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Health Care Reform Drug Subsidy Deduction

3rd Quarter 2010
Some articles the staff at Benistar think you should read:

AARP Says Brand-Name Drug Prices Up 8% in 2009
Excerpt: “Over the last five years, according to the report . . ., the retail prices for the most popular brand-name drugs increased 41.5 percent, while the consumer price index rose 13.3 percent.”
(The New York Times; free registration required)

Health Care Reform: Elimination of Retiree Drug Subsidy Deduction
Employers that provide retiree prescription drug coverage should analyze the increased future tax liability and the current accounting charges necessary to retain retiree prescription drug coverage, and evaluate the practical and legal risks of eliminating this benefit.

N.Y. Faces $200 Billion in Retiree Health Costs
The cities, counties and authorities of New York have promised more than $200 billion worth of health benefits to their retirees while setting aside almost nothing, putting the public work force on a collision course with the taxpayers who are expected to foot the bill.

Medicare actuary: Reform will cost some seniors
A Medicare official concedes that seniors may have to dig deeper into their wallets next year thanks to the health care law.

Dealing with Medicare Part B and COBRA CoverageGenerally, the Socal Security Act provides that individuals may enroll in Medicare Part B (which covers doctors visits and other outpatient services) when they reach age 65. If they fail to do so during a seven-month initial enrollment period surrounding their 65th birthday,

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2nd Quarter 2010

Group Health Insurance Rates on the Rise, According to Survey
Excerpt: “Group health insurance rates for small and midsize employers are surging for 2011 renewals, according to a survey by the Council of Insurance Agents & Brokers.”

Seniors in Medicare Drug Plans see drop.

(Business Insurance)
Sixth Circuit Holds That Cap Limits Retiree Health Care Contributions
Excerpt: “The matter in dispute was whether the caps on retiree health care contributions in the agreements continue to apply to 1993-2004 retirees, even after the close of the years covered by the agreements, and after the related CBAs expire. The Court interpreted the agreements to provide for lifetime, capped health care contributions, saying that this interpretation . . . ”
(Stanley D. Baum of Fellheimer & Eichen LLP)

Retiree-Only Plans Could Be Exempt from Health Reform Rules
Excerpt: “[According to draft regulations prepared by the Internal Revenue Service and the departments of Labor and Health and Human Services,] the exemption, if finalized, would mean retiree-only health care plans would not have to comply with . . . health care reform law requirements banning lifetime dollar limits and that coverage be extended to adult children up to age 26.”
(Business Insurance)

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Benistar featured in the News

The following article about Benistar appeared in the Stamford Advocate:

http://www.stamfordadvocate.com/business/article/Benistar-moves-to-add-staff-433728.php The Stamford Branch of a national employee health and welfare benefits administrator has moved within the city and is in the process of hiring more staff.

Retiree Medical Solutions

• No networks
• No Referrals
• Guaranteed Issue
• Coverage for Spouses
• Portablitly
• Affordable
• Electronic Claims
processing

3rd Quarter 2009

Emergency Retiree Health Benefits Protection Act Reintroduced

Excerpt: “Representative John Tierney (D-Mass.) has reintroduced the Emergency Retiree Health Benefits Protection Act (H.R. 1322), which would prevent employers from reducing or eliminating health benefits for retirees or their dependents. The bill has been around for years but has attracted more attention since it appeared in a pension bill last year. Under the act, employers could not make changes to their retiree health plans that would eliminate, reduce or limit benefits, increase out-of-pocket costs or make it more difficult to obtain medical care.” (Watson Wyatt Worldwide)

GASB Issues Guidance on Multi-Employer OPEB Plans
Excerpt: “The Governmental Accounting Standards Board (GASB) has issued an exposure draft of a proposed statement that addresses issues related to the use of the alternative measurement method and the frequency and timing of measurements by employers that participate in agent multiple-employer other postemployment benefit (OPEB) plans. The proposed Statement would amend paragraphs 33 – 35 of Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions, to permit an agent employer that has an individual-employer OPEB plan with fewer than 100 total plan members to use the alternative measurement method, at its option, regardless of the number of total plan members in the agent multiple-employer OPEB plan in which it participates.” (PLANSPONSOR.com; free registration required)

Medicare Part D Update :  Lessons Learned and Unfinished Business
Excerpt: “Enacted in 2003, Medicare’s Part D prescription drug benefit reflected an unprecedented and controversial new approach for Medicare, relying exclusively on private plans to provide health coverage and including an unusual gap in coverage. This analysis by Kaiser researchers examines in detail how the new model has worked since its launch almost four years ago. Published as an article in today’s New England Journal of Medicine, the analysis by Kaiser vice president Patricia Neuman and principal policy analyst Juliette Cubanski assesses the evidence related to key policy questions arising from the Part D benefit. It also briefly discusses a number of potential policy changes to the Part D benefit that could arise as Congress and the Obama Administration weigh the program’s future.” (Kaiser Family

