[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1322 Introduced in House (IH)]
108th CONGRESS
1st Session
H. R. 1322
To amend title I of the Employee Retirement Income Security Act of 1974
to provide emergency protection for retiree health benefits.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
March 18, 2003
Mr. Tierney (for himself, Mr. Brown of Ohio, Mr. Lynch, Mr. Oberstar,
Ms. Woolsey, Mr. Frank of Massachusetts, Mr. Sanders, Ms. Norton, Mr.
Hinchey, Mr. Clyburn, Mr. Kildee, Mr. Kleczka, Mr. Abercrombie, Mr.
McNulty, Mr. Bishop of New York, Ms. Lee, Mr. Kucinich, Ms. Loretta
Sanchez of California, Mr. George Miller of California, Ms. Jackson-Lee
of Texas, Mr. Kennedy of Rhode Island, and Mr. Serrano) introduced the
following bill; which was referred to the Committee on Education and
the Workforce
_______________________________________________________________________
A BILL
To amend title I of the Employee Retirement Income Security Act of 1974
to provide emergency protection for retiree health benefits.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Emergency Retiree Health Benefits
Protection Act of 2003''.
SEC. 2. FINDINGS AND PURPOSES.
(a) Findings.--The Congress finds the following:
(1) Retired participants of group health plans regulated by
the Employee Retirement Income Security Act of 1974 (ERISA)
have been severely harmed by the virtually unchecked practices
of sponsors of such plans involving the post-retirement
cancellation or reduction of health benefits which retirees
counted on receiving for their lifetimes.
(2) Such widespread post-retirement reductions in retiree
health benefits has led to a crisis in retiree health care in
which retirees--
(A) have been unable to substitute individual
coverage for the group coverage they lost, or, in order
to obtain individual coverage, have jeopardized their
economic security in retirement;
(B) because of preexisting medical conditions
cannot obtain substitute coverage that they can afford
without depleting their life savings or have been
unable to obtain adequate medical care or medical care
they had relied on to deal with serious illness;
(C) have sustained catastrophic illnesses or
injuries or otherwise experienced a marked
deterioration in their medical conditions or health as
a result of post-retirement changes to their medical
benefits;
(D) have been transferred indiscriminately into
improperly or inadequately managed health maintenance
organizations or other managed care entities, resulting
in the worsening rather than improvement of prior
medical conditions; and
(E) in many instances, have failed to obtain
adequate relief in the courts due to highly restrictive
judicial interpretations which are inconsistent with
ERISA's underlying protective purposes.
(3) The crisis in retirees healthcare generated by the plan
sponsor practice of post-retirement cancellations or reductions
of previously promised retiree health benefits has led to a
widespread loss of confidence in the integrity of ERISA-
regulated group health plans and the ability of ERISA itself to
adequately protect retiree health benefits.
(4) A strong and dependable private sector retiree health
system is necessary to the essential health of our Nation's
senior citizens.
(b) Purposes.--The purposes of this Act are to ensure that the
reasonable health benefit expectations of retirees from ERISA-regulated
group health plans are fulfilled, to minimize the incidence of
prolonged legal disputes arising out of the post-retirement
cancellation or reduction of retiree health benefits from such plans,
and to prevent further adverse effects on retiree health arising from
such post-retirement changes. To this end, the purposes of this Act
also include the following:
(1) to safeguard retired participants of group health plans
subject to the Employee Retirement Income Security Act of 1974
(29 U.S.C. 1001 et seq.) from loss or reduction of their health
benefits from such plans by barring plan sponsors from
canceling or reducing such benefits after the dates such
participants retire and when they no longer are able to absorb
such losses or reductions without experiencing adverse effects
on their health or finances;
(2) to establish an enforceable obligation on the part of
sponsors of such group health plans to restore health benefits
previously taken away from retired participants of such plans
to the extent such benefits were canceled or altered after the
dates such participants retired and the plan sponsor would not
sustain substantial business hardship by restoring such
benefits; and
(3) to establish an Emergency Retiree Health Loan Guarantee
Program to assist sponsors of group health plans subject to the
obligation to restore retiree health benefits under this Act to
obtain credit to assist them in discharging such obligations by
providing retiree health loan guarantees that would encourage
the availability of such credit.
