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FOR YEARS, JUST HEARING the words "tax legislation" or "budget bills" has been enough to make benefit managers grimace-and for good reason.
While more than a decade has passed, veteran benefit managers still can recall the Section 89 debacle. That was in 1986, when congressional and administration staffers closed the door to outside input and assembled a bewildering and unjustified set of non-discrimination rules for health care plans as part of a tax bill. An embarrassed Congress repealed Section 89 three years later amid a tidal wave of employer protest.
There also was COBRA, a law with a sound public purpose, but one that gave employers an impossibly short time to be in compliance in spite of administrative complexities.
And there have been many miscues since then, among them the misguided Medicare Data Bank, which was part of a 1993 budget law. The Data Bank was a ludicrous federal mandate that would have required the nation's employers to file millions of health care coverage reports each year with bureaucrats, who never would have been able to read those reports. It, too, was later repealed.
Last year, however, we saw the glimmer of a possibility that lawmakers were changing their act when it came to tax/budget legislation and employee benefits.
The 1996 tax law included provisions-long sought by the employer community-that began to peel away layers of complex and unnecessary pension rules that had accumulated over the years.
The relief in the 1996 tax law, it now seems, was no fluke. Tax and spending measures now on their way to President Clinton contain numerous benefit provisions that employers and employees will welcome.
As we report this week, the legislation will, by getting rid of an irrational payment structure, greatly increase the availability of health maintenance organizations for Medicare beneficiaries. That will mean employers in many more parts of the country will have a new weapon to hold down their health care costs, while retirees in many cases will receive greater benefits than they now receive.
Other provisions also make a lot of sense, including those that will allow employers to give lump-sum payments and remove from their pension rolls more former employees with very small benefits. The cost of administering such small benefits is exorbitant relative to their value.
Perhaps best of all, the legislation contains no provisions that make us shake our heads and say: "How awful. That is going to cause no end of problems."
How has such a positive change come about? Certainly, a booming economy has helped. With the government flush with tax receipts, benefits no longer are the easy target they once were for revenue raiders.
But that isn't the only reason. We think the Clinton health care reform disaster of 1993-1994 has made both the administration and Congress more sensitive to the vital role that employer-provided benefits play and the need to deal with them carefully.
Last, but certainly not least, is that employer trade groups and individual employers are getting more active in the legislative process. Employers used to complain how they were blindsided by legislative changes affecting their benefit programs. Today, more than ever, instead of complaining after the fact, employers have taken action to stop bad ideas from becoming law.
Case in point: a provision in the Senate's tax bill that would have required employees to obtain written spousal consent before they could make withdrawals from their 401(k) plans. Employers launched a massive lobbying campaign to tell legislators and their staffs that the measure not only would increase administrative costs, but also could dampen participation in the plans. They argued that employees would be reluctant to contribute to retirement accounts knowing that access to those funds would be restricted. Those arguments won the day, and the provision was dropped from the bill that now is before President Clinton.
While an era of benefits goodwill may prevail today, it is uncertain how long it will last. Tough decisions are ahead for federal programs such as Medicare and Social Security, which are intertwined with employee benefit plans.
Employers must keep their eyes-and mouths-open in Washington. If they don't, their current smiles could become grimaces again.