[Congressional Record Volume 143, Number 143 (Wednesday, October 22, 1997)]
[Senate]
[Pages S10954-S10956]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. DASCHLE:
  S. 1307. A bill to amend the Employee Retirement Income Security Act 
of 1974 with respect to rules governing litigation contesting 
termination or reduction of retiree health benefits and to extend 
continuation coverage to retirees and their dependents; to the 
Committee on Labor and Human Resources.


           THE RETIREE HEALTH BENEFITS PROTECTION ACT OF 1997

  Mr. DASCHLE. Mr. President, today I am introducing a bill that 
restores employer health coverage to individuals who, throughout their 
careers, were led to believe their retiree health benefits were secure. 
These retirees earned their benefits through years of labor and have 
reached an age when other private coverage is difficult if not 
impossible to find. The Retiree Health Benefits Protection Act of 1997 
reempowers retirees whose employers renege, often without notice, on a 
commitment they made to retiree security and health.
  The bill I am offering today melds two measures I first introduced in 
the 104th Congress. The goal is to restore retirees' rights and options 
when their former employer takes action to terminate their health 
benefits.
  The legislation was drafted to address a serious problem brought to 
my attention by the retirees of the Morrell meatpacking plant in Sioux 
Falls, SD. In January 1995, more than 3,300 Morrell retirees in Sioux 
Falls and around the country were given 1 week's notice that their 
health benefits were being terminated.
  Pre-Medicare retirees were offered continued health coverage for only 
one year under Morrell's group plan, if the retiree assumed the full 
cost of coverage. When this option lapsed in January 1996, many of 
these people became uninsured. These retirees, like so many who face 
this situation, had spent years building the company and taking lower 
pensions or wages in exchange for the promise of retiree health 
benefits.
  This problem is unfortunately not limited to the Morrell retirees. 
Recent data confirms that a declining share of employers maintain 
health benefits for their retirees. In fact, the percentage of large 
employers offering such coverage has dropped by nearly 10 percentage 
points over the last 5 years. In 1991, 80 percent of large employers 
provided retiree benefits. As of 1996, 71 percent do.
  Early retirees age 50-64 who lose their health benefits are 
especially vulnerable to becoming uninsured, because health insurance 
is expensive when purchased at an older age, or unavailable as a result 
of preexisting conditions.
  The bill I am introducing today would establish a number of 
protections to address this alarming trend.
  To minimize unexpected terminations of benefits, my bill would ensure 
that benefits are terminated or reduced only when evidence shows that 
retirees were given adequate warning--before their retirement--that 
their health care benefits were not promised for their lifetimes. If 
the contract language establishing retiree benefits is silent or 
ambiguous about the termination of these benefits, my bill would place 
the burden of proof on the employer to show that the plan allows for 
the termination or reduction of retiree health benefits.
  To help protect coverage for retirees and their families until fair 
settlements are reached, if an employer's decision to terminate 
benefits is challenged in court, my bill requires the employer to 
continue to provide retiree health benefits while these benefits are in 
litigation.
  To prevent early retirees and their families from being left 
uninsured, this legislation would extend so-called COBRA benefits to 
early retirees and their dependents whose employer-sponsored health 
care benefits are terminated or substantially reduced.
  Broadly stated, COBRA currently requires employers to offer 
continuing health coverage for up to 18 months for employees who leave 
their place of employment. The employee is responsible for the entire 
cost of the premium, but is allowed to remain in the group policy, thus 
taking advantage of lower group rates. This legislation would extend 
the COBRA law to cover early retirees and their families who are more 
than 18 months away from Medicare eligibility.
  This bill would not prohibit employers from modifying their retiree 
health benefits to implement legitimate cost-savings measures, such as 
utilization review or managed care arrangements.
  Mr. President, retirees deserve this kind of health security.

[[Page S10955]]

  Workers often give up larger pensions and other benefits in exchange 
for health benefits. Unfortunately, in the case of the Morrell 
employees and far too many others, the thanks they get for their 
sacrifices is that their benefits are taken away with no notice and no 
compensating increase in their pensions or other benefits.
  Early retirees often have been with the same company for decades, 
perhaps all of their adult lives. They rightfully believe that a 
company they help build will reward their loyalty, honesty, and hard 
work.
  It is time for this Congress to address this victimization of 
retirees by companies that put profits before integrity and cost-
cutting before fairness. We should not simply sit back while this 
system creates another population of uninsured individuals. Instead, we 
should take this opportunity to preserve private coverage for as many 
retirees as possible and restore the financial security and freedom 
they earned and thought they could depend upon.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1307

       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 ``Retiree Health Benefits 
     Protection Act''.
              TITLE I--RETIREE HEALTH BENEFITS PROTECTION

     SEC. 101. RULES GOVERNING LITIGATION INVOLVING RETIREE HEALTH 
                   BENEFITS.