SEC. 3. AMENDMENT OF EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974 TO
PROVIDE RETIREE HEALTH BENEFIT PROTECTIONS IN GROUP
HEALTH PLANS.
(a) In General.--Subtitle B of title I of the Employee Retirement
Income Security Act of 1974 is amended by adding at the end a new part
8 as follows:
``PART 8--EMERGENCY RETIREE HEALTH BENEFIT PROTECTIONS
``SEC. 801. PROHIBITION AGAINST POST-RETIREMENT REDUCTIONS OF RETIREE
HEALTH BENEFITS BY GROUP HEALTH PLANS.
``(a) In General.--Notwithstanding that a group health plan
described in subsection (b) may contain a provision reserving the
general power to amend or terminate the plan or a provision
specifically authorizing the plan to make post-retirement reductions in
retiree health benefits, it shall be prohibited for any group health
plan, whether through amendment or otherwise, to reduce the benefits
provided to a retired participant or his or her beneficiary under the
terms of the plan if such reduction of benefits occurs after the date
the participant retired for purposes of the plan and reduces benefits
that were provided to the participant, or his or her beneficiary, as of
the date the participant retired. Any group health plan provision which
purports to authorize the reduction of benefits in a manner
inconsistent with the foregoing prohibition shall be void as against
public policy.
``(b) Group Health Plan.--The term `group health plan' shall have
the same meaning as in section 607(1).
``(c) Prohibited Reduction of Benefits.--As used in this section,
references to a prohibited reduction of benefits means any group health
plan amendment or other action which has the effect of--
``(1) canceling, decreasing or limiting the amount, type,
level, or form of any benefit or option provided prior to the
amendment or action;
``(2) imposing or increasing the out-of-pocket costs a
retired participant, or his or her beneficiary, must pay in
order to keep or obtain any benefits that were provided to the
participant or beneficiary prior to the amendment or action; or
``(3) modifying the manner by which medical services are
delivered under the plan so that after the amendment or action
a retired participant, or his or her beneficiary, has less
ready access to the delivery of any such medical services than
the participant or beneficiary had prior to the amendment or
action.
``(d) Treatment of Plan Termination.--
``(1) In general.--Subject to paragraph (2), a termination
of a group health plan shall be treated as violating the
prohibition contained in this section if, after the
termination, the plan sponsor of the terminated plan fails to
continue to provide to the participants who retired prior to
the termination and to their beneficiaries the same retiree
health benefits that were provided prior to the termination.
``(2) Waiver.--Paragraph (1) shall not apply in the case of
the termination of a group health plan if the Secretary issues
a waiver under this paragraph in connection with such
termination. The Secretary shall issue such a waiver if and
only if the plan sponsor demonstrates to the satisfaction of
the Secretary, in accordance with regulations prescribed by the
Secretary, that such plan sponsor will be unable to continue in
business unless such a waiver is issued.
``(e) Consent or Authorization by Participant.--A reduction of
benefits shall not be treated as prohibited by this section if such
reduction is consented to in writing by any retired participant or is
authorized with respect to the retired participant under the terms of
one or more agreements which the Secretary finds to be collective
bargaining agreements between one or more employee representatives who
were representing such participant at the time of the entry into such
agreement and one or more employers.
``SEC. 802. ADOPTION BY GROUP HEALTH PLANS OF PROVISION BARRING POST-
RETIREMENT REDUCTIONS IN RETIREE HEALTH BENEFITS.
``Every group health plan shall contain a provision which expressly
bars the plan, or any fiduciary of the plan, from reducing the benefits
provided under the plan to a retired participant, or his or her
beneficiary, if such reduction affects the benefits provided to the
participant or beneficiary as of the date the participant retired for
purposes of the plan and such reduction occurs after the participant's
retirement.
