December 3, 2009

Retiree Health Plan Flexibility Under Fire

The national health care reform debate is in full swing.  It is far too early to project what might, or might not, come out of this debate.  However, for those who sponsor, or are contemplating adopting, a retiree health benefit, one point bears watching.

The House health reform bill (“Affordable Health Care for America Act”,H.R. 3962) would effectively eliminate an employer’s ability to change retiree health benefits.  The proposal would only allow retiree health benefits to be changed if benefits would be comparably changed for all active employees, or unless a special request is made and approved by the relevant government agency.  This provision is not contained in the Senate health reform bill (“Patient Protection and Affordable Care Act”, H.R. 3590) and it is unclear whether it will make it to, or through, the Joint Conference process. 

What is important to know, though, is that, in its current form, it would have an immediate effective date.  What this means that if a health care reform bill is sent to the President, and if this provision, or some form of it is included, it would be effective upon the President’s signature, leaving employers little time to make changes.  Employers contemplating changing their retiree health program should watch the progress of this provision carefully.  Again, there is no assurance that this provision will be enacted, but it does bear watching.


The information contained in this Benefit Beat is not intended to be legal, accounting, or other professional advice, nor are these comments directed to specific situations.

As required by U.S. Treasury rules, we inform you that, unless expressly stated otherwise, any U.S. federal tax advice contained in this Benefit Beat is not intended or written to be used, and cannot be used, by any person for the purpose of avoiding any penalties that may be imposed by the Internal Revenue Service

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