<nobr>Jun 21, 2010</nobr>

Senate Approves Pension Funding Relief as Part of Medicare Pay Fix

The Senate on June 18 approved defined benefit funding relief as part of legislation (H.R. 3962, the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010) to provide a six-month Medicare physician pay fix.

The Senate had been considering the pension funding relief provisions and a longer-term Medicare pay fix as part of a larger bill (H.R. 4213) to extend expired tax provisions and unemployment insurance, but has been unable to move forward on that bill over cost concerns and other issues.

The defined benefit funding provisions in H.R. 3962 are essentially the same as the provisions passed by the Senate in March as part of an earlier version of H.R. 4213 (the American Workers, State, and Business Relief Act of 2010).

Highlights of the funding relief includes:

• 2+7 amortization (first two years are interest-only);


• 15-year amortization;


• Conditions apply for three years for 2+7 and for five years for 15-year amortization;


• Eligible plan years include 2008-2011;


• Increased reporting to participants and beneficiaries if plan elects relief; and


• "Matching contributions" to plans for excess compensation (greater than $1 million), extraordinary dividends or stock redemptions.

It is doubtful that the House will take up the legislation this week. House Speaker Nancy Pelosi (D-CA) has said that the temporary Medicare fix approved by the Senate is inadequate, and urged the Senate to approve the broader tax extender legislation (H.R. 4213). Depending on what happens with H.R. 4213, it is possible H.R. 3962 could be further amended by the House and sent back to the Senate.

Questions or comments on the pension provisions of this legislation should be addressed to Kathryn Ricard (kricard@eric.org).

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H.R. 3962 as Approved by Senate

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