Two members of Congress have introduced legislation strongly backed by the American Council of Life Insurers that would encourage workers to annuitize a portion of their retirement savings from a qualified plan.
The legislation, called the Secure Annuity Income for Life Act, would exclude from income 15% of the annual annuity stream to a retiree, subject to a limitation.
Specifically, the maximum amount of annuity income qualifying for the exclusion is $20,000, annually. Thus, the exclusion is capped at $3,000.
The legislation is sponsored by Reps. Earl Pomeroy, D-N.D., and Johnny Isakson, R-Ga.
The legislation did not have a bill number at press time.
ACLI President Frank Keating praises Pomeroy and Isakson for introducing the legislation and their understanding of the retirement security equation.
“They know retirement security is not built on accumulating assets alone, but managing them in retirement,” Keating says.
“By annuitizing at least a portion of assets from a qualified plan, a person can go a long way toward guaranteeing lifetime financial security,” he adds.
In health news, President Bush is pressuring Congress to create a new $400 billion Medicare prescription drug benefit by July 4.
“Time and time again, Medicares failure to pay for drugs means our seniors risk serious illnesses, disease and injuries, all of which Medicare would pay to treat after the fact,” he says.
The president spoke in Chicago to a meeting of the Illinois State Medical Society.
Bush notes there is a growing consensus in both the House and the Senate, and among both Republicans and Democrats, that seniors need more choices and better benefits, including prescription drugs.
“With the right spirit, I am confident that both the House and the Senate can act on historic Medicare improvements before the 4th of July recess,” Bush says.
Currently, the leading prescription drug proposal was developed by Senate Finance Committee Chairman Charles Grassley, R-Iowa, and Ranking Democrat Max Baucus.
The legislation was set to be approved by the Committee after press time for this issue.
Under their proposal, beginning in 2006, all Medicare beneficiaries would have the option of purchasing a standard drug benefit or an actuarially equivalent coverage.
The standard coverage is defined as having a $275 deductible. Between $276 and $3,450 in costs, Medicare would pay 50% of all costs.
There would be no coverage between $3,450 and $3,700 in total drug expenditures.
Above $3,700 in drug expenditures, Medicare would pay 90%.
The plan would rely on private insurers to provide coverage and bear a portion of the financial risk.
Insurers could use a variety of cost control methods to keep prices affordable, including selective contracting with drug providers and mail order pharmacies.
Coverage would be available through the traditional fee-for-service plan and the managed care plan, which will be called Medicare Advantage.
Bush says that the House of Representatives will take up the issue in the coming weeks.
He adds that the new benefit is vital to maintain the viability of Medicare.
“Because seniors dont have drug coverage for prescription drugs and preventive care, we are creating a health care system that is more expensive and less effective,” Bush says.
Scott P. Serota, president of the Washington-based Blue Cross and Blue Shield Association, praises the effort to enact a Medicare drug benefit.
“Prescription drugs are a critical benefit for Americas seniors, and we are encouraged that the Senate has taken positive steps to provide much-needed coverage,” Serota says.
In other health news, life and health insurers participated in a public event last week aimed at increasing public support for legislation creating an above-the-line deduction for the purchase of long term care insurance.
The Capitol Hill event was tied to Fathers Day, and the release of a study sponsored by MetLife, Inc., New York, which reported that contrary to many perceptions, men are just as likely as women to be caregivers to a chronically ill relative.
The legislation insurers are supporting, H.R. 2096, is sponsored by Reps. Nancy Johnson, R-Conn., and Earl Pomeroy, D-N.D.
Johnson says that men are the “silent caregivers” in the current long term care crisis.
“While the huge contributions of mothers and daughters to their families in this regard has long been recognized, we cannot ignore that working men are caregivers who also want to assure the financial security of their families,” she says.
The MetLife study found that the majority of both men and women caregivers report they needed to modify their work schedules and miss some work as a result of caregiving.
Finally, the House of Representatives was expected at press time to pass legislation reforming the nations class-action civil justice system.
The legislation, which is strongly backed by the insurance industry, would have major national class actions heard in federal courts instead of state courts.
It would prevent so-called “forum shopping” in which plaintiffs manipulate their complaints to allow them to be filed in local courts that business groups believe are biased.
For an update on the expected House action, see National Underwriters Web site at www.nationalunderwriter.com.
Reproduced from National Underwriter Edition, June 16, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved. Copyright in this article as an independent work may be held by the author.