Most employers believe that the primary way to provide health insurance benefits should remain with employer-based plans, according to a survey by the International Foundation of Employee Benefits Plans.

The study found that 64 percent of the employers who responded want employers to continue to offer health care benefits, while only 25 percent prefer a government-sponsored national health care system and 20 percent want to have universal coverage purchased by individuals.

However, employers are resistant to any new law that mandates employer-provided coverage; only 43 percent of survey respondents preferred employer mandates. And 71 percent, believe that the U.S. health care system needs reform.

Almost three-quarters of employers believe the best way to reduce health care costs is to make health and wellness a core value of the organization, and many of them are already using health-improvement and disease-management programs to help their employees stay healthy and reduce costs.

-- Tom Pappas,
UnitedHealthcare of Pennsylvania,
tpappas@uhc.com

The recently enacted Worker, Retiree and Employer Recovery Act provides some relief for employers that contribute to defined benefit plans, as well as for certain individual taxpayers. It also makes several expected technical corrections to the Pension Protection Act of 2006.

The Act waives the tax penalties imposed on those age 70 1/2 and older who do not take required minimum distributions from their 401(k), 403(b) or 457 plans or IRAs for 2009. No relief is provided for required minimum distributions for 2008 and the waiver does not apply to defined benefit plans.

For plan years beginning on or after Jan. 1, 2008, the Act eliminates a requirement that employers immediately fully fund their single-employer defined benefit plans if they fail to meet certain benchmarks. The target funding percentage is 92 percent for 2008, 94 percent for 2009, 96 percent for 2010 and 100 percent thereafter.

Under the Pension Protection Act, the value of plan assets may be determined by averaging the fair market values over a period of 24 months or less, making adjustments for contributions and distributions. In order to lessen the impact of recent steep declines in asset values, the Act allows employers that use the averaging method to "smooth out" these unexpected losses over 24 months by including expected earnings on the assets through the valuation date. Asset smoothing can be applied retroactively to Jan. 1, 2008.

Plan sponsors should review these and other provisions of the Act that may have an immediate impact on plan operations.

-- Lauren B. Licastro,
llicastro@morganlewis.com,
Morgan, Lewis & Bockius LLP