Present Law and Issues Relating to Employer-provided Retiree Health Insurance: Scheduled for a Hearing Before the Subcommittee on Oversight of the Committee on Ways and Means, on June 14, 1989

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U.S. Government Printing Office, 1989 - Health insurance - 33 pages
 

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Page 1 - Voluntary employees' beneficiary associations providing for the payment of life, sick, accident, or other benefits to the members of such association or their dependents, if (A) no part of their net earnings inures (other than through such payments) to the benefit of any private shareholder or individual, and (B) 85 per centum or more of the income consists of amounts collected from members for the sole purpose of making such payments and meeting expenses ; (17) Teachers...
Page 18 - ... with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an emterprise of a like character and with like aims...
Page 15 - ... past and current service credits of all employees under the plan, plus (B) Any excess over the amount allowable under subparagraph (A) necessary to provide with respect to all of the employees under the trust the remaining unfunded cost of their past and current service credits distributed as a level amount, or a level percentage of compensation, over the remaining future service of each such employee...
Page 15 - ... (sec. 415(cXlXB)) does not apply. If the requirements with respect to post-retirement medical benefits are met, the income earned in the separate account is not taxable. Also, employer contributions to fund these benefits are deductible under the general rules relating to the timing of deductions for contributions to qualified retirement plans. The deduction for such contributions is not taken into account in determining the amount deductible with respect to contributions for retirement benefits....
Page 14 - The medical benefits described in section 401(h) are considered subordinate to the retirement benefits if at all times the aggregate of contributions (made after the date on which the plan first includes such medical benefits) to provide such medical benefits and any life insurance protection does not exceed 25 percent of the aggregate contributions (made after such date) other than contributions to fund past service credits. (ii) The meaning of the term "subordinate" may be illustrated by the following...
Page 18 - A fiduciary shall discharge his duties with respect to a plan solely in the interest of the participants and beneficiaries and for the exclusive purpose of • providing benefits to participants and their beneficiaries...
Page 1 - ... the nondiscrimination rules of section 105(h). Present law permits employers to prefund medical benefits for retirees. Postretirement medical benefits may be prefunded by the employer in two basic ways: (1) through a separate account in a tax-qualified pension plan (sec. 401(h)); or (2) through a welfare benefit fund (sees. 419 and 419A). Generally, the amounts contributed are excluded from the income of the plan or participants.
Page 15 - ... a separate account is established and maintained for such benefits payable to such employee (and his spouse and dependents) and such benefits (to the extent attributable to plan years beginning after March 31, 1984, for which the employee is a key employee) are only payable to such employee (and his spouse and dependents) from such separate account. For purposes of paragraph (6), the term "key employee...
Page 14 - Under section 401 (h) a qualified pension or annuity plan may make provision for the payment of sickness, accident, hospitalization, and medical expenses for retired employees, their spouses, and their dependents. The term "medical benefits described in section 401 (h)" is used in this section to describe such payments.
Page 17 - ... years. Each year's computation of contributions with respect to post-retirement medical benefits is to be made under the assumption that the medical benefits provided to future retirees will have the same cost as medical benefits currently provided to retirees. Because the reserve is computed on the basis of the current year's medical costs, neither future inflation nor future changes in the level of utilization may be taken into account until they occur. The Deficit Reduction Act of 1984 (DEFRA...

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