       (a) In General.--Part 5 of subtitle B of title I of the 
     Employee Retirement Income Security Act of 1974 (29 U.S.C. 
     1131 et seq.) is amended by adding at the end the following 
     new section:

     ``SEC. 516. RULES GOVERNING LITIGATION INVOLVING RETIREE 
                   HEALTH BENEFITS.

       ``(a) Maintenance of Benefits.--
       ``(1) In general.--If--
       ``(A) retiree health benefits or plan or plan sponsor 
     payments in connection with such benefits are to be or have 
     been terminated or reduced under an employee welfare benefit 
     plan; and
       ``(B) an action is brought by any participant or 
     beneficiary to enjoin or otherwise modify such termination or 
     reduction,

     the court without requirement of any additional showing shall 
     promptly order the plan and plan sponsor to maintain the 
     retiree health benefits and payments at the level in effect 
     immediately before the termination or reduction while the 
     action is pending in any court. No security or other 
     undertaking shall be required of any participant or 
     beneficiary as a condition for issuance of such relief. An 
     order requiring such maintenance of benefits may be refused 
     or dissolved only upon determination by the court, on the 
     basis of clear and convincing evidence, that the action is 
     clearly without merit.
       ``(2) Exceptions.--Paragraph (1) shall not apply to any 
     action if--
       ``(A) the termination or reduction of retiree health 
     benefits is substantially similar to a termination or 
     reduction in health benefits (if any) provided to current 
     employees which occurs either before, or at or about the same 
     time as, the termination or reduction of retiree health 
     benefits, or
       ``(B) the changes in benefits are in connection with the 
     addition, expansion, or clarification of the delivery system, 
     including utilization review requirements and restrictions, 
     requirements that goods or services be obtained through 
     managed care entities or specified providers or categories of 
     providers, or other special major case management 
     restrictions.
       ``(3) Modifications.--Nothing in this section shall 
     preclude a court from modifying the obligation of a plan or 
     plan sponsor to the extent retiree benefits are otherwise 
     being paid by the plan sponsor.
       ``(b) Burden of Proof.--In addition to the relief 
     authorized in subsection (a) or otherwise available, if, in 
     any action to which subsection (a)(1) applies, the terms of 
     the employee welfare benefit plan summary plan description 
     or, in the absence of such description, other materials 
     distributed to employees at the time of a participant's 
     retirement or disability, are silent or are ambiguous, either 
     on their face or after consideration of extrinsic evidence, 
     as to whether retiree health benefits and payments may be 
     terminated or reduced for a participant and his or her 
     beneficiaries after the participant's retirement or 
     disability, then the benefits and payments shall not be 
     terminated or reduced for the participant and his or her 
     beneficiaries unless the plan or plan sponsor establishes by 
     a preponderance of the evidence that the summary plan 
     description or other materials about retiree benefits--
       ``(1) were distributed to the participant at least 90 days 
     in advance of retirement or disability;
       ``(2) did not promise retiree health benefits for the 
     lifetime of the participant and his or her spouse; and
       ``(3) clearly and specifically disclosed that the plan 
     allowed such termination or reduction as to the participant 
     after the time of his or her retirement or disability.

     The disclosure described in paragraph (3) must have been made 
     prominently and in language which can be understood by the 
     average plan participant.
       ``(c) Representation.--Notwithstanding any other provision 
     of law, an employee representative of any retired employee or 
     the employee' spouse or dependents may--
       ``(1) bring an action described in this section on behalf 
     of such employee, spouse, or dependents; or
       ``(2) appear in such an action on behalf of such employee, 
     spouse or dependents.
       ``(d) Retiree Health Benefits.--For the purposes of this 
     section, the term `retiree health benefits' means health 
     benefits (including coverage) which are provided to--
       ``(1) retired or disabled employees who, immediately before 
     the termination or reduction, have a reasonable expectation 
     to receive such benefits upon retirement or becoming 
     disabled; and
       ``(2) their spouses or dependents.''
       (b) Conforming Amendment.--The table of contents in section 
     1 of such Act is amended by inserting after the item relating 
     to section 515 the following new item:

``Sec. 516. Rules governing litigation involving retiree health 
              benefits.''

