BENEFITS BYTE

June 22, 2004
BB 04—70

In this issue:

  • Democrats Call for Renewed Patients' Bill of Rights Debate
  • Treasury Health Savings Account Guidance is Delayed
  • House Passes Dependent Care FSA Rollover
  • Council Files Benefit Options Comment Letter With IRS; will Testify June 24
  • American Benefits Council IN THE NEWS: The Supreme Court Rules in Favor of ERISA Preemption in HMO Benefits Decisions

Democrats Call for Renewed Patients' Bill of Rights Debate

In response to the Supreme Court's unanimous ruling in Aetna Health Inc v. Davila and Cigna Healthcare, Inc. v. Calad, Representatives John Dingell (D-MI) and Charles Norwood (R-GA), and Senator Edward Kennedy (D-MA) have called on Congress to unravel the Court's decision. The Court ruled that the federal remedies available under ERISA take precedence over remedies available under state laws when a health plan makes a benefits determination, including those that involve making a medical judgment. Predictably, Rep. Dingell, one of the leading champions of Patients' Bill of Rights (PBOR) legislation renewed calls for Congress to swiftly approve a patients' rights bill. Rep. Dingell, along with 54 cosponsors, has introduced H.R. 4628, which is identical to the Senate-passed PBOR legislation from 2001.

In a statement issued in response to critics of the decision, Council President James Klein stated that the real question should be "why the two physicians in these cases did not act swiftly to help make sure their patients got the care they were seeking. In neither case did the patient or their physician seek a further review of the health plan's initial coverage decision, despite being specifically informed of their right to such a review under federal law." Klein continued, "Today, extensive procedures are now in place under ERISA, and patients and physicians should use these review procedures to help resolve benefits disputes and not seek to rekindle the rancorous [PBOR] debate over subjecting employer-sponsored benefit plans to conflicting decisions made by the courts of 50 different states."

PBOR legislation stalled in Congress in the past and despite calls for federal legislation in light of the Supreme Court's decision, it is unlikely that Congress will seriously consider the issue in 2004. Nonetheless, the outcome of the presidential and congressional elections could significantly alter the outlook for PBOR next year. For more information, please contact Susan Relland, Council health policy legal counsel, at (202) 289-6700.

Treasury Health Savings Account Guidance is Delayed

The Treasury Department has announced that the final installment of anticipated Health Savings Account (HSA) guidance will be delayed a few weeks and is now expected by mid-July. Treasury has previously issued four batches of guidance addressing various HSA plan design and operational issues. The July guidance is expected to address all final open issues, such as whether an employer may make matching contributions and whether an HSA can accept rollovers from a Health Reimbursement Arrangement (HRA). Additional guidance may also be provided on issues such as contribution limits to HSAs in the case of "embedded" family deductibles and the definition of preventive care. We also now expect to see an HSA technical corrections bill introduced later this year, which Treasury staff is reportedly considering at this time. For more information, please contact Susan Relland, Council health policy legal counsel, at (202) 289-6700.

House Passes Dependent Care FSA Rollover

On June 22, the U.S. House of Representatives approved by voice vote the Working Families Assistance Act (H.R. 4372), which would allow up to $500 of unused dependent care spending arrangement dollars to be carried forward into the following year. This is similar to the provision the House has passed twice to allow rollovers of unused health care flexible spending arrangement dollars. The Senate has not yet acted on either measure during this Congress. The Council supports efforts to allow unspent funds from health FSAs to rollover for future use by employees. For more information, please contact Maria Ghazal, Council director, health policy, at (202) 289-6700.

Council Files Benefit Options Comment Letter With IRS; will Testify June 24

On June 22, the Council filed a comment letter with the Internal Revenue Service on the proposed regulations to reduce benefit options for defined benefit plans under Code section 411(d)(6). The proposed regulations were discussed in more detail in a March 24, 2004, Benefits Byte. The Council's comment letter focuses on simplifying the redundant options approach by basing the fund families on the core options. The letter also discusses contingent event benefits, replacing actuarial assumptions, the de minimis test and terminated vested participants, and coordination with the minimum required distribution rules. The Council will testify at an IRS hearing on the regulations on June 24. For more information, contact Jan Jacobson, Council director, retirement policy, at (202) 289-6700.

American Benefits Council IN THE NEWS: The Supreme Court Rules in Favor of ERISA Preemption in HMO Benefits Decisions

The Council's phones starting ringing with media calls immediately following the Supreme Court's 9-0 decision on June 21 in two related cases involving ERISA preemption of state tort laws in actions by health plans when making benefits decisions: Aetna Health Inc v. Davila and Cigna Healthcare, Inc. v. Calad. In addition to a radio interview broadcast on San Antonio's KTSA, Council staff's comments appeared in:

  • Justices Limit Suits Against HMOs (Charles Lane, Washington Post, June 22) also appeared in the Minneapolis Star Tribune
  • Justices Limit Ability to Sue Health Plans (Linda Greenhouse, New York Times, June 22) also appeared in the Delaware Star News and the Spartanburg (SC) Herald-Journal
  • Court shields HMOS from suits (Lisa Greene, St. Petersburg Times, June 22)
  • Court rules for HMOs in fight over patient suits (Anne Gearan, Associated Press, June 22) also appeared in the Myrtle Beach Sun News
  • Court shields HMOs from malpractice (Tom Ramstack, Washington Times, June 22)
  • High Court Blocks State HMO Medical Negligence Suites (Fred Schneyer, Plansponsor.com, June 22)
  • HMO Subscribers' State Law Claims Preempted, U.S. Supreme Court Finds (Jo-el J. Meyer and Peyton M. Sturges, BNA Health Care Daily Report, June 22) subscription required to view
  • Supreme Court rules for HMOs over patients (Stephen Henderson, Knight Ridder Newspapers, June 21) appeared also in the Aberdeen (SD) American News, Akron Beacon Journal, Atlanta Journal Constitution, Biloxi (MS) Sun Herald, Bradenton (FL) Herald, Charlotte Observer, Columbia (SC) State, Columbus (GA) Ledger-Enquirer, Contra Costa (CA) Times, Covallis (OR) Gazette-Times, Duluth (MN) News Tribune, Fort Wayne (IN) News-Sentinel, Grand Forks (SD) Herald, Kansas City Star, Lexington Herald-Leader, Macon (GA) Telegraph, Miami Herald, Monterey County (CA) Herald, Philadelphia Inquirer, San Jose Mercury News, San Luis Obispo Tribune, State College (PA) Centre Daily, Tallahassee Democrat, Twin Cities (MN) Pioneer Press, Wichita (KS) Eagle, and Wilkes Barre (PA) Times Leader
  • Aetna, Cigna Win at U.S. High Court on Patient Suits (Greg Stohr, Bloomberg, June 21)

Also on June 21, a story appeared on the recent release by the IRS of its final regulations on minimum required distributions that included quotes by Council staff:

As other stories of note appear, the Council will keep you informed. For more information about any of these articles, please contact Deanna Johnson Keim, APR, Council director, communications, or Jason Hammersla, Council communications associate at (202) 289-6700.

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The American Benefits Council is the national trade association for companies concerned about federal legislation and regulations affecting all aspects of the employee benefits system. The Council's members represent the entire spectrum of the private employee benefits community and either sponsor directly or administer retirement and health plans covering more than 100 million Americans.