Mr. President, I rise today to join my colleague, Senator Bingaman, to introduce the bipartisan Rural Aviation Improvement Act. I am proud to join the senior Senator from New Mexico, a steadfast and…
Mr. President, I rise today to join my colleague, Senator Bingaman, to introduce the bipartisan Rural Aviation Improvement Act. I am proud to join the senior Senator from New Mexico, a steadfast and resolute guardian of commercial aviation service to all communities, particularly rural areas that would otherwise be deprived of any air service.
It has always been true that reliable air service to our Nation's rural areas is not simply a luxury or a convenience. It is an imperative. Ask any town manager or mayor of a small community how critical aviation is to economic development. All of us in the Senate who come from rural states understand the vital role aviation plays in the moving of people and goods to and from areas that would otherwise face a paucity of transportation options. Quite frankly, I have long held serious concerns about the impact deregulation of the airline industry has had on small cities and smaller towns in rural areas, like those in my home State of Maine. That fact is, since deregulation, many of these communities across the country have experienced a decline in flights and size of aircraft while seeing an increase in fares. More than 300 have lost air service altogether.
This legislation will serve to improve the long-underfunded Essential Air Service program. The additional commitment of resources will augment the ability of the program to achieve its desired goals, reducing the impact on the general fund while providing small communities with a greater degree of certainty when planning future improvements or bringing enhanced service to their airports. The bill also gives those same communities a greater role in retaining and determining the sort of air service which they receive, and assists in making that service sustainable.
Increasingly, the Essential Air Service program has been plagued with a decline in the number of airlines willing to provide this critical link to the national transportation network. Not only have we lost a rash of participants in the program due to wildly fluctuating fuel costs and the omnipresent economic downturn, but in addition, a few `bad actors' have jeopardized commercial aviation for entire regions by submitting low-ball contracts to the Department of Transportation and then reneging on their commitment to the extent and quality of their service. Our bill will not only establish a system of minimum requirements for contracts to protect these small cities that rely on EAS, but it will also extend those contracts to 4 years from the current 2. This gives a heightened degree of stability in terms of air service, rather than having communities negotiating new contracts or receiving service from entirely new carriers every 18 months. Actively encouraging communities to get involved in the process, and build relationships with the carriers who serve them, can only bolster the quality of the program.
In the final analysis, everyone benefits when our Nation is at its strongest economically. Most importantly in this case, greater prosperity everywhere will, in the long run, mean more passengers for the airlines. We cannot afford to ignore rural America--which contains nearly a quarter of the population--as we move forward with aviation policy and the next generation air traffic system. Therefore, it is very much in our national interests to ensure that every region has reasonable, consistent access to commercial air service. That is why I strongly believe the federal government has an obligation to fulfill the commitment it made to these communities when Congress deregulated the airlines in 1978; to safeguard their ability to continue commercial air service.
Mr. President, I rise today to introduce the SIMPLE Cafeteria Plan Act of 2009, which will increase the access to quality, affordable health care for millions of small business owners and their employees. I am pleased that my good friends, Senator Bond from Missouri and Senator Bingaman from New Mexico, have agreed to cosponsor this critical, bipartisan piece of legislation. We have introduced this legislation together since 2005.
In order to help small businesses increase their employees' access to health insurance and other benefits, and help them compete for talented workers, we are introducing the SIMPLE Cafeteria Plan Act. This bill will enable small business employees to purchase health insurance with tax-free dollars in the same way that many employees of large companies already do--in their cafeteria plans. This legislation is modeled after the Savings Incentive Match Plan for Employees SIMPLE, Pension Plan enacted in 1996.
As former Chair and now Ranking Member of the Senate Small Business Committee, if there's one concern I've heard time and again--from small businesses in Maine and across the country--it's the exorbitant cost to small businesses of providing health insurance to their employees. Throughout America, health insurance premiums have increased by a staggering 89 percent since 2000--far outpacing inflation and wage gains. In Maine, the annual premium for the most heavily subscribed policy in the small group insurance market is $5,400 for individual coverage, and over $16,000 for a family plan.
Clearly our Nation's health care system is terribly broken--and the majority of the uninsured--52 percent--are either self-employed, work for a small business with 100 or fewer employees, or are dependent upon someone who does. I am pleased that the Congress is now in the midst of a serious reform effort that will result in a much better system of delivering health care. In order to address the problem of the working uninsured, we must address access and affordability in small businesses. The bill we are introducing today will do just that.
So why are our Nation's small businesses, which are our country's job creators and the true engine of our economic growth, not offering health insurance? Survey after survey tells us that the main reason is that they cannot afford to offer it, or other benefits. Still other small firms can only afford to pay a portion of their employees' health insurance premiums. As a result, countless employees of small business must try to obtain health insurance from the individual market rather than through their work place. As we debate reforming health insurance, we must consider cafeteria plans--Section 125 plans, as they are often known--which are a proven vehicle for access, and should be a key component to reform. I would like to add that another component to reform that must be considered is the SHOP Act, which I reintroduced yesterday with Senators Durbin and Lincoln, which would also help to reverse the pernicious problems of access and affordability of health insurance.
