Month: November 2008

For anyone considering a career jump from legal practitioner to law professor, I highly recommend Jeffrey Lipshaw’s piece entitled “Memo to Lawyers: How Not to “Retire and Teach.” Abstract:

Many long-time practitioners muse about what it might be like to retire and teach, not realizing there is no more galvanizing phrase to their counterparts who have long toiled in the academy, nor one less likely to enhance the prospects of the unfortunate seasoned applicant who utters the phrase. I intend this essay not for law professors (though it may either amuse or irritate them), but for those in the practice who aspire, after all these years, to return to the academy. With a good deal of humility acquired along the way, I offer some realistic advice to job seekers, concluding that wistful phrase is precisely the opposite of the true sine qua non of success: demonstrating the capability of, and commitment to, being a productive scholar

While I enjoyed the article, I found it humorous that Professor Lipshaw considers employee benefits to be “mundane”:

It seems like the vast majority of young law professors want to talk and write about the burning constitutional, political, and rights issues of the day. It’s an advantage to want to teach and write in a niche that may be considered more mundane (somebody has to think about employee benefits, for example). But merely writing in the niche is not enough; you need to have something scholarly to say about it.

Apparently, he hasn’t been reading Benefitsblog. Who could possibly think this is mundane? Or even this?

The IRS has published its 2008 Cumulative List. The 2008 Cumulative List informs plan sponsors of issues the Service has specifically identified for review in determining whether a plan filing in Cycle D has been properly updated. It also acts as an attorney’s legal checklist for updating an individually designed plan that falls into the Cycle D Remedial Amendment Period.

In accordance with Rev. Proc. 2007-44, the Service will start accepting determination letter applications for Cycle D plans beginning on February 1, 2009. The 12-month submission period for Cycle D plans will end January 31, 2010.

It sounds like they might still be counting votes. However, the most recent report indicates that Proposition 101 in Arizona which would have attempted to block any government-run universal health plan in Arizona will be defeated. From The Arizona Republic: Health-care debate will rage on; However, universal plan in state appears unlikely. Excerpt:

The most recent count shows that 50.3 percent voted against the measure that backers said would prevent a government-run universal health plan in Arizona.

Dr. Eric Novack, chairman of Medical Choice for Arizona, said the close vote showed that Arizona voters are interested in blocking government-run health plans.

Read about the proposed legislation in previous posts here.

(The New York Times is gloating over the result.)

From CFO.com: “Study Shows Workers Sticking with Retirement Plans.” Excerpt:

U.S. employees seem to be resisting the temptation to save less in their retirement accounts, a Hewitt Associates survey shows.

Savings rates have barely dropped, from 8 percent in 2007 to 7.8 percent in 2008, although there is a predictably aggressive shifting of assets from equities to more other investments. What’s more, just 4 percent of employees have terminated their 401(k) plan contributions altogether this year, according to the analysis by Hewitt, a global human resources consulting company.

So, how bad does the survey show 401(k) investors being hit? The analysis of 2.7 million U.S. employees measured the average 401(k) plan balance as falling 14 percent through 2008, to $68,000 from $79,000 in 2007. In the past two months alone, employees on average have lost nearly 18 percent of their 401(k) plan savings. Some have lost more than 30 percent.

Senators Baucus, Grassley, Kennedy, and Enzi have joined together in proposing some year-end pension legislation. The name of the proposed legislation is : The Worker, Retiree, and Employer Recovery Act of 2008. Some links:

Press Release here.
Text of the Worker, Retiree, and Employer Recovery Act of 2008 (“WRERA?”)
Staff Summary here.

SEC Improves Disclosure for Mutual Fund Investors:

The Securities and Exchange Commission today voted unanimously to improve mutual fund disclosure by requiring that funds provide investors with a concise summary — in plain English — of the key information they need to make informed investment decisions. The new summary prospectus will appear at the front of a fund’s prospectus.

The Commission also approved amendments to encourage funds to make greater use of the Internet so investors can receive more detailed information in a way that best suits their needs.

