March 2009

From the editors of CCH's BENE and BAN products, here are hot topics from recent Employee Benefits Management Directions newsletters as well as recent explanatory updates in Employee Benefits Management. Also included are recent explanatory updates to the Benefits Answers Now product.

If you have any comments/suggestions concerning the information provided or the format used, we'd like to hear from you. Please contact me at tulay.turan@wolterskluwer.com.

Hot Topics in Employee Benefits Management:

President signs stimulus bill with COBRA, transit provisions, Employee Benefits Management Directions newsletter, Issue No. 438, February 24, 2009 – On February 17, President Obama signed the American Recovery and Reinvestment Act of 2009 (P.L. 111-5) into law. The law includes, among other provisions, a temporary COBRA premium subsidy and a transit provision.

Failure to change beneficiary designation negates waiver in divorce decree, Supreme Court finds, Employee Benefits Management Directions newsletter, Issue No. 437, February 10, 2009 – The United States Supreme Court has resolved a split of authority among the Federal Circuit Courts by unanimously concluding that: (1) the waiver by a former spouse of a plan interest in a divorce decree that did not constitute a qualified domestic relations order does not violate ERISA’s anti-alienation rule, and (2) plan administrators are not required to honor waivers expressed in external documents that do not comply with plan terms and procedures governing beneficiary designations.

Expert provides tips for employers who are maintaining or implementing work/life programs, Employee Benefits Management Directions newsletter, Issue No. 438, February 24, 2009 – In the past, employers have responded to their employees’ needs for work/life balance by increasingly providing targeted programs and policies that enable employees to more efficiently manage their personal and professional lives. How should employers think about work/life programs now, in light of America’s slumping economy and the various laws and regulations that impact work/life programs? CCH, a Wolters Kluwer business, went looking for answers from Amanda Layton, an attorney with WolfBlock, who specializes in employee benefits.

Study examines issues in capping tax exclusion of health coverage, Employee Benefits Management Directions newsletter, Issue No. 437, February 10, 2009 – The nonpartisan Employee Benefit Research Institute (EBRI) has published a detailed study of the implications for employers and workers involved in capping the tax exclusion for employment-based health coverage, an issue that could come up during this year’s expected debate over overhauling the nation’s health care system.

What's New in Employee Benefits Management:

Anti-alienation rule – The Supreme Court’s decision in Kennedy v. Plan Administrator of the DuPont Savings and Investment Plan (see story above) is discussed at ¶77,540.

Statute of limitations on ERISA claim – The Fourth Circuit’s decision in Pressley v. Tupperware Long Term Disability Plan is discussed at ¶132,730. The court found that a long-term disability participant’s suit should not have been dismissed under a general state statute that contained a one-year statute of limitations when there was a state statute with a longer limitations period that more specifically corresponded to the participant’s situation.

SIFL rates – The standard industry fare rates for the first half of 2009 have been issued. The rates are at ¶150,086.

HIPAA special enrollment rules – The Children’s Health Insurance Program Reauthorization Act of 2009 (P.L. 111-3) amended HIPAA’s special enrollment rules. The rules are discussed at ¶10,120.

State law – The discussion of state disability laws has been updated at ¶30,100.

What's New in Benefits Answers Now (BAN):

DOL finalizes rules allowing for personalized investment advice under eligible investment advice arrangements
The Department of Labor has released final regulations implementing provisions of the Pension Protection Act of 2006 that authorize fiduciary advisers to provide individualized investment advice under eligible investment advice arrangements. They are effective and apply to transactions occurring on or after March 23, 2009. However, on January 20, 2009, Rahm Emanuel, Chief of Staff for President Obama, sent a memo to the heads of all executive departments and agencies, directing them to consider extending for 60 days the effective date of regulations that have been published in the Federal Register, but which have not yet taken effect, so that questions of law and policy raised by the regulations may be reviewed. In the event the effective date is so extended, the notice and comment period is to be reopened for 30 days. Following the 60-day extension, regulations that raise no substantial questions of law or policy will go into effect. Find out more about eligible investment advice arrangements at ¶10,025.

CMS publishes interim final and proposed regulations on Retiree Drug Subsidy program
The Centers for Medicare & Medicaid Services (CMS) has issued an announcement regarding its publication of interim final revisions to the Retiree Drug Subsidy (RDS) regulations which add definitions of several terms, and revise definitions of several other terms that already appear in the regulations. The interim final revisions add definitions for the following terms: actually paid, and administrative costs. The interim final revisions also revise definitions that already appear in the regulations for the following terms: allowable retiree costs, and gross covered retiree plan-related prescription drug costs. To find out more about the RDS, see ¶22,880.

EBSA final regs issued on civil penalty rules reflecting PPA changes
EBSA has issued final regulations that provide procedures for assessing civil penalties for the failure to disclose certain documents to participants, beneficiaries and others as required by ERISA. The regulations are effective on March 3, 2008. The procedures are for failures by plan administrators: (1) of single-employer defined benefit plans to provide notices of funding-based limits, (2) of multiemployer plans to provide actuarial or financial information upon request, (3) of multiemployer employee benefit plans to provide notices of potential withdrawal liability upon request, and (4) of plans with automatic contribution arrangements to provide notices of participants' rights and obligations. More information about the civil penalties can be found at ¶14,220.

Failure to change beneficiary designation negates waiver in divorce decree, Supreme Court holds
The United States Supreme Court has resolved a split of authority among the Federal Circuit Courts by unanimously concluding that: (1) the waiver by a former spouse of a plan interest in a divorce decree that did not constitute a qualified domestic relations order does not violate ERISA's anti-alienation rule, and (2) plan administrators are not required to honor waivers expressed in external documents that do not comply with plan terms and procedures governing beneficiary designations. As a consequence of the decision, a former spouse who attempted to waive her rights in a participant's 401(k) plan remained entitled to the benefits because the participant had not designated a new beneficiary prior to his death. See the discussion at ¶12,920 for more information about the case.

Family COBRA coverage consumes at least three-fourths of unemployment income
Most unemployed people would have to devote an unrealistically high proportion of their income to health insurance in order to maintain their employer-based health care coverage under COBRA, according to a recent report from Families USA. The report, Squeezed! Caught between Unemployment Benefits and Health Care Costs, notes that for many unemployed workers, "It would take their entire unemployment check and more to continue coverage for themselves and their families. However, if laid-off workers do not continue their employer-based coverage by electing COBRA and instead seek coverage in the individual health insurance market, those with health problems are likely to find that no insurer will sell them a policy that will cover their preexisting conditions at any price. Thus, many American workers find themselves in a Catch-22." To learn more about the cost of COBRA, see the discussion at ¶22,510.