Retiree Group Targets Healthcare Gaps

February 26, 2002 ( - Those retirees lucky enough to have employer-sponsored health coverage have, in a growing number of cases, seen that benefit come under attack by both tough economic times and rising healthcare costs.

However, the National Retiree Legislative Network (NRLN), a Washington-based coalition of nearly a dozen retiree organizations dedicated to protecting the pension plans and retirement benefits of their members, has outlined an aggressive legislative agenda for 2002, according to its organizers. And that agenda could present plan sponsors with yet another tough choice. 

Filling the ‘Hole’

Top of the list is support for H.R. 1322 – The Emergency Retiree Health Benefits Protection Act of 2002. That legislation, first introduced in October 2000 by Representative John Tierney (D-Massachusetts), was designed to prevent group health plans from making post-retirement reductions of retiree health benefits (see Bitter Pill ).

The bill attempts to fill in what has been called ‘The Hole in ERISA’ (see The Hole in ERISA ). Drafted at a time where retiree healthcare issues paled in comparison to the more immediate concerns regarding pension benefits, the Employee Retirement Income Security Act of 1974 (ERISA) currently protects only the right of participants to be told about changes in their health-care plan, not from changes in the benefits themselves.  And a growing number of retirees have been getting those notifications of late (see Retiree Group Protests Premium Hikes and LTV Retiree Health Plan Running Out of Cash, Time ).   

Protection Provisions

Specifically, in its current form the bill would amend ERISA to provide ’emergency’ protections for retiree health benefits, including:

  • prohibiting group health plans from making post-retirement reductions of retiree health benefits,
  • requiring group health plans to adopt provisions barring post-retirement reductions in retiree health benefits, and
  • requiring group health plans to restore benefits reduced after retirement

The bill would also authorize the Secretary of Labor to waive or vary such requirements for plan sponsors who file for an exemption and were able to prove that compliance would:

  • be adverse to the interests of plan participants in the aggregate,
  • not be administratively feasible, and
  • cause substantial business hardship to the sponsor

To help ease the financial pain of transition, the bill would also create a program that would guarantee loans, provided by private banking and investment institutions, to eligible plan sponsors to assist them in meeting obligations under the law – which is still seeking a Senate sponsor.

Plan Sponsors Squeezed

However, retirees are not the only ones caught in the crosshairs of this legislative gap. Plan sponsors are confronted with both the challenge of meeting the financial obligations for growing – and aging – retiree groups, without the ability to pre-fund the obligations, as they can with pensions. Until this gap is filled, it is unlikely that mandating the benefits will do anything more than accelerate the rush to phase out these critical benefits – just when they are needed most.

Based in Washington, DC, NRLN represents nearly 2 million retirees from US WEST, Bell Atlantic, Raytheon, GE, GM, IBM, Prudential Insurance, Johns Manville, Southern New England, Western Union, among others.

– Nevin Adams   &nb