More on the change from Reuters–“U.S. SEC adopts rules to improve fund disclosures.” Excerpt:

Almost half of the households in the United States use mutual funds to save for retirement or college tuition. But many consumers cannot understand the documents that fund firms such as Fidelity Investments or Vanguard are required to publish, detailing what will be done with their money.

Nor do retail investors generally take the time to wade through the prospectuses, which often run hundreds of pages long.

The SEC’s rule requires mutual funds to include key information at the front of its statutory prospectus such as the fund’s investment objectives, strategies, risks and costs.

The summary prospectus also needs to include brief information about the investment advisers and portfolio managers, as well as the fund’s purchase and sale procedures and tax consequences.

The new SEC rules, which do not go into effect until 2010, will allow investors to access more detailed information via the Internet or from the traditional paper prospectus.

Here is a website that has been studying and analyzing blogs and psychoanalyzing their authors. According to the “happy people” at PRfekt:

By studying how people write, we can get a glimpse of what is on the mind of the person and what is characteristic of the person – or, as in the case of a blog – what is typical of the role/persona used when writing that blog. maintaining the site and, supposedly, tells you the blogger’s psychological profile.

Watch the video about it here where the founders explain how they came up with this.

The author of Benefitsblog has been analyzed as the Scientist type:

The long-range thinking and individualistic type. They are especially good at looking at almost anything and figuring out a way of improving it – often with a highly creative and imaginative touch. They are intellectually curious and daring, but might be hesitant to try new things.

The Scientists enjoy theoretical work that allows them to use their strong minds and bold creativity. Since they tend to be so abstract and theoretical in their communication they often have a problem communcating their visions to other people and need to learn patience and use conrete examples. Since they are extremly good at concentrating they often have no trouble working alone.

(A lot of it is correct, but the part about trying new things. . . well, that is not really true or I wouldn’t have started a blog–back when people hardly knew what a blog was. Thanks to the TaxUpdate Blog for the link.)

Great article from Professor Katherine V.W. Stone of UCLA: The deeper roots of the mortgage crisis: employment instability:

In the 1980s, adjustable mortgages became commonplace and most mortgages ceased imposing prepayment fees, so that homeowners gained flexibility to adjust their debt level as interest rates changed. But that flexibility did not address the deeper source of instability – the danger of joblessness.

The problem now is that few people have the kind of long-term job security that our housing policies take for granted. According to the Bureau of Labor Statistics, the median length of time a worker spends with a particular employer has decreased in every age group.Today people have a more episodic experience in the labor market, moving from employer to employer, with periods of employment often followed by periods of unemployment and transition. When unemployment strikes, mortgage payments that once had been manageable become impossible.

These episodic employment patterns can also impact benefits negatively as well: people may lose their health insurance, or never build up a very big retirement nest egg because they are always leaving an employer before vesting in the employer’s retirement plan, etc.

Regarding the recently issued final FMLA Regulations issued by the DOL yesterday, here are the benefits-related sections of the regulations:

825.209 Maintenance of employee benefits.
825.210 Employee payment of group health benefit premiums.
825.211 Maintenance of benefits under multi-employer health plans.
825.212 Employee failure to pay health plan premium payments.
825.213 Employer recovery of benefit costs.

Besides these provisions, the final regulations also:

(1) Provide guidance regarding when PEOs will be considered joint employers for purposes of FMLA.

(2) Allow the employer and employee to agree to run paid leave concurrently with FMLA leave to supplement disability benefits.

(3) Allow an employer to deny an employee the payment of a bonus or other payment based on achievement of a specified job-related performance goal (such as attendance) where the employee has not met the goal due to being on FMLA leave, so long as this is done in a nondiscriminatory manner.

These final regulations have an effective date of January 16, 2009. For those employers who haven’t updated their benefits booklets or plan documents to reflect these new rules, it is time to do so.

Also, here is what the DOL has to say in the preamble as to what, if any changes, were made to the benefits-related provisions in these final regulations:

Section 825.209 (Maintenance of Employee Benefits) No changes were proposed to this section. The Department received no comments on this section and the final rule adopts this section as proposed.

