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ERIC Benefits Proposal Would Realign Distribution

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A task force at the ERISA Industry Committee has come out with ideas for a new health and retirement system that might affect the role of many current health insurance agents and benefits brokers.

ERIC, Washington, today introduced the “new benefit platform for life security” at a press conference in Washington.

The group, which represents employers, insurers, banks and consultants, has released a proposal that calls for the federal government to set uniform national benefits standards and divide the United States into several uniform benefits service areas.

At least 2 large-scale “benefit administrators” would compete to sell “lifetime security plans” to employers and individuals in each region, according to an outline of the ERIC task force proposal posted on the ERIC Web site.

“These administrators, who would be trusted intermediaries, must have significant expertise in designing, delivering, and managing retirement and other financial benefits, as well as health plans,” the task force members write in the proposal. “Benefit administrators could be direct providers or assemblers of affiliated providers. Examples might include banks, mutual fund/investment companies, insurers, health plans, or new “platform” administrators.”

Competition among the benefit administrators would help “eliminate fragmentation and unnecessary ‘middlemen’ that add little value to the ultimate consumer,” the task force members write.

Employers could decide whether to work with their current benefits advisors, buy employee benefits from the benefit administrators, or encourage employees to buy their own benefits from the benefits administrators.

If the proposal were adopted as is, the benefits administrators would:

- Assume fiduciary responsibility for any benefits provided.

- Offer optional benefits, such as life insurance and disability insurance, until those products “are included as core benefits.”

- Compete with one another based partly on health coverage quality, use of information technology and plan design as well as cost.

- Offer a standard retirement benefits package that would include a defined benefit plan, a defined contribution plan, and a short-term security account.

ERIC officials said at the press conference that they view the proposal as a vehicle for starting discussions with other stakeholders and do not expect to develop legislation based on the proposal until sometime between 2009 and 2011.

“If you want to change the results, then you’ve got to change the benefit system,” Michael Stapley, chairman of the ERIC task force, said at the press conference. “The new platform changes the system.”


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