Emergency Retiree Health Benefits Protection Act
The Emergency Retiree Health Benefits Protection Act is legislation aimed at helping people who retire to retain or regain health insurance coverage. The act seeks to ensure that retirees do not suffer a loss or reduction of coverage when they retire and imposes an obligation on the sponsors of group plans to restore health-care benefits to retirees who have previously lost those benefits or seen a reduction in those benefits. The act establishes an emergency loan guarantee program to help group plan sponsors get credit to pay for the reestablishment of health-care benefits to retirees if needed.
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Post-Retirement Reductions
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A group health-care plan sponsor cannot adversely adjust the health-care coverage offered to employees enrolled with the plan after they retire. Certain actions are prohibited by the act: These include the cancellation of health care or a decrease in the level of care offered. Sponsors must not increase the out-of-pocket contributions that a retiree must make to retain any benefits that he was entitled to receive prior to retirement, or to take advantage of any options that were available prior to retirement. Sponsors must not adjust the delivery arrangements for medical care to the disadvantage of the retiree. However, the sponsor may reduce benefits to the retiree it the retiree agrees to the reduction in writing.
Exemption From Restoration
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A group plan sponsor may apply for a waiver for an exemption from the requirement to restore benefits to retirees who had previously lost them. The application may be approved if it can demonstrate certain conditions. If the applicant can show that the cost of restoring benefits to retirees would have an overall adverse effect on all the participants in the plan, this may be grounds for approving an exemption application. If the administrative burden of restoring benefits to retirees would be administratively complex and cause a great business hardship to the plan sponsor due to the necessary diversion of resources, this may also be grounds for approving an exemption application. If the plan sponsor is operating at a loss or if restoring benefits to retirees would entail a reduction in benefits offered to all participants in the group plan in the future, an applicant may be granted an exemption according to the act.
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Loan Guarantee Program
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To help plan sponsors obtain the credit necessary for them to pay for compliance with act, the act establishes a loan guarantee program, whereby repayment for credit extended to health-care plan sponsors is guaranteed by the government. The act establishes a body responsible for administration of the program, called the Retiree Health Loan Guarantee Board, which consists of the Secretary of Labor, the Secretary of Commerce, the Secretary of Human Services and the Chairman of the Council of Economic Advisers. The act puts a limit on the amount of loan guarantees that can be outstanding at any one time, and this amount is set at $5,000,000 with no one guarantee exceeding $5,000,000.
Group Health Plan Provision
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The act contains a requirement that all group health plans must contain certain provisions. A plan must contain a provision preventing the plan from reducing benefits granted to retirees and their beneficiaries who are entitled to benefits under the plan. The provision must state that persons who participate in the plan, along with their beneficiaries, must maintain the level of benefits enjoyed on the date of their retirement.
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