 

Medicare Prescription Benefit Program Has Exceeded Expectations
RAND Corporation

Deadline for Medicare Part D Creditable Coverage Notices Approaches (PDF)
2 pages. Excerpt: “Medicare Part D notices of creditable or non-creditable coverage must be provided to Medicare-eligible individuals prior to November 15 of each year. Many employers satisfy this requirement by including the notice in enrollment materials or in separate mailings in the fall. In preparing materials for distribution this fall, employers should be aware of revised model notices provided by the Centers for Medicare & Medicaid Services (CMS).” (Buck Consultants)

Articles courtesy of: Benefitslink.com, Benefitnews.com, Bizjournals.com, AHIP.org, BusinessInsurance.com, NAHU.org, WEBNetwork.org, Insurancebroadcasting.com, SeniorMarketAdvisor.com, SHRM.org, Accountingweb.com, Benefitadvisorsnetwork.com, GASB.org, Medicare.gov, cms.hhs.gov

“You can’t stay in your corner of the forest waiting for  others to come to you.  You have to go to them sometimes.”

2nd Quarter 2009

Final FASB Disclosure of More Asset Classes Held in Pension and Postretirement Benefit Plans
Excerpt: “The Financial Accounting Standards Board (FASB) on December 30, 2008, finalized revisions to FASB Statement # 132, Employers’ Disclosures about Pensions and Other Postretirement Benefits. The revisions are effective for fiscal years ending after December 15, 2009, and are found in

Quote of the Quarter: “If you wait for   opportunities to  occur, you will be one of the crowd.”

Edward de Bono, Psychiatrist & Author

Expert discusses Medicare coverage.  In the Wall Street Journal (2/21) Ask Encore column, Kelly Greene wrote that, according to Paul Precht, policy director for the nonprofit Medicare Rights Center in Washington, older Americans “must sign up for Medicare Part B any time in a seven-month window — three months before” their “65th birthday, the month” of their “birthday, or three months after — to avoid future penalties.” He noted that “there are a few exceptions in which people with retiree health coverage mightn’t have to sign up for Part B, including if you have health insurance from an HMO under the Federal Employees Health Benefit Program.” When people “have retiree health-insurance coverage, it generally kicks in after Medicare parts A and B. .. Retiree health coverage may help pay for Medicare costs, or for things that Medicare doesn’t cover.” Nevertheless, retirees “need to enroll in Part A and B to have full insurance coverage. Many retiree policies require” that people “sign up for parts A and B, anyway, so it is important to check that with…former employers.” Meanwhile, retirees “can skip Medicare Part D, which provides drug coverage, if’ they “have coverage through an ex-employer that’s good or better than Medicare’s.”

Indexed Medicare Part D Amounts for 2010
Excerpt: “The Centers for Medicare & Medicaid Services (CMS) has announced the indexed Medicare Part D standard benefit and Retiree Drug Subsidy (RDS) amounts for 2010. This Capital Checkup features charts comparing the 2010 numbers and the 2009 numbers.” (The Segal Group, Inc.\

Options to Remove Liabilities for High Retiree Medical Costs from a Company’s Balance Sheet: VEBAs (PDF)
2 pages. Excerpt: “The creation and structuring of the VEBA must fulfill a number of legal requirements all of which are normally manageable. Depending upon how the retiree medical VEBA is to be funded, there are a number of other approvals that may be required and SEC filings that must be made for companies with registered securities if the settlement agreement is a ‘material agreement.’ Further, the VEBA will allow for different accounting treatments of the change. If the company has securities registered with the Securities Exchange Commission, the company’s accounting treatment can be verified by obtaining approval of the proposed accounting treatment through the office of the Chief Accountant at the SEC and the appropriate Counsel’s office.” (Haynes & Boone)

Articles courtesy of: Benefitslink.com, Benefitnews.com, Bizjournals.com, AHIP.org, BusinessInsurance.com, NAHU.org, WEBNetwork.org, Insurancebroadcasting.com, SeniorMarketAdvisor.com, SHRM.org, Accountingweb.com, Benefitadvisorsnetwork.com, GASB.org, Medicare.gov, cms.hhs.gov

1st Quarter 2009

Quote of the Quarter: “Middle age is you’ve met so many people that every new person you meet reminds you of someone else.” Ogden Nash

