I

104TH CONGRESS

2D SESSION H. R. 4052

To amend the Internal Revenue Code of 1986 to assure continued health

insurance coverage of retired workers.

IN THE HOUSE OF REPRESENTATIVES

SEPTEMBER 11, 1996

Mr. KLECZKA (for himself and Mr. STARK) introduced the following bill;

which was referred to the Committee on Ways and Means, and in addition to the Committees on Economic and Educational Opportunities, and

Commerce, for a period to be subsequently determined by the Speaker,

in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

A BILL

To amend the Internal Revenue Code of 1986 to assure

continued health insurance coverage of retired workers.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Health Care Assurance

5 for Retired Employees Act of 1996’’.
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1 SEC. 2. ADVANCE NOTICE OF MATERIAL REDUCTIONS IN

2 COVERED SERVICES UNDER GROUP HEALTH

3 PLANS.

4 (a) ADVANCE NOTICE.—

5 (1) IN GENERAL.—Section 104(b)(1) of the

6 Employee Retirement Income Security Act of 1974

7 (as amended by section 101(c)(1)(B) of the Health

8 Insurance Portability and Accountability Act of

9 1996 (Public Law 104–191)) is amended—

10 (A) by redesignating subparagraphs (A)

11 and (B) as clauses (i) and (ii), respectively;

12 (B) by striking ‘‘(1) The administrator’’

13 and inserting ‘‘(1)(A) The administrator’’;

14 (C) by striking ‘‘The administrator’’ the

15 second place it appears and inserting the follow16 ing:

17 ‘‘(B) The administrator’’;

18 (D) by striking ‘‘If there is a modification’’

19 and inserting the following:

20 ‘‘(C) If there is a modification’’; and

21 (E) by adding at the end the following new

22 subparagraph:

23 ‘‘(D) Notwithstanding subparagraph (C), a modifica24 tion or change described in section 102(a)(1) in covered

25 services or benefits provided in the case of a group health

26 plan (as defined in section 706(a)(1))) relating to retiree
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1 health benefits, a summary description of such modifica2 tion or change shall be furnished to participants and bene3 ficiaries not later than 180 days before the effective date

4 of the modification or change. In any case in which an

5 individual first becomes a participant under a group

6 health plan during any such 180-day period with respect

7 to such a modification or change or (in the case of any

8 other beneficiary under the plan) first receives benefits

9 under the plan during such 180-day period, the require10 ments of the preceding sentence may be met by providing

11 the summary description of such modification or change

12 not later than the date on which such individual first be13 comes a participant or such other beneficiary first receives

14 benefits under the plan.’’.

15 (2) DETERMINATION BY SECRETARY.—Section

16 104 of the Employee Retirement Income Security

17 Act of 1974 (29 U.S.C. 1024) is further amended by

18 redesignating subsection (d) as subsection (e) and by

19 inserting after subsection (c) the following new sub20 section:

21 ‘‘(d) A change or modification in covered services or

22 benefits provided in the case of a group health plan relat23 ing to retiree health benefits that is subject to the require24 ments of subsection (b)(1)(D) may not take effect until

25 after the Secretary determines that such change or modi-
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1 fication does not violate the plan, including collective bar2 gaining agreements.’’.

3 (3) ADVANCE NOTICE TO SECRETARY.—Section

4 104(a)(1)(D) of the Employee Retirement Income

5 Security Act of 1974 (29 U.S.C. 1024(a)(1)(D)) is

6 amended by inserting before the period the follow7 ing: ‘‘, or in the case of any such modifications and

8 changes in covered services or benefits provided in

9 the case of a group health plan relating to retiree

10 health benefits, not later than 180 days before the

11 effective date of such modification or change.’’.

12 (4) CIVIL PENALTY.—Section 502(c)(1) of such

13 Act (29 U.S.C. 1132(c)(1)) is amended by striking

14 ‘‘or section 101(e)(1)’’ and inserting ‘‘, section

15 101(e)(1), or section 104(b)(1)(D)’’.

16 (b) ENFORCEMENT.—

17 (1) REQUIREMENTS.—Section 4980B of the In18 ternal Revenue Code of 1986 is amended by redesig19 nating subsection (g) as subsection (h) and by in20 serting after subsection (f) the following new sub21 section:

22 ‘‘(g) NOTICE OF CHANGE OR MODIFICATION IN

23 HEALTH BENEFITS.—

24 ‘‘(1) IN GENERAL.—A group health plan meets

25 the requirements of this subsection if—
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1 ‘‘(A) the plan sponsor complies with sec2 tion 104(b)(1)(D) of the Employee Retirement

3 Income Security Act of 1974 (relating to pro4 viding advance notice of modification or change

5 in retiree health benefits provided under a

6 group health plan); and

7 ‘‘(B) such modification or change in retiree

8 health benefits in a group health plan takes ef9 fect after the Secretary of Labor makes the de10 termination required by section 104(d) of such

11 Act that such change or modification does not

12 violate the plan, including collective bargaining

13 agreements.

14 ‘‘(2) NONCOMPLIANCE PERIOD.—For the pur15 poses of subsection (b), the noncompliance period

16 with respect to this subsection shall be determined

17 without regard to paragraph (2)(B)(ii) of subsection

18 (b).’’.

