On balance, it would seem that the loss of this protection under ERISA would be far less aggravating than the loss of mandatory provision of medical care, especially since the federal protection would be replaced by state protection in a field that is essentially a short term risk. Most of all, Hawaii (and other states) could easily establish other forms of health insurance programs which thereby, as a practical matter, would dismantle existing inter-state plans with respect to local employees but would not run afoul of ERISA. Thus, Hawaii could establish a health insurance fund to be supported by employer and employee contributions (as provided under the present act) and empower the fund to arrange mandated health care benefits with prepaid health care plan contractors chosen by employee election. This scheme would yield the same benefits and advantages as are provided under the present law except that the interstate employers would lose the possibility of providing coverage of the whole work force by a carrier of their choice. Bearing in mind that the state could accomplish the goals of its Prepaid Health Care Act by alternative schemes not involving employee benefit plans under ERISA, but at the price of greater inconveniences to multi-state employers and of greater bureaucratic component, it should be manifest that the proposed clarification or correction of ERISA is preferable and more in harmony with the over-all objectives of that legislation. In response to your invitation of May 3, 1978, the Society of Professional Benefit Administrators is pleased to submit the enclosed statement for the record concerning legislative action with respect to the Employee Retirement Income Security Act of 1974 (ERISA). We are uniquely qualified to commert on laws and regulations which impact on the administration of employee benefit plans since all of our member firms' primary source of income is derived primarily through the providing of administrative services to employee benefit plan sponsors. May I reiterate here our offer to assist you and your staff in addressing the many problems in administering employee benefit plans which have arisen since the passage of ERISA. We believe the purposes for which the law was enacted are important and valid and hope that we can assist you in finding ways to make the means of attaining these ends more workable. Thank you again for this opportunity to express our views. Please feel free to call upon us at any time. SOCIETY OF PROFESSIONAL BENEFIT ADMINISTRATORS A STATEMENT OF CONCERNS ABOUT THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974 PRESENTED TO THE SUBCOMMITTEE ON LABOR STANDARDS OF THE HOUSE EDUCATION AND LABOR COMMITTEE By Richard J. Galbraith President Galbraith & Green, Inc. Salt Lake City, Utah June 15, 1978 The Society of Professional Benefit Administrators is an association of third-party administrators of employee benefit plans. It represents a broad spectrum of companies within the industry, including firms from all parts of the country and ranging in size from very small, to the largest such organizations in the country. These firms provide benefits administration services for most types of employee benefit plans: Taft-Hartley and corporate, single and multi-employer, large and small, insured and self-insured; health, life, dental, pension, vacation, apprenticeship, and many other types of plans. We are affected daily by ERISA's requirements and are uniquely qualified to comment on the burdens which ERISA and its administration has placed on the private sector, as well as ways in which these burdens could be lessened without sacrificing protection for the plan employee-beneficiaries. While we are quite familiar with the broad range of ERISA's impact on the employee benefits universe, we have special expertise in the administrative aspects. Our continuation in business depends upon our ability to provide administrative services of employee benefit plans effectively and efficiently. Therefore, we are directly concerned with the administrative requirements under ERISA. I should also point out that as an industry, we have developed special skills in administrative techniques related to employee benefits. Our member companies utilize the most effective procedures and equipment, with constant consideration of new and more productive tools. This has enabled us to respond effectively to the new ERISA requirements. At the same time, we are perhaps most qualified to advise on the "doability" of various provisions of statute and regulation. We are also concerned about the value received by plan employee-beneficiaries for administrative expenses incurred by plan sponsors. To the extent that these values are minimal or counter-productive, we feel that there are losses to the employee-beneficiaries and plan sponsors alike. On the other hand, to the degree that certain requirements can be amplified, both the participants in an individual plan and the general public may well benefit. We, therefore, approach the subject with two basic premises with respect to plan administration: (1) ERISA has many desirable features which would be strengthened. areas. Clarification is needed in many (2) ERISA provides for a significant amount of reporting and record-keeping which is unnecessary |