``SEC. 803. RESTORATION BY GROUP HEALTH PLANS OF BENEFITS REDUCED AFTER
RETIREMENT.
``(a) In General.--The plan sponsor of each group health plan shall
provide, in accordance with this section, the option of benefit
restoration to each retired participant that meets the following
requirements:
``(1) The retired participant is entitled to benefit
coverage under the plan as of the date of enactment of the
Emergency Retiree Health Benefits Protection Act of 2003.
``(2) The amount, type, level, or form of any benefits or
option provided to the retired participant under the plan as of
the date the participant retired was reduced after the
participant's date of retirement. For purposes of the preceding
sentence, the term `reduced' has the same meaning as in section
801(c).
``(3) The retired participant has elected to restore
benefits under the plan within the restoration period
prescribed by subsection (c) and in accordance with such
procedures established by the plan pursuant to regulations of
the Secretary.
``(b) Exception for Certain Plans.--In accordance with regulations
prescribed by the Secretary, subsection (a) shall not apply to any
group health plan with less than 100 participants both on and after the
date of enactment of the Emergency Retiree Health Benefits Protection
Act of 2003.
``(c) Restoration Period.--The term `restoration period' means the
period which--
``(1) begins not later than 1 year after the date of
enactment of the Emergency Retiree Health Benefits Protection
Act of 2003;
``(2) ends before 2 years from such date, unless extended
by the Secretary pursuant to section 804(g); and
``(3) is of no less than 60 days duration.
``(d) Notice Requirements Concerning Restoration of Benefits.--In
accordance with regulations prescribed by the Secretary, each group
health plan subject to the requirements of subsection (a) shall, within
no less than 30 days prior to the commencement of the plan's
restoration of benefits period, provide written notice to each retired
participant of the plan who meets the requirements of subsection (a) of
the following:
``(1) A description of all benefits the retired participant
is entitled to have restored.
``(2) The administrative procedure established under the
plan which may be used to submit a claim for the restoration of
any benefits.
``(3) An itemization of the value of each benefit the
retired participant is entitled to have restored, as determined
in accordance with regulations of the Secretary, and the total
value of all such benefits.
``(4) A description of any post-retirement increases in
retiree health benefits the retired participant received which
the plan sponsor could rescind if the retired participant
asserts a claim for the restoration of benefits.
``(5) An itemization of the value of each retiree health
benefit the plan sponsor could rescind, as determined in
accordance with regulations of the Secretary, and the total
value of all such benefits.
``(6) If the plan sponsor has filed an application for a
substantial business hardship exemption under section 804, the
date such application was filed, the date notice of such application
was given to retired participants entitled to submit a claim for the
restoration of benefits, and the status of such application as of the
date of the notice sent pursuant to this subsection.
``(7) Such other information in such form and detail as may
be prescribed by the Secretary to carry out the purposes of
this part.
``(e) Deadline for Restoration of Benefits.--Regardless of any
extension that may be granted by the Secretary pursuant to section
804(g), all benefits required to be restored under this section shall
be restored within no more than 3 years from the date of enactment of
the Emergency Retiree Health Benefits Protection Act of 2003, or the
date the plan sponsor files an application for an exemption under
section 804, whichever comes last.
``SEC. 804. EXEMPTION FROM RESTORATION OF BENEFITS REQUIREMENTS.
``(a) Application for Exemption.--Any plan sponsor of a group
health plan that would sustain substantial business hardship if
required to fulfill, in whole or in part, the restoration of benefits
requirements contained in section 803, may file an application for an
exemption with the Secretary from any or all of such requirements.
``(b) Authority for Waiver or Variance.--In response to an
application filed by a plan sponsor pursuant to subsection (a), the
Secretary may waive or vary the requirements of section 803 with
respect to any or all of such requirements, including postponing for
reasonable periods of time the obligation of the plan sponsor to
restore reduced benefits, if the Secretary finds that compliance by the
plan sponsor with the requirements of section 803 would--
``(1) be adverse to the interests of plan participants in
the aggregate;
``(2) not be administratively feasible; and
``(3) cause substantial business hardship to the plan
sponsor.
