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APPWP: CONSENT RULE NOT DEAD YET

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WASHINGTON-While benefit lobbying organizations are celebrating the enactment of tax and budget bills, which generally will be a boon to employers, employees and retirees, they are wary that damaging provisions that were knocked out could resurface in other measures later this year.

Their biggest fear involves a provision proposed by Sen. Carol Moseley-Braun, D-Ill., that would have required employees to obtain the written consent of spouses before taking a distribution other than as an annuity from their 401(k) plans. The spousal consent provision had been part of the Senate tax bill, but congressional conferees dropped it amid a major employer lobbying campaign.

The battle over spousal consent has only been put off to another day, say officials at the Washington-based Assn. of Private Pension & Welfare Plans, one of several trade groups that mobilized their members to lobby against the provision.

This is something Sen. Moseley-Braun "feels very strongly about. She will try very hard to attach it to an appropriations bill," Lynn Dudley, the APPWP's director of retirement policy, said at a press briefing last week.

Indeed, there is a precedent for employee benefit provisions ending up as part of broader, unrelated appropriations measures.

Last year, two health care measures passed that way. Legislation attached to an unrelated appropriations bill mandated that group health care plans offer at least 48 hours of inpatient care for a mother and child after a normal delivery and 96 hours after a Caesarean section. Also in that bill was a ban on discriminatory annual and lifetime limits for mental health care that takes effect in 1998.

Still, while awaiting a future battle, APPWP officials are jubilant that they were able to derail the spousal consent provision, which they say would have added to employers' administrative costs while discouraging participation in 401(k) plans by employees fearful they would lose easy access to the money.

"A handful of groups and individuals made a difference," said APPWP President James Klein, referring to the employer lobbying effort against the provision.

APPWP officials also worry that legislators in the fall will take up what they call "legislating by body part," i.e., setting specific periods of time that group health care plans must cover certain physical conditions.

Through such efforts, legislators are attempting to make medical decisions, which is an inappropriate role for them, said Paul Dennett, the APPWP's vp of health policy.

The APPWP, though, saluted other provisions included in the final bill, including those that permanently repeal the 15% excise tax on large pension distributions and require the Labor and Treasury departments to issue rules next year guiding employers on which benefit forms they can deliver to employees through electronic information systems, such as e-mail and the Internet.

The 15% excise tax deserved to be repealed because it punished employees who did better at investing assets in their retirement accounts, Ms. Dudley said.

Ms. Dudley said she welcomes the push that the new law gives the regulatory agencies to develop rules for electronic delivery of benefit information to employees.

Such systems, Ms. Dudley said, are a very cost-effective way of providing employees information and far more accurate than paper-driven systems.

Other provisions in the new law will expand the availability of health maintenance organizations to retirees eligible for Medicare, allow more employees with pension plans to also make tax-deductible contributions to individual retirement accounts as well as raise to $5,000 from $3,500 the present value benefit threshold at which employers can remove former employees from their pension plans by giving them their accrued benefit in cash (BI, Aug. 4).