       (c) Effective Date.--The amendments made by this section 
     shall apply to actions relating to terminations or reductions 
     of retiree health benefits which are pending or brought, on 
     or after January 1, 1998.
                TITLE II--RETIREE CONTINUATION COVERAGE

     SEC. 201. EXTENSION OF COBRA CONTINUATION COVERAGE.

       (a) Public Health Service Act.--
       (1) Type of coverage.--
       (A) In general.--Section 2202(1) of the Public Health 
     Service Act (42 U.S.C. 300bb-2(1)) is amended--
       (i) by striking ``The coverage'' and inserting the 
     following:
       ``(A) In general.--Except as provided in subparagraph (B), 
     the coverage''; and
       (ii) by adding at the end the following:
       ``(B) Certain retirees.--In the case of an event described 
     in section 2203(6), the qualified beneficiary may elect to 
     continue coverage as provided for in subparagraph (A) or may 
     elect coverage--
       ``(i) under any other plan offered by the State, political 
     subdivision, agency, or instrumentality involved; or
       ``(ii) notwithstanding paragraphs (4) and (5) of section 
     2741(b), through any health insurance issuer offering health 
     insurance coverage (as defined in section 2791(b)(1)) in the 
     individual market in the State.''.
       (B) Technical amendment.--Section 2202(2)(D)(i) of the 
     Public Health Service Act (42 U.S.C. 300bb-2(2)(D)(i)) is 
     amended by striking ``covered under any other'' and inserting 
     ``except with respect to coverage obtained under paragraph 
     (1)(B), covered under any other''.
       (2) Period of coverage.--Section 2202(2)(A) of the Public 
     Health Service Act (42 U.S.C. 300bb-2(2)(A)) is amended by 
     adding at the end thereof the following new clause:
       ``(v) Qualifying event involving substantial reduction or 
     elimination of a retiree group health plan.--In the case of 
     an event described in section 2203(6), the date on which such 
     covered qualified beneficiary becomes entitled to benefits 
     under title XVIII of the Social Security Act.''.
       (3) Qualifying event.--Section 2203 of the Public Health 
     Service Act (42 U.S.C. 300bb-3) is amended by adding at the 
     end thereof the following new paragraph:
       ``(6) The substantial reduction or elimination of group 
     health coverage as a result of plan changes or termination 
     with respect to a qualified beneficiary described in section 
     2208(3)(A).''.
       (4) Notice.--Section 2206 of the Public Health Service Act 
     (42 U.S.C. 300bb-6) is amended--
       (A) in paragraph (2), by striking ``or (4)'' and inserting 
     ``(4), or (6)''; and
       (B) in paragraph (4)(A), by striking ``or (4)'' and 
     inserting ``(4), or (6)''.
       (5) Definition.--Section 2208(3) of the Public Health 
     Service Act (42 U.S.C. 300bb-8(3)) is amended by adding at 
     the end thereof the following new subparagraph:
       ``(C) Special rule for retirees.--In the case of a 
     qualifying event described in section 2203(6), the term 
     `qualified beneficiary' includes a covered employee who had 
     retired on or before the date of substantial reduction or 
     elimination of coverage and any other individual who, on the 
     day before such qualifying event, is a beneficiary under the 
     plan--
       ``(i) as the spouse of the covered employee;
       ``(ii) as the dependent child of the covered employee; or
       ``(iii) as the surviving spouse of the covered employee.''.
       (b) Employee Retirement Income Security Act of 1974.--
       (1) Type of coverage.--
       (A) In general.--Section 602(1) of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1162(1)) is amended--
       (i) by striking ``The coverage'' and inserting the 
     following:
       ``(A) In general.--Except as provided in subparagraph (B), 
     the coverage''; and
       (ii) by adding at the end the following:

[[Page S10956]]