``(c) Factors Taken Into Account.--For purposes of this section,
the factors to be taken into account in determining substantial
business hardship shall include (but shall not be limited to) whether--
``(1) the plan sponsor is operating at an economic loss;
``(2) compliance with the restoration of benefits
requirements would necessitate substantial future reductions in
health benefits provided to participants under the plan or
cause a substantial decline in employment with the plan
sponsor;
``(3) it is reasonable to expect that the plan will be
continued only if a waiver or appropriate variance is granted;
and
``(4) the provisions of the Retiree Health Loan Guarantee
Program established under section 805 are unavailable to the
plan sponsor submitting the application, or, if available,
still would not provide a sufficient basis for denying a waiver
or variance.
``(d) Requirement of Satisfactory Evidence.--
``(1) In general.--The Secretary shall, before granting a
waiver or variance under this section, require each applicant
to provide evidence satisfactory to the Secretary that the
applicant has provided timely written notice of the filing of
an application for such waiver or variance to each retired
participant entitled to submit a claim for the restoration of
benefits under the applicant's plan.
``(2) Timeliness.--For purposes of paragraph (1), a written
notice shall be considered timely if it is provided not later
than 60 days prior to the date the plan sponsor files an
application for a waiver or variance under this section.
``(3) Information required.--The notice referred to in
paragraph (1) shall include information with respect to the
specific relief that will be sought by the plan sponsor's
application, the period of time for which relief is sought, and
such other relevant information as the Secretary may prescribe.
``(e) Participation in Proceedings by Retired Plan Participants.--
Each retired participant entitled to submit a claim for the restoration
of benefits within the meaning of this section shall be provided a
reasonable opportunity to submit comments or otherwise participate in
any proceeding established by the Secretary to determine whether to
grant or deny an application for a waiver or variance filed by the
retired participant's plan sponsor.
``(f) Exception for Certain Applications.--The Secretary shall not
be authorized to grant any application for a waiver or variance
purporting to satisfy the requirements of subsection (b) if--
``(1) within the 5-year period preceding the date of the
plan sponsor's application the plan sponsor could have
transferred excess pension assets to a health benefits account
within the meaning of section 420 of the Internal Revenue Code
of 1986 (as in effect on the date of the enactment of the Tax
Relief Extension Act of 1999) but failed to do so, and the plan
sponsor is submitting an application on behalf of such retiree
health account; or
``(2) the plan sponsor submitting the application also
maintains a fully funded pension plan with respect to which--
``(A) retired participants eligible to submit a
claim for the restoration of benefits under section 803
are also eligible to receive ad hoc cost-of-living
adjustment benefits;
``(B) the assets of the fully funded pension plan,
over the past 5 years preceding the date of application
for a waiver or variance, on average have exceeded 120
percent of the plan's liabilities;
``(C) the plan had no minimum funding requirement
to satisfy within the 5 years preceding the date of
application for the waiver or variance and the plan
sponsor submitting the application made no minimum
funding contribution to the fully funded pension plan
during such 5-year period; and
``(D) the plan sponsor submitting the application
for a waiver or variance failed to provide an ad hoc
cost-of-living adjustment benefit from the fully funded
pension plan during the 5-year period preceding the
date of application for the waiver or variance.
``(g) Running of Restoration Period Suspended.--The submission of
an application for a waiver or variance pursuant to this section shall
suspend the running of any relevant restoration period as specified in
subsection (c). Where appropriate, the Secretary shall direct the
reopening of any relevant restoration period upon the final conclusion
of proceedings to determine whether an application should be granted or
denied.
``SEC. 805. ESTABLISHMENT OF EMERGENCY RETIREE HEALTH LOAN GUARANTEE
PROGRAM.
