Mr. MILLER. It was suggested in my own State that in some cases the collusion among employer representatives and employee representatives in fact can bargain away benefits because you actuarially know the impact of providing a level of care. Let's say, if you are bargaining for dental care for children, you know the cost of providing it to children under 5 as opposed to children over 7 and that in fact there may be some concern as to exactly the arm's length transaction in establishing these benefits. In some instances the case was given here as to the minimum benefit of mental health in Connecticut as opposed to visual care in an adjoining State. There has been substantial suggestion in the past that all of those transactions are not in fact at arm's length. În fact, people have been prosecuted because they have transacted away in collusion their unit's benefits. So I have a little trouble that suggestions, that the idea that if you are properly licensed and you properly report that, therefore, you properly are providing benefits. While I will profess that I am not as fully acquainted as I will be by the time we get into the amendments to the ERISA law, it appears that there is still a chance for rather illusory plans, certainly in the health and welfare benefit section, to exist. I think the States have a right to be concerned about that. I know the tragedies of people who were wholesalely enrolled in plans in southern California to find out that doctors who they thought were participants in the plan were not participants. Hospital beds that were available were not available. I am not sure that those things are addressed under ERISA. Mr. ANDERSON. We would agree they are not addressed. Mr. MILLER. You can have an administratively neat program that provides no benefits. That is my concern in the health field. The day may come from preemption if we have national health care, but I don't think that was addressed in ERISA. I stand to be corrected. Mr. ANDERSON. No. You are speaking of the regulatory vacuum that has been constructed. Mr. MILLER. That is my concern. Again, your testimony jibes with that of Mr. Barnes that that in fact exists. I think a State properly has a concern for the health and welfare of its citizens. I think that is clearly one of their roles and that these minimum benefit levels, there is substantial evidence that if they are not brought about by State action, they will in fact not exist or they will be a long time coming and that the collective bargaining system either does not exist for a great number of people or perhaps it is not made out as wholly as those who participate in it. Well, I appreciate your testimony. I think all of the testimony is very helpful to outlining some of the problems that we are going to have to deal with. As I say, some of us here, Mr. Heftel and Mr. Murphy and myself, we have inherited these problems and it will be interesting to see how we deal with them. Thank you very much for your time. Mr. ANDERSON. Thank you, Mr. Chairman. Mr. MILLER. The committee is recessed to the call of the Chair. [Whereupon, at 1:03 p.m. the subcommittee recessed, subject to the call of the Chair.] APPENDIX AMERICAN ACADEMY OF ACTUARIES 1775 K STREET, N.W., SUITE 215, WASHINGTON, D.C. 20006. (202) 223-8196 EDWIN F. BOYNTON, M.A.A.A., PRESIDENT C/O THE WYATT COMPANY 1629 K STREET, N.W. WASHINGTON, D.C. 20006 (202) 452-0660 June 13, 1978 Honorable John H. Dent, Chairman Committee on Education and Labor Dear Congressman Dent: This is in response to your letter of May 3, 1978 inviting the I am pleased to enclose a statement prepared by the Academy's the course of working with the new law. For simplicity, this is an organ- I would add that because of the timing for submission of these comments these should not be taken as official representations of the Academy per se. Rather they are a collection of proposed changes prepared by the Academy's Committee on Pensions reflecting the views of practitioners with long experience in the field. I trust that these suggestions will be helpful to your committee in coming up with proposed revisions to ERISA. If we can be of further assistance, please do not hesitate to call upon us. Presently, disability benefits in excess of the basic pension amount are subject to the accrual requirements of the Act. There are a number of plans where the disability retirement benefit is determined independently of the basic pension benefit and is in excess of the prospective basic pension benefit. Such disability benefits are intended for the specific contingency of disability and do not have income deferral characteristics or any of the basic features of pension plans. Unless disability benefits are excluded from the term "normal retirement benefits", employers with arrangements of this type will be encouraged to provide disability benefits outside the pension plan which may not be in the interest of employees. The activities of accountants should be limited in scope to a thorough review of the assets, benefit payments, and other financial aspects of the pension fund. Generally, accountants have ignored Section 103(a) (3) (B) of the Act which states that the accountant has the right to rely on the certification of an actuary. As a result, accountants have taken the position that not only the transactions of the fund, but the actuarial assumptions, methods, procedures, etc. must be reviewed. The added cost in duplication of work is considerable. The calculation of the amount of liability by computations. |