       ``(B) Certain retirees.--In the case of an event described 
     in section 603(7), the qualified beneficiary may elect to 
     continue coverage as provided for in subparagraph (A) or may 
     elect coverage--
       ``(i) under any other plan maintained by the plan sponsor 
     involved; or
       ``(ii) notwithstanding paragraphs (4) and (5) of section 
     2741(b) of the Public Health Service Act, through any health 
     insurance issuer offering health insurance coverage (as 
     defined in section 2791(b)(1) of such Act) in the individual 
     market in the State.''.
       (B) Technical amendment.--Section 602(2)(D)(i) of the 
     Employee Retirement Income Security Act of 1974 (29 U.S.C. 
     1162(2)(D)(i)) is amended by striking ``covered under any 
     other'' and inserting ``except with respect to coverage 
     obtained under paragraph (1)(B), covered under any other''.
       (2) Period of coverage.--Section 602(2)(A) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1162(2)(A)) 
     is amended by adding at the end thereof the following new 
     clause:
       ``(vi) Qualifying event involving substantial reduction or 
     elimination of a group health plan covering retirees, spouses 
     and dependents.--In the case of an event described in section 
     603(7), the date on which such covered qualified beneficiary 
     becomes entitled to benefits under title XVIII of the Social 
     Security Act.''.
       (3) Qualifying event.--Section 603 of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1163) is 
     amended by adding at the end thereof the following new 
     paragraph:
       ``(7) The substantial reduction or elimination of group 
     health plan coverage as a result of plan changes or 
     termination with respect to a qualified beneficiary described 
     in section 607(3)(C).''.
       (4) Notice.--Section 606(a) of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1166) is amended--
       (A) in paragraph (2), by striking ``or (6)'' and inserting 
     ``(6), or (7)''; and
       (B) in paragraph (4)(A), by striking ``or (6)'' and 
     inserting ``(6), or (7)''.
       (5) Definition.--Section 607(3)(C) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1167(2)) is 
     amended by striking ``603(6)'' and inserting ``603(6) or 
     603(7)''.
       (c) Internal Revenue Code of 1986.--
       (1) Type of coverage.--
       (A) In general.--Section 4980B(f)(2)(A) of the Internal 
     Revenue Code of 1986 is amended--
       (i) by striking ``The coverage'' and inserting the 
     following:
       ``(i) In general.--Except as provided in clause (ii), the 
     coverage''; and
       (ii) by adding at the end the following:
       ``(ii) Certain retirees.--In the case of an event described 
     in paragraph (3)(G), the qualified beneficiary may elect to 
     continue coverage as provided for in clause (i) or may elect 
     coverage--

       ``(I) under any other plan maintained by the plan sponsor 
     involved; or
       ``(II) notwithstanding paragraphs (4) and (5) of section 
     2741(b) of the Public Health Service Act, through any health 
     insurance issuer offering health insurance coverage (as 
     defined in section 2791(b)(1) of such Act) in the individual 
     market in the State.''.

       (B) Technical amendment.--Section 4980B(f)(2)(B)(iv)(I) of 
     the Internal Revenue Code of 1986 is amended by striking 
     ``covered under any other'' and inserting ``except with 
     respect to coverage obtained under paragraph (1)(B), covered 
     under any other''.
       (2) Period of coverage.--Section 4980B(f)(2)(B)(i) of the 
     Internal Revenue Code of 1986 is amended by adding at the end 
     thereof the following new subclause:

       ``(VI) Qualifying event involving substantial reduction or 
     elimination of a retiree group health plan.--In the case of 
     an event described in paragraph (3)(G), the date on which 
     such covered qualified beneficiary becomes entitled to 
     benefits under title XVIII of the Social Security Act.''.

       (3) Qualifying event.--Section 4980B(f)(3) of the Internal 
     Revenue Code of 1986 is amended by adding at the end thereof 
     the following new subparagraph:
       ``(G) The substantial reduction or elimination of group 
     health coverage as a result of plan changes or termination 
     with respect to a qualified beneficiary described in 
     subsection (g)(1)(D).''.
       (4) Notice.--Section 4980B(f)(6) of the Internal Revenue 
     Code of 1986 is amended--
       (A) in subparagraph (B), by striking ``or (F)'' and 
     inserting ``(F), or (G)''; and
       (B) in subparagraph (D)(i), by striking ``or (F)'' and 
     inserting ``(F), or (G)''.
       (5) Definition.--Section 4980B(g)(1)(D) of the Internal 
     Revenue Code of 1986 is amended by striking ``(f)(3)(F)'' and 
     inserting ``(f)(3)(F) or (f)(3)(G)''.

     SEC. 202. EFFECTIVE DATE.

       This title shall take effect as if enacted on January 1, 
     1998.
                                 ______