppy DOS shareware program finds the best benefit formula under a profit-sharing plan for the owner of a small business, by adjusting the plan's integration level. If the plan's current formula is not the optimum formula, the Inte-Greater shows the business owner how much would be saved each year if the optimum integration level were used instead. Also shows the dollars that would go to each participating employee's account (i.e., the allocations) at user-specified employer contribution levels. Good for determining the employer contribution that is needed to reach a certain desired allocation level for the owner, or to watch how proposed additional contributions would be divided among the owner and the other employees. Written by a pension attorney. Click here to download; takes only about a minute at 14,400 bps.

4/16: Group health plan SPDs delivered via intranet? Recent Department of Labor rules (see below) provide a safe harbor as of June 1, 1997. Here's part of the preamble to those rules, along with discussion of them by practitioners (via the BenefitsLink Welfare Plans Message Board).

4/16: Here's a link to the Interim Rules Amending ERISA Disclosure Requirements for Group Health Plans, including new rules on the use of electronic media to supply Summary Plan Descriptions. From the Pension and Welfare Benefits Administration of the U.S. Department of Labor (4/8/97).

Excerpt:
SUMMARY: This document contains interim rules governing the content of the summary plan description (SPD) for group health plans, the furnishing of summaries of material reductions in covered services or benefits by group health plans, and the disclosure of SPD and related information through electronic media. The rules contained in this document implement amendments to the disclosure provisions of the Employee Retirement Income Security Act of 1974 (ERISA) enacted as part of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and the Newborns' and Mothers' Health Protection Act of 1996 (NMHPA).
Interested persons are invited to submit comments on the interim rules for consideration by the Department in developing final rules. * * *
EFFECTIVE DATE. This regulation is effective on June 1, 1997.

4/16: Here's a link to the Interim Rules for Health Insurance Portability for Group Health Plans, published jointly by several federal agencies (4/8/97).

Also: you might wish to
4/16: Improved: Contents of Today's Federal Register, a BenefitsLink exclusive. Now enables you to easily fetch the full text of particular items from the Federal Register (e.g., proposed regulations), once you've determined the starting page number.

4/16: Executive Summary of new EBRI Issue Brief: Employee Benefits, Retirement Patterns, and Implications for Increased Work Life (no. 184, April 1997). Excerpt:
This Issue Brief examines why policymakers are concerned about the trend toward early retirement and how it relates to Social Security, Medicare, and employee health and retirement benefits. It reviews the rationale for the effects of economic incentives on early retirement decisions and includes a summary of empirical literature on the retirement process. It presents data on how employee benefits influence workers' expected retirement patterns. Finally, it examines the implications of public policies to reverse early-retirement trends and raise the eligibility age for Social Security and Medicare.
- The full text of this Issue Brief is not available online except to members of the Employee Benefit Research Institute and others who have password access to EBRI's site.
- Full text versions of many previously published Issue Briefs are available now to the public, however.

4/16: Hold the phone on those stock option contributions based on the private letter ruling issued to Travelers ... here's IRS Announcement 97-45 (full text):
On December 24, 1996, the Internal Revenue Service issued P.L.R. 9712033 which concerned the federal income tax (including unrelated business income tax) and federal excise tax consequences of the contribution of certain stock options to a qualified plan and the subsequent exercise of those stock options to be used in the purchase of the common stock of the employer maintaining the plan. The Service is reexamining the plan qualification and other tax issues under the Internal Revenue Code of 1986, as amended, raised by a contribution of stock options to a plan and subsequent exercise of those options.

4/15: Buying a Business? Watch Out for The Hidden Costs of Employee Benefits by James A. Houle, Esq. of Bernstein, Shur, Sawyer & Nelson (Portland, Maine)

4/15: Rocky Mountain Benefits Bulletin is online, from Rocky Mountain Employee Benefits, Inc. of Salt Lake City, UT.

4/14: The following benefits-related items were added to the "Recently Issued Reports" page on the U.S. Government Accounting Office's World Wide Web site (http://www.gao.gov/new.items/newtitle.htm) in Portable Document (PDF) format. (Use the free Adobe Acrobat reader to view them.)
- Medicare: Most Beneficiaries With Diabetes Do Not Receive Recommended Monitoring Services. HEHS-97-48. 25 pp. plus 4 appendices (17 pp.) March 28, 1997.
  http://www.gao.gov/new.items/he97048.pdf
- Defense Health Care: Need for More Prescribing Psychologists Is Not Adequately Justified. HEHS-97-83. April 1, 1997.
  http://www.gao.gov/new.items/he97083.pdf

4/14: More questions and answers in the popular column, Q&A for Plan Defects: Correction/VCR/CAP --
Question 25: In Q&A 24, we dealt with when the remedial amendment for a new plan expires. What happens if an application for a favorable determination letter is not filed within that period and a defect in the form of the document is discovered later on? Can this be corrected under APRSC? VCR? CAP?
Answer (click here).

4/14: Executive PayWatch, from the AFL-CIO. Excerpt:
Welcome to Executive PayWatch -- A working families' guide to monitoring and curtailing the excessive salaries, bonuses and perks in CEO compensation packages.
Most of us are working longer and harder just to get by. Not so for America's corporate elite, whose exorbitant pay schemes have created unprecedented inequities in the American workplace. Why is CEO pay getting further and further out of line? How does it affect the rest of us who work for a living? And what can be done to rein it in? Click on to find the answers.

4/14: Latest Benchmarks for Flex Benefits Offerings, from the Institute on Management and Administration's Web column promoting its periodical, Managing Flexible Benefits Plans. Excerpt:
Flex plan managers struggle every year with the appropriate pricing scheme for their plan offerings. Although this exercise is of great importance, it's also important to compare your benefits costs -- and the methods you use to fund them -- with those of other employers.
To that end, Hay/Huggins' Compensation and Benefits Strategies for 1997 and Beyond contains numerous benchmarks which you can use to assess the fairness and competitiveness of what your carriers are charging.

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