Section 825.210 (Employee Payment of Group Health Benefit Premiums) Section 825.210 addresses an employee’s obligation to pay his or her share of group health plan premiums while on FMLA leave. The Department proposed to revise paragraph (f) of this section by deleting the word ‘‘unpaid,’’ because an individual who is simultaneously taking FMLA leave and receiving payments as a result of a workers’ compensation injury is not on unpaid leave. See § 825.207(e). In addition, the Department proposed to make several technical corrections by changing the cross-references at the end of § 825.210(d) and (f) to reflect the renumbering of other sections dealing with employer notice and workers’ compensation. The internal crossreference at the end of § 825.210(f) was deleted as unnecessary. The Department received no comments on this section and the final rule adopts the section as proposed.

Section 825.211 (Maintenance of Benefits Under Multi-Employer Health Plans) No changes were proposed to this section. The Department received no comments on this section and the final rule adopts this section as proposed.

Section 825.212 (Employee Failure To Make Health Premium Payments) Section 825.212 explains that an employer may terminate an employee’s health insurance coverage while the employee is on FMLA leave if the employee fails to pay the employee’s share of the premiums, the grace period has expired, and the employer provides sufficient and timely notice to the employee. The Department proposed to add language to paragraph (c) of this section to make clear that if an employer allows an employee’s health insurance to lapse due to the employee’s failure to pay his or her share of the premium as set forth in the regulations, the employer still has a duty to reinstate the employee’s health insurance when the employee returns to work, and the employer may be liable for harm suffered by the employee as a result of the violation if it fails to do so. This proposal is a clarification and does not represent a change in the Department’s enforcement position. Few comments were received on this section. The American Association of University Women supported the clarification, which they termed ‘‘common sense.’’ The Chamber requested that language be added to clarify that employers will not be held liable for medical costs incurred during a lapse in coverage prior to the employee’s return to work, while the National Retail Federation expressed concern regarding the employer’s ability to recoup the cost of maintaining the employee’s insurance coverage. The Department believes that the proposed addition is clear in stating that employers may only be held liable for their failure to restore an employee’s health insurance upon the employee’s return from FMLA leave. As explained in the NPRM, employers have a variety of alternatives to terminating an employee’s health insurance when the employee fails to make premium payments, such as payroll deductions or other deductions after the employee returns to work, to the extent recovery is allowed under applicable laws, or as set forth in revised § 825.213 below. Accordingly, the final rule adopts § 825.212 as proposed.

Section 825.213 (Employer Recovery of Benefit Costs) This section explains what process an employer may follow to recoup insurance premiums from an employee when the employee does not return from leave in certain circumstances. The Department proposed to move language from current § 825.310(h) to this section, in order to combine it with other issues involving repayment of health premiums. This language provides that where an employer requires medical certification that an employee’s failure to return to work was due to the continuation, recurrence, or onset of a serious health condition, so that the employee does not have to repay the employer for health insurance premiums paid during FMLA leave, the employee must bear the cost of any such certification, and associated travel costs. The Department received no comments on this section and adopts § 825.213 as proposed.

The New York Tmes reports here an increase in the use of HSAs:

But this year, at more than 100 large companies and hundreds of smaller ones, the high-deductible plans are the employee’s single take-it-or-leave-it option.

One of those companies is the automaker Nissan, which is offering only high-deductible plans to its 15,000 United States employees for the coming year. Another is Delta Airlines.

Most large companies still do offer a choice between high-deductible plans and more conventional insurance, which means workers must try to decide which approach is best for them.

Regarding whether HSAs will survive the next administration, the article states that “the plans may not have a White House advocate.” The article quotes an advisor to the President-elect as saying that “medical benefits that shift costs to employees” would not be consistent with the upcoming President’s position on health care.

Update: The Tax Update Blog has a response to the comments quoted in the article. (Great benefits quote, by the way: “Benefits don’t grow on magical benefits trees grown in HR Departments.”)