FASB Expansion of Disclosures About Postretirement Benefit Plan Assets (PDF)
Excerpt: “On Dec. 30, 2008, the Financial Accounting Standards Board issued FSP FAS 132(R)-1, which amends Statement 132(R) to require more detailed disclosures about employers’ plan assets, including employers’ investment strategies, major categories of plan assets, concentrations of risk within plan assets and valuation techniques used to measure the fair value of plan assets. The FSP has other components. Read more details about the FSP in this issue of Heads Up, by Deloitte.” (Deloitte Development LLC via Financial Executives International)

Reference Guide to 2009 Retirement, Health and Welfare Plan Limits, Social Security and Medicare Changes (PDF)
Excerpt: “[The guide includes] a Table of Retirement Plan Limits from 1990 to Present. Plan administrators must concern themselves with a broad array of annual limits and thresholds that affect a variety of employee benefits. This Reference Guide consolidates these limits to give plan administrators quick access to this information. Page 1 lists updated limits and other cost-of-living adjusted numbers affecting retirement plans. Page 2 lists 2009 health, welfare and fringe benefit plan limits and 2009 figures needed to determine Social Security benefits and contributions. Page 3 lists 2009 Medicare premiums. Page 4 provides key retirement plan-related annual limits from 1990 to 2009. Page 5 provides the 2009 covered compensation tables.” (Hay Group)

FASB Fine-Tunes New Disclosures About Pension and Retiree Medical Plan Assets
Excerpt: “A refined FAS 132(R), Employers’ Disclosures about Pensions and Other Postretirement Benefits, should describe the objectives of employers’ disclosures about their pension, retiree medical and other postretirement benefit plan assets and investment risks, FASB decided at its Sept. 24 meeting.” (Mercer LLC)

Moving Retirees to VEBA-Funded Retiree Medical Plan Could Require New Application for Retiree Drug Subsidy
Excerpt: “The CMS believed that it was necessary to issue this guidance in light of the current trend of employers sponsoring retiree medical benefits that stop providing the coverage and instead contribute to a VEBA trust established specifically to cover such benefits. This trend has arisen out of labor union agreements, bankrup.tcy, and litigation.” (Wolters Kluwer)

Articles courtesy of: Benefitslink.com, Benefitnews.com, Bizjournals.com, AHIP.org, BusinessInsurance.com, NAHU.org, WEBNetwork.org, Insurancebroadcasting.com, SeniorMarketAdvisor.com, SHRM.org, Accountingweb.com, Benefitadvisorsnetwork.com, GASB.org, Medicare.gov, cms.hhs.gov

4th Quarter 2008

Quote of the Quarter: “A problem is a chance to do your best.” Duke Ellington

Report Says Medicare Is Stronger Insurance Model Than Federal Employees Health Benefits Program
Excerpt: “Medicare’s relatively low overhead makes it a better model for a publicly run health insurance option for people without employer-provided coverage than the Federal Employees Health Benefits Program, a health care expert said on Wednesday. ‘The Medicare program, as it’s currently constituted, needs reform,’ said Jacob Hacker, co-director of the University of California-Berkeley School of Law’s Center on Health, Economic and Family Security. ‘But I argue that a new public plan could embody many reforms and in doing so, could set a high standard for private plans.'” (GovernmentExecutive.com)

The Medicare Part D Coverage Gap: Costs and Consequences in 2007
Excerpt: “This study quantifies, for the first time, the number of Medicare Part D plan enrollees in 2007 who reached a gap in their prescription drug coverage known as the ‘doughnut hole,’ as well as the changes in beneficiaries’ use of medications and out-of-pocket spending after they reached that gap. The analysis excludes beneficiaries who receive low-income subsidies because they do not face a gap in coverage under their Medicare drug plan.” (Kaiser Family Foundation)

[Guidance Overview] Solving Small Employers’ GASB 45 Puzzle
Excerpt: “GASB 45 has already placed requirements on large government entities. Now smaller public employers face their own deadlines. GASB 45 poses a particular challenge to these entities because of the cost of valuing the liability and the potential size of the liability relative to their overall budget. This article outlines a sensible approach for these smaller public employers.” (Milliman)

Some Medicare beneficiaries do not understand benefits

One-third of Medicare beneficiaries surveyed said they are either unfamiliar or very unfamiliar with their health benefits. Researchers say understanding Medicare benefits is linked to outcomes and quality of care, so educational programs and simpler policies could have a major effect on people’s ability to get needed care. The Washington Post/HealthDay News (11/25)

