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:
                    ``(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.
TABLE OF CONTENTS: 
     Title I:  Retiree Health Benefits Protection 
     Title II:  Retiree Continuation Coverage 
Retiree Health Benefits Protection Act - 
Title I:  Retiree Health Benefits Protection
 - Amends the Employee Retirement Income Security Act of 1974 (ERISA) to add rules governing litigation involving the termination or reduction of retiree health benefits. 
Title II:  Retiree Continuation Coverage
 - Amends ERISA, the Public Health Service Act, and the Internal Revenue Code to extend group health plan insurance continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 to retirees and their dependents, in cases of substantial reduction or elimination of a retiree group health plan.  Allows early retirees and their dependents who lost such employer-sponsored health benefits to purchase continuing group health insurance coverage until they become eligible for Medicare.
Retiree Health Benefits Protection Act