American Benefits Council

San Francisco case represents threat to ERISA; preemption standard essential for plan sponsors
April 15, 2007: “For more than 30 years, America’s voluntary employer-sponsored health care system has relied upon the federal standards provided by the Employee Retirement Income Security Act of 1974 (ERISA),” American Benefits Council President James A. Klein said at a media briefing today, two days before the U.S. Court of Appeals for the 9th Circuit is to hear oral arguments in the pivotal case regarding the San Francisco Health Care Security Ordinance.

“Innovation at the state and local level to expand access to health care coverage is important. But it must not come at the expense of ERISA’s critical preemption standards and the millions of people who rely on their employers for health care coverage,” Klein said. “The San Francisco law will restrict employers’ ability to uniformly administer multi-state health plans by forcing employers to make certain choices that result in modification or establishment of an employee benefit plan – exactly the sort of state or local regulation ERISA was intended to preempt.”

Representative Charles W. Boustany, Jr. (R-LA) participated in the Council’s media briefing to offer his perspective on the need to protect ERISA’s federal preemption standards. “Congressman Boustany has been an outspoken champion on this issue because he recognizes that ERISA’s protections benefit employees and their families, as well as employer plan sponsors,” Klein said.

To read the full media release, click here.

To arrange an interview with a Council staff member, please contact Jason Hammersla, Council director, communications, at (202) 289-6700.

Council applauds end of AARP v. EEOC legal battle
March 24: "Now that the U.S. Supreme Court has declined to hear further arguments in the case of AARP v. the Equal Employment Opportunity Commission (EEOC), retirees and employer benefit plan sponsors can breathe a little easier," said American Benefits Council President James A. Klein today. "The Third Circuit Court decision, now final, permits public and private employers to continue the long-standing practice of coordinating retiree health programs with Medicare without fear of running afoul of federal law. Without the ability to do so, employers would — for practical purposes - have been compelled to reduce retiree health benefits for younger retirees not eligible for Medicare," Klein noted.

The Supreme Court denial closes the chapter on a long legal struggle beginning in 2001 with the case of Erie County Retirees Association v. County of Erie. In 2003, EEOC proposed a regulation to allow for a coordination of employer-sponsored retiree health benefits when retirees become eligible for Medicare or a state-sponsored retiree health benefits program. AARP then filed suit to block the publication of the EEOC’s final regulation.

"Voluntary sponsorship of employer benefits — and retiree health benefits in particular — has become an ongoing challenge for employers competing in a global economy,” Klein said. “By coordinating retiree health coverage with existing government programs like Medicare or state employee health benefit programs, employers can preserve retiree benefits that would otherwise be unsustainable," Klein concluded.

To arrange an interview with Council staff on this topic, contact Jason Hammersla, Council director, communications.

House mental health “parity” bill treats behavioral conditions differently than other medical and surgical services
Senate measure represents a balanced and workable approach to parity
March 5, 2008:As the House of Representatives prepares to consider The Paul Wellstone Mental Health and Addiction Equity Act (H.R. 1424) today, American Benefits Council president James A. Klein urged the rejection of the bill’s burdensome approach and praised the more balanced, collaborative Senate-passed measure.

"The American Benefits Council believes strongly in health plan coverage parity for behavioral and other health conditions," Klein said. "Unfortunately, H.R. 1424 does not promote parity because it would treat coverage for mental and behavioral conditions differently than coverage for other medical and surgical services.

"The unintended result if the House bill becomes law could be to compel employers to either reduce health plan coverage generally, or eliminate mental health coverage altogether in order to offset the added cost and complexity of compliance,” noted Klein.

As Klein wrote in a March 3 letter to House leadership, it is essential that employers have flexibility in plan design with respect to benefits in and out of network, protection of the ability to ensure quality care through medical management practices, and federal uniformity in plan administration and remedies. “H.R. 1424 fails to meet these critical requirements for continued health plan sponsorship,” Klein said.

To read the Council's full statement, Click here. To reach a Council member for comment, contact Jason Hammersla, Council director, communications, at (202) 289-6700.

Council applauds new PBGC investment strategy
New diversification policy follows recommendation of Council’s 2005 report
February 19, 2008: "The Pension Benefit Guaranty Corporation’s (PBGC) decision to diversify its invested assets is a welcome change in policy," said Council President James A. Klein upon the recent announcement by the PBGC. "We applaud the agency for taking a bold step that should improve PBGC’s financial health for the long term."

This news validates a key recommendation of the September 2005 report, Promises to Keep: The True Nature of the Risks to the Defined Benefit Pension System, which explored the varying dimensions of the PBGC’s financial profile. The report argued that the agency’s financial standing has been hurt through its investment strategy; some of which is imposed by law and some of which the agency itself could modify. “The PBGC’s overall mix of all invested assets is overly conservative and heavily skewed toward fixed-income securities,” the report noted, indicating that the PBGC has not taken sufficient advantage of the higher long-term returns earned by equity investments.

"Pension policy should always be crafted by looking at the long view rather than based on a snapshot point in time," Klein said. "This more appropriate strategy, increasing investment in equities, will fulfill this philosophy by generating greater returns down the road."

Klein continued, "We continue to urge that PBGC use more market-based assumptions in the calculation of its assets and liabilities, for the sake of employers and employees who still rely on the traditional defined benefit pension system."

To arrange an interview with a Council staff member about the PBGC policy, contact Jason Hammersla, Council director, communications, at (202) 289-6700.

