NRLN 2008 Legislative Agenda – Major Initiatives Summary

(Click here to read entire 2008 Legislative Agenda)

 

Protection of Defined Pension Plan Assets from Use in Corporate Restructuring – Our 2008 effort will focus on lobbying to get a specification of a bill in place with a likely sponsor and to develop potential co-sponsors. Our proposal is vital to the protection of plan assets and to the generation of surplus assets that can be used to offset corporate healthcare costs. Pension plan assets should not be used to fatten corporate profit.

 

Maintenance of Cost Payment: The NRLN spent 2007 socializing, on Capitol Hill, the critical need for this bill. Our proposal is win/win legislation for retirees and sponsoring companies. Retirees would benefit from the fixing of health care caps and companies would be entitled to tax credits as an offset against cap dollars paid. Our 2008 effort will include the creation of a specification that incorporates all elements of the NRLN proposal for a statute. We hope to sign up a sponsor and co-sponsors to partner with the NRLN.

 

EEOC Rule: The NRLN will support AARP and others in influencing reversal of this rule that effectively legalizes age discrimination against retirees age 65 or older. This support may include participating in the preparation and filing of an amicus briefs with the Supreme Court. Should the Supreme Court not hear AARP’s appeal or rule against that appeal, the NRLN will support legislation repealing the Rule.

 

National Health Care:  The NRLN, through its National Health Care Advisory Committee, has reviewed and endorses the five (5) principles promulgated by the National Coalition on Health Care (NCAC). National reform proposals will be evaluated using these NCAC principles as benchmarks. The NCAC, a coalition of business, union and health care leaders has recommended changes such as electronic modernization.

 

Medicare Reform: Support Medicare “buy-in” whereby retirees under the age of 65 are offered an opportunity to buy-into Medicare coverage at Medicare cost levels. The NRLN believes strongly that retirees under age 65 need a bridge between retirement and Medicare eligibility.

 

Appeal to Congressional Committees to hold hearings: to testify to the pension and health care plight of U.S. retirees. Paramount in our case is an obligation to sensitize Congress about how fixed incomes have been stripped of 20% or more over the past 5-years. The NRLN holds that many companies are preying on Congress with excuses that benefits are making them less competitive when in fact other issues are in play.

 

Tax Reform: Initiate support for a bill or amendment that grants deductibility for health care premiums without being limited by or subject to the current 7.5% AGI limitation imposed on deductibles.

 

OTHER AGENDA OBJECTIVES SUPPORTED: Use NRLN Congressional lobbying, Capwiz network, and grassroots support to opportunistically follow and influence advancement of specific bills and issues identified in our agenda, such as prescription drug legislation that supports Increased Corporate Incentives to keep drug plans in place, Importation, Competitive Bidding, and the proliferation of lower cost Generic Drugs; Enforced FDA quality standards for Drugs and Drug Ingredients; Social Security Reform; and others listed as part of our more detailed agenda.

 

THE NRLN IS THE ONLY U.S. ORGANIZATION DEDICATED EXCLUSIVELY TO HELPLING RESTORE AND ADVANCE BOTH FIXED INCOME AND HEALTHCARE BENEFITS FOR RETIREES THROUGH LEGISLATIVE ACTION AT THE NATIONAL LEVEL.

 

 

NRLN 2008  LEGISLATIVE  AGENDA  DETAILS

 

 

PENSION LEGISLATION:

 

Protection of Defined Pension Plan Assets from Use in Corporate Restructuring:

Support new legislation, likely an amendment to ERISA, that would stop corporate use of pension assets to pay lump-sum severance or layoff payments and/or other enhancements to selected defined pension plan participants in instances where a plan is funded at or below the 120% level. Plans bargained by unions and subject to terms of a collective agreement would be exempt from this legislation.