``(a) Definitions.--For purposes of this section--
``(1) Board.--The term `Board' means the Emergency Retiree
Health Loan Guarantee Board established under subsection (c).
``(2) Program.--The term `Program' means the Emergency
Retiree Health Loan Guarantee Program established under
subsection (b).
``(3) Eligible plan sponsor.--The term `eligible plan
sponsor' means any plan sponsor as defined in section 3(16)(B)
that maintains a group health plan subject to the retiree
health benefits restoration requirements of section 803.
``(b) Establishment of Emergency Retiree Health Loan Guarantee
Program.--There is established the Retiree Health Loan Guarantee
Program, to be administered by the Board, the purpose of which is to
provide loan guarantees to eligible plan sponsors in accordance with
this section.
``(c) Retiree Health Loan Guarantee Board Membership.--There is
established a Retiree Health Loan Guarantee Board, which shall be
composed of--
``(1) the Secretary of Labor, who shall serve as Chairman
of the Board;
``(2) the Secretary of Commerce;
``(3) the Secretary of the Treasury;
``(4) the Secretary of Health and Human Services; and
``(5) the Chairman of the Council of Economic Advisers.
``(d) Retiree Health Loan Guarantee Program--
``(1) Authority.--The Program may guarantee loans provided
by private banking and investment institutions to eligible plan
sponsors for purposes of assisting such plan sponsors to meet
their obligations under section 803. Such loan guarantees shall
be provided to the extent provided in advance in appropriation
Acts pursuant to paragraph (4) and only in accordance with the
procedures, rules, and regulations established by the Board.
``(2) Total guarantee limit.--The aggregate amount of loans
guaranteed and outstanding at any time under this section may
not exceed $5,000,000,000.
``(3) Individual guarantee limit.--The aggregate amount of
loans guaranteed under this section with respect to a single
eligible plan sponsor may not exceed $5,000,000.
``(4) Additional costs.--For the additional cost of loans
guaranteed under this subsection, including the costs of
modifying the loans, as defined in section 502 of the
Congressional Budget Act of 1974 (2 U.S.C. 661a), there is
authorized to be appropriated $200,000,000, to remain available
until expended.
``(e) Requirements for Loan Guarantees.--A loan guarantee may be
issued under this section upon application to the Board by an eligible
plan sponsor pursuant to an agreement to provide a loan to that
eligible plan sponsor by a private bank or investment company, if the
Board determines that--
``(1) credit is not otherwise available to that eligible
plan sponsor under reasonable terms and conditions sufficient
to meet its financing needs with respect to the restoration of
retiree health benefits, as reflected in the financial and
business plans of that eligible plan sponsor;
``(2) the prospective earning power of that eligible plan
sponsor, together with the character and value of the security
pledged, furnish reasonable assurance of repayment of the loan
to be guaranteed in accordance with its terms;
``(3) the loan to be guaranteed bears interest at a rate
determined by the Board to be reasonable, taking into account
the current average yield on outstanding obligations of the
United States with remaining periods of maturity comparable to
the maturity of such loan;
``(4) the loan to be guaranteed will materially assist that
eligible plan sponsor to discharge its obligation to comply
with the restoration of benefits requirements contained in
section 803; and
``(5) the eligible plan sponsor has agreed to an audit by
the General Accounting Office prior to the issuance of the loan
guarantee and annually while any such guaranteed loan is
outstanding.
``(f) Terms and Conditions of Loan Guarantee.--
``(1) Loan duration.--All loans guaranteed under this
section shall be payable in full not later than December 31,
2011, and the terms and conditions of each such loan shall
provide that the loan may not be amended or any provision
thereof waived without the consent of the Board.
``(2) Loan security.--Any commitment to issue a loan
guarantee under this section shall contain such affirmative and
negative covenants and other protective provisions that the
Board determines are appropriate.
``(3) Fees.--An eligible plan sponsor receiving a guarantee
under this section shall pay a fee in an amount equal to 0.5
percent of the outstanding principal balance of the guaranteed
loan to the Department of the Treasury.