Currently, many large employers, and even the Federal Government, allow employees to purchase health insurance, and other qualified benefits, with tax-free dollars. Cafeteria plans allow employers to offer health benefits with pre-tax dollars. As the name suggests, cafeteria plans are programs where employees can purchase a variety of qualified benefits. Specifically, cafeteria plans offer employees great flexibility in selecting their desired benefits while allowing them to disregard those benefits that do not fit their particular needs. Moreover, the employees are usually purchasing benefits at a lower cost because their employers are often able to obtain a reduced group rate prices.
Typically, in cafeteria plans, a combination of employer contributions and employee contributions are used to fund the accounts that employees used to buy specific benefits. Under current law, qualified benefits include health insurance, dependent-care reimbursement, life and disability insurance. Unfortunately, long term care insurance is not currently a qualified benefit available for purchase in cafeteria plans. I will come back to long term care insurance in a moment.
Again, cafeteria plans already have a proven record of providing good benefits to a wide group of employees. However, in order for companies to qualify for cafeteria plans they must satisfy the tax code's strict non-discrimination rules and these rules are a major impediment to small employers being able to offer benefits to employees. These rules exist to ensure that companies offer the same benefits to their low- wage employees along with their highly compensated employees.
Now, I want to be clear. I believe that these non-discrimination rules serve a legitimate purpose and are necessary employee protections. Indeed, we need to ensure that employers are not able to game the tax system to benefit only upper income employees or the business owners. As with the SIMPLE pension plan, a small business employer that is willing to make a minimum contribution for all employees, or who is willing to match contributions, will be permitted to waive the non-discrimination rules that currently prevent them from otherwise offering these benefits. This structure has worked extraordinarily well in the pension area with little risk of abuse. I am confident that it will be just as successful when it comes to broad- based benefits offered through cafeteria plans. The SIMPLE Cafeteria Plan Act requires the employer to either match contributions of 3 percent of an employee's income or contribute 2 percent without the employee's contribution.
An essential change allows small business owners themselves to participate in cafeteria plans generally. Current law punitively prohibits the owners of small businesses from participating in these benefit plans. As a result, if a business owner is unable to obtain any benefit for himself or his own family he is unlikely to undertake the time and financial commitment of offering the benefit. It is time to remove this punitive prohibition which I believe will expand access to this flexible platform for employee benefits.
Another improvement generally applicable to all cafeteria plan law updates the rules regarding depended care flexible spending accounts, DCFSA. The bill increases the amount that can be excluded to $7,500 for one dependent or $10,000 for two or more dependents. Had the original $5,000 limit for DCFSA been indexed for inflation when it was created in 1986, it would have risen to $9,692. The bill also indexes these amounts for future inflation so that families will not see an erosion of their benefit in the future. In order for millions of working moms to be able to
work outside of the home, they must have help in addressing child care costs. It is critical to note that it is not just working parents but an increasing number of baby-boom adults who need help caring for aging dependent parents. Increasing the dependent care exclusion in flexible spending accounts is an essential update to cafeteria plan law for working families.
Another provision of the bill generally revises the use it or lose it rule under current law, and permits participants to carry over up to $500 left in a health-care or dependent-care flexible spending account to the next plan year. Such unused contributions could also be carried over to the employee's retirement account, such as a 401(k) plan, or to a Health Savings Account. In either case, any carried over contributions will reduce the amount that the employee could contribute to the flexible spending account or pension plan in the subsequent year. The bill indexes the carry-over amount for inflation.
Finally, the bill also works to address our aging populations' need for long-term care insurance which is also a probable component to the debate on health care reform. In the U.S., nearly half of all seniors age 65 or older will need long-term care at some point in their life. Unfortunately, most seniors have not adequately prepared for this possibility, just as many working age individuals have not given much thought to their eventual long-term care needs. With the cost of a private room in a nursing home averaging more than $74,000 annually, many Americans risk losing their life savings--and jeopardizing their children's inheritance--by failing to properly plan for the long-term care services they will need as they grow older.
To address this problem, this bill would allow employees to purchase long-term care insurance coverage through their cafeteria plans and flexible spending arrangements. Expanding eligibility of these benefits will make long-term care insurance more affordable and help Americans prepare for their future long-term care needs.
If more small business owners are able to offer their employees the chance to enjoy a variety of employee benefits these firms will be more likely to attract, recruit, and retain talented workers. This will ultimately make small enterprises more competitive. Therefore, I urge my colleagues to join Senator Bond and Senator Bingaman and me in cosponsoring this important legislation as we work together to achieve broader health care reform.
Mr. President, I ask unanimous consent that the text of the bill and a bill summary be printed in the Record.