 

Under the new 2006 Pension Protection Act, Internal Revenue Code Sec 420 asset transfers to 401(h) accounts within a defined benefit plan are not permitted unless the plan’s current asset valuation level is at or above 120% of the plan’s current liabilities. However, companies regularly draw down plan assets toward the 100% funding level to pay for force reduction costs in the form of early retirement incentive programs (including severance pay/layoff bonuses) without effective legal constraints. Such bonuses are typically granted to 10% or fewer of the total plan participants, take the form of incentives designed to get retirees to retire early, are usually offered in exchange for a waiver of rights by older workers that limits the company’s age discrimination liability, and dilute defined benefit pension plan assets. Use of pension plan assets in this fashion thus benefits shareholders, not plans participants, and should not be paid from the pension trust

 

Examination of the underlying nature of the theses costs reveals they are corporate restructuring costs to be born by shareholders not by defined benefit pension plans. Vested assets of plan participants should not be raided. Non-union plan participants have no bargaining power to limit corporate power and are entitled to this proposed ERISA protection. The proposed legislation would mandate at least the same protection (the 120% of current liability surplus requirement) of assets from use by corporations to pay force reduction costs as the 109th Congress enacted to protect assets from being used under Sec 420 when establishing and transferring pension funds to 401(h) accounts.

 

This highly questionable practice has led to under funding or near under funding of defined benefit pension plans and thus directly increases the risk of under funding and PBGC takeover where plan liabilities have outgrown assets and/or equity markets have tumbled.

 

The IRS and courts have allowed companies to hide behind current pension law to use defined benefit pension plan assets to pay such bonuses and, to date, Congress has allowed this practice to continue. The NRLN believes that such bonuses should properly be treated as a corporate expense, payable out of the corporation’s own assets, not as a pension benefit paid out of defined benefit plan assets. Long-time ERISA and tax lawyers and Congressional staff have resisted legal changes in this area, arguing that plan sponsors have always been allowed to treat such expenses as pension benefit payments. This sacred-cow type thinking is not in keeping with the intent of ERISA, the 2006 Pension Protection Act or the vested rights of defined benefit pension plan participants.

 

We urge creation, sponsorship and passage of a bill that limits the ability of a company to tap pension assets to pay for what properly should be considered restructuring expense and which establishes the same 120% of current liability cushion of protection already established by Congress for transfers to 401(h) accounts for payment of corporate health care expenses.

 

Investigate the need for legislation that would insure protection of pension plan assets (and health care benefits) from exhaustion by foreign country corporations and would require them to fully fund pension plans.

 

 

 

HEALTH CARE LEGISLATION:

 

NATIONAL HEALTH CARE REFORM – Support new legislation that offers (1) health care coverage for all including catastrophic coverage; (2) effective cost management disciplines; (3) better information technology systems and quality and safety discipline; (4) equitable financing; (5) simplified administration. Reform must not include programs that focus on health care for just the uninsured, underinsured and Medicaid enrollees. New legislation must also protect the health care benefits of retirees already covered by corporate plans and must not allow corporations to abandon their plans, dumping an inferior National Plan in retirees’ laps, forcing them to buy back previously earned coverage.

 

The NRLN supports and believes that the guidelines for Universal or National Health Care promulgated by the NCHC should be the benchmarks used to establish National Health Care Reform.

 

Introduce a bill that would prohibit companies from forcing retirees to select company pre-determined bundles of plans or none of their sponsored Health Care and Prescription Drug Plans. This bundling practice holds retirees hostage to company plans.

 

Maintenance of Cost Payment: The NRLN supports a path to universal coverage that protects both retiree health care and the competitive strength of American corporations. The NRLN also supports the concepts and passage of HR 1322 designed to recapture lost benefits. Alternatively, (1) We propose corporations pay a retiree health care Maintenance-of-Cost Payment (MCP) equal to the cost of an individuals health care benefits at the time of retirement or at a subsequent time when reduction or cancellation of coverage or subsidies may occur, whichever is higher. (2) For retirees eligible for Medicare or if a standard National Health Care Plan is established, retirees would be entitled to a reduced corporate MCP sufficient to purchase supplemental insurance in an amount that would maintain parity with their coverage in effect at the time of retirement or at the time their company coverage is cancelled or reduced, whichever is higher. Retirees would use MCP’s to purchase supplemental insurance from employers or third party providers but employers would be required to continue to make available and pay administrative costs for self-insured or contracted group plans. (3) Employers would be entitled to an annual tax credit equal to the amount expended for retiree MCP’s.

