[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 2904 Introduced in Senate (IS)]







107th CONGRESS
  2d Session
                                S. 2904

To amend title I of the Employee Retirement Income Security Act of 1974 
      to provide emergency protection for retiree health benefits.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           September 5, 2002

 Mr. Wellstone introduced the following bill; which was read twice and 
  referred to the Committee on Health, Education, Labor, and Pensions

_______________________________________________________________________

                                 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 2002''.

SEC. 2. FINDINGS AND PURPOSES.

    (a) Findings.--Congress finds the following:
            (1) Retired participants of group health plans regulated by 
        the Employee Retirement Income Security Act of 1974 (referred 
        to in this Act as ``ERISA'') have been severely harmed by the 
        virtually unchecked practices of the sponsors of such plans 
        relating to the post-retirement canceling or reducing of post-
        retirement health benefits that retirees counted on receiving 
        for their lifetimes.
            (2) 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 judicial relief due to highly restrictive 
                judicial interpretations inconsistent with ERISA's 
                underlying protective purposes.
            (3) The crisis in retiree health care 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 health of our Nation's senior 
        citizens.
    (b) Purposes.--The purposes of this Act are the following:
            (1) 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.
            (2) To safeguard retired participants of group health plans 
        subject to ERISA 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.
            (3) To establish an enforceable obligation on the part of 
        sponsors of 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 if the plan sponsor would not 
        sustain substantial business hardship by restoring such 
        benefits.
            (4) 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 (29 U.S.C. 1021 et seq.) is amended by 
adding at the end the following:

         ``Part 8--Emergency Retiree Health Benefit Protections

``SEC. 801. DEFINITIONS.

    ``In this part:
            ``(1) Group health plan.--The term `group health plan' has 
        the meaning given such term in section 607(1).
            ``(2) Reduce.--The term `reduce' or `reduction', with 
        respect to employee health benefits under a group health plan, 
        means any action which has the effect of--
                    ``(A) canceling, decreasing, or limiting the 
                amount, type, level, or form of any benefit or option 
provided under the plan prior to the action;
                    ``(B) imposing or increasing 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 under the 
                plan prior to the action; or
                    ``(C) modifying the manner by which medical 
                services are delivered under the plan so that after the 
                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 action.

``SEC. 802. PROHIBITION AGAINST POST-RETIREMENT REDUCTIONS OF RETIREE 
              HEALTH BENEFITS BY GROUP HEALTH PLANS.

    ``(a) In General.--Notwithstanding any provision of a group health 
plan that reserves the general power to amend or terminate the plan or 
that specifically authorizes the plan to make post-retirement 
reductions in retiree health benefits, a group health plan may not, 
whether through amendment or otherwise, reduce the benefits provided to 
a retired participant or his or her beneficiary under the terms of the 
plan if such reduction of benefits--
            ``(1) occurs after the date the participant retired for 
        purposes of the plan; and
            ``(2) reduces benefits that were provided to the 
        participant, or his or her beneficiary, on the day prior to the 
        date the participant retired.
    ``(b) Treatment of Plan Termination.--
            ``(1) In general.--A termination of a group health plan 
        shall be treated as violating the prohibition described in 
        subsection (a) 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 exception.--
                    ``(A) In general.--Paragraph (1) shall not apply to 
                the termination of a group health plan if the Secretary 
                issues a waiver under this paragraph in connection with 
                such termination.
                    ``(B) Waiver.--A group health plan may submit an 
                application to the Secretary for a waiver of the 
                provisions of paragraph (1). The Secretary shall issue 
                such a waiver if the plan sponsor demonstrates to the 
                satisfaction of the Secretary that such plan sponsor 
                will be unable to continue operations if such a waiver 
                is not issued.
                    ``(C) Regulations.--The Secretary may promulgate 
                such regulations as are necessary to carry out this 
                paragraph.
    ``(c) Consent or Authorization by Participant.--A reduction of 
benefits under a group health plan shall not be considered a violation 
of this section with respect to a retired participant if--
            ``(1) such participant consents to such reduction in 
        writing; or
            ``(2) such reduction is authorized with respect to the 
        retired participant under the terms of 1 or more agreements 
        that the Secretary determines to be collective bargaining 
        agreements between 1 or more employee representatives who were 
        representing such participant at the time of the entry into 
        such agreement and 1 or more employers.

``SEC. 803. ADOPTION BY GROUP HEALTH PLANS OF PROVISION BARRING POST-
              RETIREMENT REDUCTIONS IN RETIREE HEALTH BENEFITS.

    ``A group health plan shall contain a provision in the contract of 
insurance that expressly prohibits 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 applies to 
benefits that were provided to the participant or beneficiary on the 
day before the date on which the participant retired (for purposes of 
the plan) and such reduction occurs after the participant's retirement.

``SEC. 804. RESTORATION BY GROUP HEALTH PLANS OF BENEFITS REDUCED AFTER 
              RETIREMENT.

