Compliance July 27, 2005

US House Passes Association Health Plans Bill

July 27, 2005 (PLANSPONSOR.com) - In an effort to help small employers deal with the ever-present problem of health-care coverage costs, the US House on Tuesday approved a bill allowing companies to collectively buy health insurance for their workers.
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Lawmakers okayed the measure, the Small Business Health Fairness Act (HR 525), by a 263-165 vote, according to news reports.

The legislation would allow small businesses, trade associations or business organizations to pool their purchasing power to get better health coverage prices and exempts these Association Health Plans (AHP) from many state regulations.

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“The most coveted health insurance available in America is offered by big companies and unions. All we’re trying to do in the bill is to give small employers the same opportunities to provide high-quality health insurance to their employees at competitive rates,” said Representative John Boehner (R-Ohio), chairman of the Education and Workforce Committee, in debate.

While supporters contended that the measure would restrain health costs and help cover some of the millions of uninsured working people, critics charged that this approach could provide bare-bones insurance to some workers and leave others facing even higher bills. The regulatory exemptions in the bill also prompted opposition from patient advocacy groups and insurers.

Democrats argued that the AHP plans would be able to choose relatively young and healthy workers and exclude older sicker ones, who would then face even higher insurance premiums outside the AHP framework.

The outlook for the measure from here was uncertain since previous versions of the legislation (See  DOL Pushes Health Insurance Alternative for Small Biz ) have languished in the Senate, in part because of opposition from influential Republicans, according to news reports.

Compliance July 26, 2005

Pension Bill Gets by US Senate Finance Panel

July 26, 2005 (PLANSPONSOR.com) - The US Senate Finance Committee has approved a pension reform proposal requiring companies to fully fund their defined benefit pension plans and giving airlines 14 years to pay off their pension obligations.
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The legislation now goes to the full Senate for a vote. The Senate Committee on Health, Education, Labor and Pensions has also held hearings and is working on a parallel pension measure, and a similar pension proposal is under consideration by the House Ways and Means Committee, Bloomberg reported.

“The fragile state of our nation’s pension plans has caught the attention of Americans everywhere,” said US Senator Charles Grassley (R-Iowa), Finance Committee chairman. The Congressional Budget Office estimates that companies underfunded their pensions last year by as much as $600 billion.

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An amendment added to the legislation Tuesday gives airlines 14 years to pay overdue pension obligations. Delta Air Lines Inc. and Northwest Airlines Corp., the third-and fourth-largest US carriers had asked for 25 years (See  Senate Pension Reforms Won’t Give Airlines Enough Time ). The rest of the 29,651 companies that offer defined-benefit pensions would have seven years to catch up on any backlog, according to the news report.

Also added to the measure Tuesday is a plan that would allow companies to offer cash-balance plans as long as they don’t discriminate against older employees. The 1,700 cash-balance plans already in existence have been in legal limbo since a 2003 federal court ruling that deemed International Business Machine Corp.’s plan illegal because benefits for younger workers exceeded those of older workers for the same employment period (See  IBM Strikes a Deal on Cash Balance Suit ).

The House version of the legislation, which is before the Ways and Means Committee, eliminates the use of credit balances for companies that are less than 80 percent funded.

The Senate measure approved Tuesday, the National Employee Savings and Trust Equity Guarantee Act, (NESTEG), would require companies to fully fund their plans or face increased penalties (See  Senate Bill Takes On Private Pension Pickle  ). The bill would also increase premiums that companies pay to the PBGC for insurance to $30 per plan participant per year from $17.

More information about the US House Republican pension plan is  here .

More information about the Bush Administration’s pension proposal is  here .

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