Compliance June 7, 2006

Bankrupt Northwest Asks Congress to Speed Up Aid Legislation

June 7, 2006 (PLANSPONSOR.com) - Northwest Airlines sent Representative John Boehner a letter saying that it would be forced to terminate its employee pension plan if Congress did not allow more time for the bankrupted airline to fund its plan, according to Business Insurance magazine.
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The pension reform legislation is bogged down in a conference committee, the magazine reported, but Northwest, which is threatening to terminate the retirement security of more than 70,000 employees, wants the Senate to give airlines 20 years to fund these plans themselves. A similar House pension bill, which passed, does not contain a large enough funding relief provision.

The Ohiorepresentative, according to MarketWatch, said he “want[ed] this bill over with,” referring to the slow pace of negotiations between the House and the Senate to settle differences between the two versions of the bill. The main problem, the Web site reported, is that the bills differ over pension-funding rules for “at risk” companies.

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According to MarketWatch, both versions of the bill require companies to pay bigger premiums to the Pension Benefit Guaranty Corporation (PBGC), the agency that serves as the nation’s private sector pension insurer.

According to the International Herald Tribune, Northwest reported a net loss of $295 million in April.

If Northwest’s request for more time isn’t granted, the PBGC, which has racked up an almost $23 billion deficit of its own handling other airline and steel industry bankruptcies, will have to bail the airline out of its financial woes, according to Business Insurance magazine.

The PBGC, which estimates that Northwest’s three pension plans have $5.8 billion in assets and $11.5 billion in liabilities, would have to endure one of its biggest losses as a result of taking on the bankrupt airline. The PBGC estimated that it would be responsible for covering $2.8 billion of Northwest’s $5.7 billion funding deficit.

Northwest announced in early April that it would pay more than $8 million in interest and expenses on $371 million of its 2003 pension debt to the PBGC, according to a bankruptcy court filing (See  Northwest Makes Deal to Pay on Pensions ).

In early May, Northwest was in danger of collapsing under its $3 billion shortfall, but the bill was still being reconciled between the Senate and the House, (See  Pension Bill Likely to Save Northwest Pension Plans ).

Compliance June 6, 2006

CO Governor Vetoes Two Health Care Bills

June 6, 2006 (PLANSPONSOR.com) - Colorado's governor has vetoed two health care bills in the past two months - one that would have required publishing the names of employers whose workers get public health care, and the other requiring insured group health care plans to cover employees' grandchildren in some cases.
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Governor Bill Owens called the first bill “well intentioned,” and the other he said was intended to “embarrass and harass employers,” according to his veto messages.

Owens vetoed Senate Bill 06-227 on June 2. Described as “Concerning reporting requirements regarding the payment of health care costs, and making an appropriation therefore,” the bill would make records of employees’ health benefits available to the public upon request.

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The bill would require individuals who receive public health care benefits to disclose their employers’ identity to the Department of Labor and Employment, according to the governor’s veto message.

The bill would also require employers with more than 50 employees to report on their employees’ health benefits to the Department of Labor and Employment.

Also, according to Owens’ veto message, the bill would require employers with at least 500 employees who receive public health benefits to submit information to the Department of Labor and Employment regarding the number of benefit-receiving employees, the amount employers spend on employees and the percentage of payroll that the employer spends on employee health care. For every day that the employer does not submit this information, he or she would be fined.

“Not only does this bill threaten existing Colorado jobs by pressuring employers into potentially unaffordable expenditures, SB 227 also would put Colorado at a competitive disadvantage in terms of job creation,” Owens wrote. “Companies would be hesitant to bring family sustaining jobs to Colorado if they knew the state was injecting itself so directly and publicly into their business decisions.”

Owens also wrote that he thinks the bill may violate the federal Health Insurance Portability and Accountability Act’s Privacy Standard because it could potentially lead to identifying individuals.

House Bill 06-1346, Owens wrote on May 26 in his veto message, may be “well intentioned,” but it could have the “unintended effect of increasing care costs at a time when many Coloradans are already struggling to afford health insurance.”

Owens maintained that the bill, described as “Concerning dependent health care coverage for a minor child of a person eligible for dependent coverage,” would take away the rights of employers to decide which benefits to offer.

“I am concerned that these mandates lessen an employer’s control over benefits and contribute to increase premiums, which directly impact employees,” Owens wrote.

To qualify for the health care coverage described under this bill, the parent of the dependent would be financially responsible for and have the same legal residence as his or her grandchild, Owens wrote.

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