National Conference on Public Employee Retirement Systems Produces Report on OPEB Challenges for Retiree Medical Benefit Programs
Excerpt: “National Conference on Public Employee Retirement System has issued a beautifully-done publication entitled ‘The OPEB Challenge – Mapping a comprehensive strategy for public employers.’ Many public sector employers provide retiree medical benefits as a supplement to ‘traditional’ pension benefits. With limited accounting recognition and pay-as-you-go funding, these benefits have not always received the attention that most agree they deserve. That situation is changing . . . .” (Cypen & Cypen)

Articles courtesy of: Benefitslink.com, Benefitnews.com, Bizjournals.com, AHIP.org, BusinessInsurance.com, NAHU.org, WEBNetwork.org, Insurancebroadcasting.com, SeniorMarketAdvisor.com, SHRM.org,
Accountingweb.com, Benefitadvisorsnetwork.com, GASB.org, Medicare.gov, cms.hhs.gov

2nd Quarter 2008

Quote of the Month: “Do not wait to strike before the iron is hot, but make it hot by striking .” William Butler Yeats

CMS Announces Indexed Medicare Part D Amounts for 2009
04/23/2008
Excerpt: On April 7, 2008, the Centers for Medicare & Medicaid Services (CMS) announced the indexed Medicare Part D standard benefit and Retiree Drug Subsidy (RDS) amounts for 2009. This Capital Checkup features charts comparing the 2009 numbers and the 2008 numbers.

Executive Summaries of Benefits Quarterly, 1st Quarter, 2008, Articles on Retirement and Health Plans

03/04/2008
The titles are: Conceptualizing the Defined Benefit Pension Promise – Implications from a Survey of Expert Opinion; The Consequences of Favoring Short-Term Budget Goals Over Long-Term Retirement Policy; Tax-Sheltered Annuities Under Code Section 403(B) New Regulations and New Obligations; Living With GASB 45: How To Manage Liabilities Associated with Retiree Medical Benefits; More Preventive Care, and Fewer Emergency Room Visits and Prescription Drugs — Health Care Utilization in a Consumer-Driven Health Plan.

Fewer Medicare Drug Plans Offer ‘Doughnut Hole’ Coverage in 2008

Excerpt: “Few Medicare plans in 2008 will offer brand-name prescription drug coverage in the so-called ‘doughnut hole’ gap because of cost, meaning that Medicare beneficiaries will have fewer options when choosing a plan during the open enrollment period that ends Dec. 31, the San Francisco Chronicle reports.” (California HealthCare Foundation)

Coordinating Retiree Health Benefits with Medicare (PDF)
03/31/2008
2 pages.

New GASB standards have public sector scrambling By Joanne Wojcik

August 15, 2007
Many public-entity employers are unsure of the extent of their retiree life and health benefit obligations and undecided about how they will calculate them for financial statements, a survey by Aon Consulting has found.


1st Quarter 2008

Quote of the Month: “ I can’t understand why people are
frightened by new ideas. I’m frightened of old ones.”
John Cage (1912-1992)

Overview of Retiree Health VEBAs
Excerpt: “Stuart Wohl, senior vice president at The Segal Company and retiree health care practice leader, points out some of the things that retiree health VEBAs can do . . . .” (The Segal Group, Inc.)

Buck Consultants Survey: Health Care Costs Projected to Increase at Double-Digit Levels Excerpt: Costs for the most popular types of health care coverage are projected to increase at double-digit rates through the remainder of 2007 and into 2008, according to a national survey of insurers and administrators. The survey released today by Buck Consultants, an ACS company and one of the world’s leading human resource and benefits consulting firms, analyzed responses from 79 health insurers, HMOs, and third-party administrators

Some Companies Use VEBAs to Clear Retiree Healthcare Liabilities from Balance Sheets Excerpt: “VEBAs have existed in some form since 1928, but only recently have companies begun to shift not just a portion of their health-benefits expense but the entire obligation to trusts administered by unions. The appeal for a company is clear: it negotiates a lump-sum payment that allows it to clear a costly obligation off its books.” (CFO.com)

Overview: CMS Announces Indexed Medicare Part D Amounts For 2008(The Segal Company)  Excerpt: “The Medicare Modernization Act (MMA) requires CMS to announce indexed Medicare Part D standard defined benefit amounts each year that reflect the increase in drug costs. The increase for the deductible, initial coverage limit and out-of-pocket threshold for 2008 is 4.64 percent.”

Articles courtesy of: Benefitslink.com, Benefitnews.com, Bizjournals.com, AHIP.org, BusinessInsurance.com, NAHU.org, WEBNetwork.org, Insurancebroadcasting.com, SeniorMarketAdvisor.com, SHRM.org,  Accountingweb.com, Benefitadvisorsnetwork.com, GASB.org, Medicare.gov,cms.hhs.gov