19 (2) CONFORMING AMENDMENTS.—

20 (A) Subsection (a) of section 4980B of

21 such Code is amended by striking ‘‘subsection

22 (f)’’ and inserting ‘‘subsections (f) and (g)’’.

23 (B) Clause (iv)(II) of section

24 4980B(f)(2)(B) of such Code is amended by
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1 striking ‘‘subsection (g)(1)(D)’’ and inserting

2 ‘‘subsection (h)(1)(D)’’.

3 (c) EFFECTIVE DATE.—The amendments made by

4 this section shall apply with respect to plan years ending

5 after August 1, 1996.

6 SEC. 3. CONTINUATION OF COVERAGE FOR PERSONS 55

7 AND OLDER UNTIL ELIGIBLE FOR MEDICARE.

8 (a) IN GENERAL.—Section 4980B(f)(2) of the Inter9 nal Revenue Code of 1986 is amended by adding at the

10 end the following:

11 ‘‘(F) COVERAGE FOR PERSONS 55 AND

12 OLDER UNTIL ELIGIBLE FOR MEDICARE.—In

13 the case of a covered employee who has attained

14 the age of 55 before a qualifying event de15 scribed in paragraph (3)(B)—

16 ‘‘(i) in no event shall the period of

17 continued coverage under subparagraph

18 (B)(i) with respect to such event end be19 fore the applicable date under subpara20 graph (B)(iv), and

21 ‘‘(ii) the premium requirements for

22 any period of continuation of coverage sole23 ly be reason of clause (i) shall be deter24 mined by substituting ‘110 percent’ for

25 ‘102 percent’ in subparagraph (C)(i), un-
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1 less the last sentence of subparagraph (C)

2 otherwise applies.’’.

3 (b) EFFECTIVE DATE.—The amendments made by

4 this section shall apply with respect to plan years ending

5 after August 1, 1996.

6 SEC. 4. PROTECTIONS UNDER THE MEDICARE PROGRAM

7 FOR RETIRED WORKERS WHO LOSE RETIREE

8 HEALTH BENEFITS.

9 (a) NO PREMIUM PENALTY FOR LATE ENROLL10 MENT.—The second sentence of section 1839(b) of the So11 cial Security Act (42 U.S.C. 1395r(b)) is amended by in12 serting ‘‘and not pursuant to a special enrollment period

13 under section 1837(i)(4)’’ after ‘‘section 1837)’’.

14 (b) SPECIAL MEDICARE ENROLLMENT PERIOD.—

15 (1) IN GENERAL.—Section 1837(i) of such Act

16 (42 U.S.C. 1395p(i)) is amended by adding at the

17 end the following new paragraph:

18 ‘‘(4)(A) In the case of an individual who—

19 ‘‘(i) at the time the individual first satisfies

20 paragraph (1) or (2) of section 1836—

21 ‘‘(I) is enrolled in a group health plan de22 scribed in section 1862(b)(1)(A)(v) by reason of

23 the individual’s (or the individual’s spouse’s)

24 current employment or otherwise, and
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1 ‘‘(II) has elected not to enroll (or to be

2 deemed enrolled) under this section during the

3 individual’s initial enrollment period; and

4 ‘‘(ii) whose continuous enrollment under such

5 group health plan is involuntarily terminated at a

6 time when the enrollment under the plan is not by

7 reason of the individual’s (or the individual’s

8 spouse’s) current employment,

9 there shall be a special enrollment period described in sub10 paragraph (B).

11 ‘‘(B) The special enrollment period referred to in sub12 paragraph (A) is the 6-month period beginning on the date

13 of the enrollment termination described in subparagraph

14 (A)(ii).’’.

15 (2) COVERAGE PERIOD.—Section 1838(e) of

16 such Act (42 U.S.C. 1395q(e)) is amended—

17 (A) by inserting ‘‘or 1837(i)(4)(B)’’ after

18 ‘‘1837(i)(3)’’ the first place it appears, and

19 (B) by inserting ‘‘or specified in section

20 1837(i)(4)(A)(i)’’ after ‘‘1837(i)(3)’’ the second

21 place it appears’’.

22 (c) PROVIDING FOR MEDIGAP OPEN ENROLLMENT

23 PERIOD.—Section 1882(s)(2)(A) of such Act (42 U.S.C.

24 1395ss(s)(2)(A)) is amended—

25 (1) by inserting ‘‘(i)’’ after ‘‘during’’, and
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1 (2) by inserting before the period at the end the

2 following: ‘‘or (ii) in the case of an individual who

3 enrolls in part B pursuant to a special enrollment

4 period provided under section 1837(i)(4), the 6-

5 month period beginning with the first month as of

6 the first day of which the individual is enrolled

7 under part B pursuant to such enrollment’’.

8 (d) EFFECTIVE DATE.—

9 (1) IN GENERAL.—Subject to paragraph (2),

10 the amendments made by this section shall take ef11 fect on the date of the enactment of this Act and

12 apply to involuntary terminations of coverage under

13 a group health plan occurring on or after August 1,

14 1996.

15 (2) TRANSITION.—In the case of an involuntary

16 termination of coverage under a group health plan

17 that occurred during the period beginning on August

18 1, 1996, and ending on the date of the enactment

19 of this Act, the special enrollment period under sec20 tion 1837(i)(4)(B) of the Social Security Act (as

21 amended by subsection (b)) is deemed to begin as of

22 the date of the enactment of this Act.

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