    ``(a) Requirements for Restoration.--
            ``(1) In general.--With respect to a retired participant 
        that meets the requirements of paragraph (2), the plan sponsor 
        of the group health plan involved shall provide, in accordance 
        with this section, the option of benefit restoration to such 
        retired participant.
            ``(2) Requirements.--A retired participant is eligible for 
        restoration under this section if--
                    ``(A) the retired participant was entitled to 
                benefit coverage under the group health plan involved 
                on or after the date of enactment of the Emergency 
                Retiree Health Benefits Protection Act of 2002.
                    ``(B) the amount, type, level, or form of any 
                benefits or option provided to the retired participant 
                under the plan on the day before the participant 
                retired was reduced after the participant's date of 
                retirement; and
                    ``(C) the retired participant has elected to 
                restore benefits under the plan within the restoration 
                period prescribed by subsection (c) and in accordance 
                with any procedures established by the plan pursuant to 
                regulations promulgated the Secretary.
    ``(b) Exception for Certain Plans.--The restoration requirement 
described in subsection (a) shall not apply to any group health plan 
that provides coverage for less than 100 participants.
    ``(c) Restoration Period.--For purposes of this section the term 
`restoration period' means the period that--
            ``(1) begins not later than 1 year after the date of 
        enactment of the Emergency Retiree Health Benefits Protection 
        Act of 2002;
            ``(2) ends not later than 2 years after such date, unless 
        extended by the Secretary pursuant to section 805(g); and
            ``(3) is of not less than 60 days duration.
    ``(d) Notice Requirements Concerning Restoration of Benefits.--Not 
later than 30 days prior to the commencement of the restoration period 
relating to a group health plan, such plan shall provide to each 
retired participant of the plan who meets the requirements of 
subparagraphs (A) and (B) of subsection (a)(2), a written notice that 
contains the following:
            ``(1) A description of all benefits that the retired 
        participant is entitled to have restored under this section.
            ``(2) The administrative procedure established under the 
        plan that may be used to submit a claim for the restoration of 
        any such benefits.
            ``(3) An itemization of the value of each such benefit the 
        retired participant is entitled to have restored.
            ``(4) A description of any post-retirement increases in 
        retiree health benefits the retired participant received that 
        the plan sponsor could rescind if the retired participant 
        asserts a claim for the restoration of benefits under this 
        section.
            ``(5) An itemization of the value of each retiree health 
        benefit the plan sponsor could rescind and the total value of 
        all such benefits.
            ``(6) If the plan sponsor has filed an application for an 
        exemption under section 805, 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) Other information determined by the Secretary to be 
        appropriate.
    ``(e) Deadline for Restoration of Benefits.--Regardless of any 
extension that may be granted by the Secretary pursuant to section 
805(g), all benefits required to be restored under this section shall 
be restored by the later of--
            ``(1) three years after the date of enactment of the 
        Emergency Retiree Health Benefits Protection Act of 2002; or
            ``(2) the date the plan sponsor files an application for an 
        exemption under section 805.

``SEC. 805. EXEMPTION FROM RESTORATION OF BENEFITS REQUIREMENTS.

    ``(a) Authority for Waiver or Variance.--The Secretary may issue a 
waiver or variance of the requirements of section 804 if the Secretary 
determines that compliance by the plan sponsor of the group health plan 
involved with the requirements of section 804 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.
    ``(b) Application.--A plan sponsor of a group health plan 
requesting a waiver or a variance described in subsection (a) may file 
an application with the Secretary at such time and in such manner as 
the Secretary may require.
    ``(c) Factors Taken Into Account.--In determining whether a 
substantial business hardship exists for purposes of subsection (a)(3), 
the Secretary shall consider whether--
            ``(1) the plan sponsor is operating at an economic loss;
            ``(2) compliance with the restoration of benefits 
        requirements of section 804 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 plan sponsor is eligible to participate in the 
        Retiree Health Loan Guarantee Program established under section 
        806 and, if so, whether such participation would not provide a 
        sufficient basis for denying a waiver or variance.
    ``(d) Requirement of Satisfactory Evidence.--
            ``(1) In general.--The Secretary shall, prior to 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 restoration 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 described in 
        paragraph (1) shall include--
                    ``(A) information on the specific relief that will 
                be sought by the plan sponsor's application;
                    ``(B) the period of time for which relief is 
                sought; and
                    ``(C) any other information that the Secretary may 
                require.
    ``(e) Exception for Certain Applications.--The Secretary shall not 
approve an application of a plan sponsor for a waiver or variance under 
this section if--
            ``(1) within the 5-year period preceding the date of 
        submission of the 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 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 804 
                are also eligible to receive ad hoc cost-of-living 
                adjustment benefits;
                    ``(B) the assets of the fully funded pension plan, 
                during the 5-year period preceding the date of 
                submission of the application, on average have exceeded 
                120 percent of the plan's liabilities;
                    ``(C) the plan had no minimum funding requirement 
                to satisfy within the 5-year period described in 
subparagraph (B) and the plan sponsor made no minimum funding 
contribution to the fully funded pension plan during such 5-year 
period; and
                    ``(D) the plan sponsor failed to provide an ad hoc 
                cost-of-living adjustment benefit from the fully funded 
                pension plan during the 5-year period described in 
                subparagraph (B).
    ``(f) Participation in Proceedings by Retired Plan Participants.--
Each retired participant entitled to submit a claim for the restoration 
of benefits under section 804 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 under this section.
    ``(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 described in 
section 804(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. 806. ESTABLISHMENT OF EMERGENCY RETIREE HEALTH LOAN GUARANTEE 
              PROGRAM.