 

Others: Support  two “Medicare for All Act” bills introduced in the 109th Congress; S.2229 (Sen. Kennedy) and HR 4683 (Rep. Dingell) if introduced in the second session of the 110th Congress. We support strengthening retiree protection including: (1) better coverage for those now on Medicare, including catastrophic coverage, (2) catastrophic coverage in new plans, (3) sufficient doctor/service payments and (4) a Maintenance-of-Cost Payment provision that ensures retention of existing coverage for million of retirees covered by superior corporate plans. Support S.1418 (Sen. Enzi’s 109th bill) and HR 4157 when reintroduced by a House member in the second session of the 110th Congress. Both bills support improved national health care system planning, quality and information technologies.

 

MEDICARE REFORM:

 

Coverage for certain Retirees under age 65:

Make Medicare “D” available to retirees under 65 through the supporting of a Medicare buy-in plan such as proposed by Representative Stark form California. The NRLN believes those under age 65 are in a no man’s land where they are not old enough (age 65) to qualify for Medicare coverage despite the fact they may have earned more than enough credits to qualify for all Medicare services. Such plans would require those under age 65 to buy-in on a cost-adjusted basis so as not to raise the overall cost of Medicare.

 

Revisions to Medicare Part D: 

(1) Retention of Current Employer Plans – Support new legislation that would increase the Part D subsidy to be paid to employers who offer better coverage than provided in Part D, and who agree to maintain their current plans.

(2) Prevent In-Year Coverage Interruptions - Support HR 4685 “Medicare Prescription Drug Emergency Guarantee Act of 2006” (Rep. Dingell) introduced in the last Congress - prevents in-year interruption of Med-D coverage and formulary changes.

(3) Importation - Support importation of safe and lower-cost prescription drugs through S.242 (Sen. Dorgan / Sen. Snowe) “Pharmaceutical Market Access and Drug Safety Act of 2007, as reintroduced in the Senate, and in the House as HR 380 (Rep Emerson / Rep Emanuel). Assure FDA quality enforcement in both finished drugs and drug ingredient manufacture, distribution, and sales.

(4) Price Negotiations - Support H.R. 4 (Rep. Dingell) “Medicare Prescription Drug Price Negotiations Act of 2007” which has passed the House and is waiting for S.250, the Sen. Wyden / Sen. Snowe version to be taken up in the Senate. Support the general principles in S.137 (Sen.Cardin) the “Preserving Medicare for All Act”, and S.345 (Sen. Durbin) the “Medicare Prescription Drug Savings Act.”

(5) Accountability:  Amend 2003 Act to require that “subsidies” paid to companies must be used to pay for health care benefits only. Today, companies use this bonus to offset other operating expenses.

 

Generic Drugs: -  Approval and Advancement to Market: 

(1) Support new legislation that funds FDA staffing and the systems needed to clear the generic, including infect-able generic drugs, approval backlog and require elimination of manufacturer “user fees”.

(2) Support companion bills S.2300 (Sen. Stabenow) and H.R. 6022 (Rep Waxman) introduced in the last Congress. The bills required resolution of FDA petitions within 6 months and that petitioners disclose information unfavorable to these petitions that challenge approval of generic drugs.

(3) Support new legislation that bans litigation or other practices that require/encourage brand manufacturers to pay generic manufactures to pull generic brands from the market.

(4) Oppose legislative or Administrative effort to force re-qualification of “legacy” prescription drugs.

 

TAX REFORM:

Deductibility of Health Care Costs: Support new legislation that enables health care premiums (including Medicare premiums) to be tax deductible, similar to the way health insurance premiums for workers and self-employed individuals are deductible. Such deductions would be exempt from the 7.5% (AGI) limitation.

HSAs: Allow Healthcare Savings Accounts for Medicare eligible retirees who are paying for High Deductible Plans. Change IRS Regulation to allow HSA funding directly from IRAs for all years not one year.

Withdrawals To Pay Retiree Health Premiums: Support new legislation that enables tax-free and penalty- free withdrawals from 401k, IRA, SEP and other qualified accounts to pay for retiree health care premiums.

AMT Tax: Stop double taxation of middle class-raise threshold level and indexing to inflation.

 

Taxing Social Security Income: Amend tax codes to eliminate federal and state taxes on all Social Security income and / or allow a tax credit for taxes withheld.

 

SOCIAL SECURITY REFORM:

The NRLN has produced a white paper on Social Security history and is monitoring Congress. We do not expect short-term action. While some change may be required, our view is that the system is not broken; Congress must decide to keep its promises and honor the terms of the present system.

 

 

Robert Foresta

NRLN V.P. Legislative Affairs

January 26, 2008