‘Safe and Sound’ retirement goals include raising financial literacy, expanding coverage
November 8:"The current voluntary employer-sponsored retirement system has been an enormous success," said Lynn Dudley, American Benefits Council vice president, retirement policy, at a hearing before the House of Representatives Health, Employment, Labor and Pensions (HELP) Subcommittee of the Education and Labor Committee. "The magnitude of America’s demographic challenges now dictates that individuals, employers and the government all need to do more to continue this success and ensure widespread retirement security."

Dudley’s testimony was drawn from the Council’s 2004 report Safe and Sound: A Ten-Year Plan for Promoting Personal Financial Security, which contains specific goals for improving retirement coverage and savings and discusses the responsibilities of the key stakeholders.

"The fact that individuals will be called upon to play a greater role in achieving personal financial security does not mean that employers or the government will be doing less," Dudley said. "As individuals play a more prominent role in achieving their own personal financial security, employers and the government will be expected to help provide the tools to more simply and successfully play this larger role."

The full text of the Council's media release is available in the Newsroom.

National Coalition on Benefits launched to preserve ERISA standard for health, retirement benefit plans
Council to serve as co-chair of legal and legislative subcommittee
November 6: "The members of the National Coalition on Benefits (NCB), like all participants in the voluntary, employer-sponsored benefits system, have two things in common," said Council President James A. Klein today upon the formal announcement of the coalition’s launch. "We all rely on the national preemption standard established by the Employee Retirement and Income Security Act of 1974 (ERISA), and we all understand how important it is to protect that standard from being weakened or eroded."

The NCB, comprised of a diverse group of companies and employer associations, will work to increase awareness of ERISA’s critical role in providing uniform benefits to workers across state and local lines and promote legislative initiatives that preserve and protect this essential element of the law. The Council is a charter member of NCB and will serve as co-chair of the coalition’s legal and legislative subcommittee. NCB's principles and mission statement, among other materials, are available at the National Coalition on Benefits Web site.

"The launch of this coalition comes at a key moment as the nation prepares to consider comprehensive health reform proposals." Klein said. "The united voice of employers will help to ensure that ERISA continues to play an essential role in securing health and financial security for millions of American workers and their families."

Klein and Paul Dennett, Council vice president, health policy, are available to comment further on the launch of the coalition. To arrange an interview, please contact Jason Hammersla, Council director, communications, at (202) 289-6700.

Council briefs media: meaningful, useful 401(k) plan fee disclosure just one piece of the puzzle
Safe and Sound retirement requires financial literacy, commitment to saving
July 26: “Meaningful disclosure of 401(k) fees is essential for both plan participants and sponsors to make smart financial decisions, but any legislative approach must first consider the tremendous value that 401(k) plans represent in today’s retirement savings world,” said Lynn Dudley, American Benefit Council vice president, retirement policy, at a media briefing today.

“Employer-sponsored defined contribution plans provide workers with retirement savings vehicles in a cost-effective way, serve as important recruitment and retention tools for employers and generate trillions of dollars in investment capital for the U.S. economy,” Dudley said. The Council recently testified before the House of Representatives Education and Labor Committee hearing on 401(k) fees as well as last week’s ERISA Advisory Council Working Group on Financial Literacy, and has prepared the following 401(k) “fast fact” sheets and other materials that demonstrate the broad appeal and considerable value of these plans:

Legislation will soon be introduced to require substantial new disclosure requirements, potentially creating additional administrative burdens for employers and more confusion for plan participants. “More disclosure is not necessarily better disclosure,” Dudley said. “Any enhanced disclosure requirements need to keep in mind four guiding principles: What is the context for increased disclosure? Is the information useful to participants? Will the new statements be easy to deliver? And will the new requirements increase costs?”

Safe and Sound: A Ten-Year Plan for Promoting Personal Financial Security, the Council’s long-term strategic plan issued in 2004, set goals and made recommendations for improving financial literacy, expanding participation in workplace plans and increasing the national saving rate. The Council continues to work toward these goals, stressing bipartisan cooperation and innovation to achieve them.

“The overwhelming interest in automatic enrollment and Roth 401(k) plan designs demonstrates that employers want to do right by their workers,” Dudley said. “We urge legislators to support their efforts, not just by working toward our Safe and Sound goals, but by preserving the employer-sponsored 401(k) system,” Dudley said.

To arrange an interview with Dudley, Council vice president, retirement policy, or another retirement policy expert on the Council staff, please contact Jason Hammersla, Council director of communications, at (202) 289-6700.

Benefits Byte (05/06/08)

Council Files Amicus Brief in Retiree Health Benefits Case

ERISA Advisory Council Releases Recommendations to DOL

Click here for details.

ERISA Preemption and State Health Reform Initiatives

The Council's ERISA Preemption Issue Page

The Council strongly believes that legislative responses that affect employers must build on the current federal framework which preserves uniformity in plan design and administration. The Council is a founding member of the Coalition on Benefits, a group of employers and employer associations dedicated to working with Congress to preserve ERISA benefits. Click here to find out how to join in this effort.

As Congress is considering how to address the problem of the working uninsured, one of the questions being raised is how the Employee Retirement Income Security Act of 1974 ("ERISA") will interact with state initiatives. ERISA "preempts" state laws that relate to employer sponsored employee benefit plans in order to promote the employer sponsorship of health plans and the uniform administration of benefits.

Simply put, ERISA preemption is vital to the voluntary sponsorship of health plans. Over 70 percent of American workers age 18 to 64 have employer-based health coverage. Employers depend on ERISA preemption to ensure that coverage can be offered uniformly across the country and administered relatively efficiently. ERISA preemption also gives each employer the flexibility to design the terms of health plans to meet the changing needs of their unique workforce and to attempt to control spiraling health care costs.