    ``(a) Establishment of Emergency Retiree Health Loan Guarantee 
Program.--There is established a Retiree Health Loan Guarantee Program 
(in this section referred to as the `Program') to provide loan 
guarantees to eligible plan sponsors in accordance with this section. 
The program shall be administered by a Retiree Health Loan Guarantee 
Board (to be established under subsection (c)).
    ``(b) Definition of Eligible Plan Sponsor.--As used in this 
section, the term `eligible plan sponsor' means any plan sponsor, as 
defined in section 3(16)(B), that maintains a group health plan that is 
subject to the retiree health benefits restoration requirements of 
section 805.
    ``(c) Retiree Health Loan Guarantee Board Membership.--
            ``(1) In general.--There is established a Retiree Health 
        Loan Guarantee Board (in this section referred to as the 
        `Board'), that shall be composed of--
                    ``(A) the Secretary of Labor;
                    ``(B) the Secretary of Commerce;
                    ``(C) the Secretary of the Treasury;
                    ``(D) the Secretary of Health and Human Services; 
                and
                    ``(E) the Chairman of the Council of Economic 
                Advisers.
            ``(2) Chairperson.--The Secretary of Labor shall serve as 
        Chairperson of the Board.
    ``(d) Loan Guarantees.--
            ``(1) Authority.--The Program shall guarantee loans 
        provided by private banking and investment institutions to 
        eligible plan sponsors for purposes of assisting such plan 
        sponsors in meeting their obligations under section 804 if--
                    ``(A) such loan guarantees meet the requirements of 
                subsection (a);
                    ``(B) such loan guarantees are not in excess of 
                amounts provided for in advance in appropriation Acts 
                pursuant to paragraph (4); and
                    ``(C) such loan guarantees are otherwise 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 section, including the costs of modifying 
        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 the Program 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 the 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 the eligible plan sponsor;
            ``(2) the prospective earning power of the eligible plan 
        sponsor, together with the character and value of the security 
        pledged, provide reasonable assurances to the institution 
        involved of repayment of the loan to be guaranteed in 
        accordance with the terms of the loan;
            ``(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 the 
        eligible plan sponsor to discharge its obligation to comply 
        with the restoration of benefits requirements contained in 
        section 804; and
            ``(5) the eligible plan sponsor has agreed to an audit by 
        the General Accounting Office--
                    ``(A) prior to the issuance of the loan guarantee; 
                and
                    ``(B) 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, 
        2010, 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 to the Department of the Treasury 
        a fee in an amount equal to 0.5 percent of the outstanding 
        principal balance of the guaranteed loan.
    ``(g) Reports to Congress.--Not later than January 31, 2003, and 
each January 31 thereafter during the period in which a loan guaranteed 
under this section is outstanding, the Secretary shall prepare and 
submit to Congress a report on the activities of the Board.
    ``(h) Salaries and Administrative Expenses.--For necessary expenses 
to administer the Program, there is authorized to be appropriated to 
the Department of Labor $10,000,000, to remain available until 
expended.
    ``(i) Termination of Guarantee Authority.--The authority of the 
Board to make commitments to guarantee loans under this section shall 
terminate on December 31, 2006.
    ``(j) Regulatory Action.--Not later than 90 days after the date of 
enactment of the Emergency Retiree Health Benefits Protection Act of 
2002, the Board shall issue such final procedures, rules, and 
regulations as may be necessary to carry out this section. In no event 
shall the Board issue a procedure, rule, or regulation which authorizes 
the Board to approve or deny any application for a loan guarantee 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. 807. 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. 808. REGULATIONS.

    ``The Secretary may promulgate such regulations as may be necessary 
to carry out this part. The Secretary may promulgate any interim final 
rules as the Secretary determines are appropriate to carry out this 
part.

``SEC. 809. 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:
    ``(8) The Secretary may assess a civil penalty of not more than 
$1,000 for each separate violation of section 802, 803, or 804 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 
the Employee Retirement Income Security Act of 1974 is amended by 
inserting after the item relating to section 734 the following new 
items:

         ``Part 8--Emergency Retiree Health Benefit Protections

``Sec. 801. Definitions.
``Sec. 802. Prohibition against post-retirement reductions of retiree 
                            health benefits by group health plans.
``Sec. 803. Adoption by group health plans of provision barring post-
                            retirement reductions in retiree health 
                            benefits.
``Sec. 804. Restoration by group health plans of benefits reduced after 
                            retirement.
``Sec. 805. Exemption from restoration of benefits requirements.
``Sec. 806. Establishment of Emergency Retiree Health Loan Guarantee 
                            Program.
``Sec. 807. Effect on other claims.
``Sec. 808. Regulations.
``Sec. 809. 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 by this Act.
                                 <all>