``(g) Reports to Congress.--The Secretary of Labor shall submit
annually to each House of the Congress a full report of the activities
of the Board under this section during 2004 and 2005, and annually
thereafter during such period as any loan guaranteed under this section
is outstanding. Such report shall be submitted not later than January
31, of each year (beginning in 2004).
``(h) Salaries and Administrative Expenses.--For necessary expenses
to administer the Program, there is authorized to be appropriated to
the Department of Labor (and to be transferred to the Office of the
Assistant Secretary for Pension and Welfare Benefits Administration)
$10,000,000, to remain available until expended.
``(i) Termination of Guarantee Authority.--The authority of the
Board to make commitments to guarantee any loan under this section
shall terminate on December 31, 2007.
``(j) Regulatory Action.--The Board shall issue such final
procedures, rules, and regulations as may be necessary to carry out
this section not later than 90 days after the date of enactment of the
Emergency Retiree Health Benefits Protection Act of 2003. In no event
shall the Board issue a procedure, rule, or regulation which authorizes
it to approve or deny any application for a loan guarantee in more than
270 days after receipt of such application.
``(k) Emergency Designation.--The entire amount made available to
carry out this section--
``(1) is designated by Congress as an emergency requirement
pursuant to section 251(b)(2)(A) of the Balanced Budget and
Emergency Deficit Control Act of 1985 (2 U.S.C. 901(b)(2)(A));
and
``(2) shall be available only to the extent that an
official budget request that includes designation of the entire
amount as an emergency requirement (as defined in the Balanced
Budget and Emergency Deficit Control Act of 1985) is
transmitted by the President to the Congress.
``SEC. 806. EFFECT ON OTHER CLAIMS.
``(a) Other Claims Unaffected.--Nothing contained in this part
shall be construed to alter, impair, or eliminate any claim for retiree
health benefits based on conduct alleged to violate the terms of a
group health plan, any provision of this Act (other than this part), or
both, regardless of whether such conduct occurred prior to, on, or
after, the effective date of this part.
``(b) Other Causes of Action Not Authorized.--Unless the conduct
giving rise to a claim for retiree health benefits is alleged to
violate the provisions of this part, nothing contained in this part
shall be construed to authorize any other cause of action for the
recovery of retiree health benefits.
``SEC. 807. REGULATIONS.
``The Secretary may promulgate such regulations as may be necessary
to carry out the provisions of this part. The Secretary may promulgate
any interim final rules as the Secretary deems are appropriate to carry
out this part.
``SEC. 808. ENFORCEMENT.
``The enforcement provisions of sections 501 and 502 shall be
applicable to this part.''.
(b) Civil Penalty Section.--Section 502(c) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1132(e)) is amended
by adding at the end the following new paragraph:
``(8) The Secretary may assess a civil penalty of not more than
$1,000 for each separate violation of section 801, 802, or 803 by any
person individually with respect to each participant or beneficiary
aggrieved by such violation.''.
(c) Conforming Amendment.--The table of contents in section 1 of
such Act is amended by inserting after the item relating to section 734
the following new items:
``Part 8--Emergency Retiree Health Benefit Protections
``Sec. 801. Prohibition against post-retirement reductions of retiree
health benefits by group health plans.
``Sec. 802. Adoption by group health plans of provision barring post-
retirement reductions in retiree health
benefits.
``Sec. 803. Restoration by group health plans of benefits reduced after
retirement.
``Sec. 804. Exemption from restoration of benefits requirements.
``Sec. 805. Establishment of emergency retiree health loan guarantee
program.
``Sec. 806. Effect on other claims.
``Sec. 807. Regulations.
``Sec. 808. Enforcement.''.
SEC. 4. SEPARABILITY OF PROVISIONS.
The provisions of section 509 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1139) shall be applicable to this Act
and the amendments made thereby.
SEC. 5. EFFECTIVE DATE.
The amendments made by this Act shall take effect on the date of
the enactment of this Act.
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