CONSOLIDATED OMNIBUS BUDGET RECONCILIATION ACT (COBRA)
On April 7, 1986, President Reagan signed into law H.R. 3128 (Public Law 99-272), the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). The new law, .which is the result of the congressional budget process, makes hundreds of changes in Federal programs to reduce the deficit in accordance with the budget decisions (S.Con.Res. 32) adopted by both the House and the Senate on August 1, 1985
If you and/or your dependents lose insurance coverage, you may be able to continue coverage with the state group insurance program for a limited time through COBRA. The Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA) amended the Public Health Service Act, the Internal Revenue Code and the Employee Retirement Income Security Act (ERISA) to require employers with 20 or more employees to provide temporary continuation of group health coverage in certain situations where it would otherwise be terminated.
The Act contains the following titles that we shall look at briefly;-
- Title I. Agriculture programs.
- Title II. Armed services and defense-related programs.
- Title III. Housing and community development programs.
- Title IV. Transportation and related programs.
- Title V. Corporation for Public Broadcasting and Federal Communications Commission.
- Title VI. Maritime, coastal zone, and related programs.
- Title VII. Energy and related programs.
- Title VIII. Outer Continental Shelf and related programs.
- Title IX. Medicare, Medicaid, and Maternal and Child Health programs.
- Title X. Private health insurance coverage.
- Title XI. Single-employer plan termination insurance system amendments.
- Title XII. Income security and related programs.
- Title XIII. Revenues, trade, and related programs.
- Title XIV. Revenue sharing.
- Title XV. Civil service, postal service, and governmental affairs generally.
- Title XVI. Higher education programs.
- Title XVII. Graduate Medical Education Council and technical amendments to the
- Public Health Service Act.
- Title XVIII. Small business programs.
- Title XIX. Veterans’ programs.
TITLE I. AGRICULTURE PROGRAMS
The Act pronounces that, for purposes of determining savings, the expenditures and outlays resulting from export sales of dairy products and emergency disaster loans and loan authorizations under the Agricultural Credit Insurance Fund of the Food Security Act of 1985.
- Tobacco Program Improvements
It amended the Agricultural Act of 1949 that set the price supports for the 1985 and 1986 crops of: (1) Flue-cured tobacco at $1.438 per pound; and (2) Burley tobacco at $1.488 per pound.
It set the price support level for any kind of tobacco for which marketing quotas were in effect or not disapproved by producers at the preceding year’s price, plus or minus the amount by which the current crop’s price is greater or less than the preceding year’s price, as such difference may be adjusted by the Secretary of Agriculture. Authorizes the Secretary to reduce the support level if requested by a producer association.
It also set the price support level for the 1987 and subsequent crops of Flue-cured and Burley tobacco of the preceding year’s level, plus or minus an adjustment of 65 percent to 100 percent of the total of:
- two-thirds of the amount by which the previous five years’ average marketing price was greater or less than the preceding year’s average price; and
- one-third of the change in the index of prices paid by tobacco farmers during the previous calendar year. Sets forth reduction adjustments for the average prices of the 1984 and 1985 marketing years.
COBRA amended the Agricultural Adjustment Act of 1938 that established reserve tobacco stock levels for:
- Flue-cured at the greater of 100,000,000 pounds or 15 percent of such tobacco’s national marketing quota; and
- Burley at the greater of 50,000,000 pounds or 15 percent of such tobacco’s national marketing quota.
That Act required the Secretary to set the national marketing quota for Flue-cured and Burley at between 103 percent and 97 percent of the total of:
- the aggregate of projected cigarette purchases;
- the previous three years’ average annual exports; and
- the amount of tobacco the Secretary determines necessary to increase or decrease producer association inventories to maintain such inventories at reserve stock levels.
It obliged the national marketing quota for both Flue-cured and Burley tobacco to be at least:
- 94 percent of the preceding year’s quota for the 1986 through 1989 marketing years; and
- 90 percent for the 1990 through 1993 marketing years.
And to limit downward adjustments in the national Burley marketing quota to the greater of:
- 35,000,000 pounds; or
- 50 percent of the amount by which total Burley inventories of a producer association exceed reserve stock levels.
The Act also required cigarette manufacturers to submit to the Secretary an annual confidential projection of the amount of Flue-cured and Burley tobacco they intended to purchase at auction or from producers during the succeeding marketing year. It directed the Secretary to establish the projection if a manufacturer failed to provide such information. The Act then subjected officers or employees of the Department of Agriculture to loss of jobs and being fined or imprisoned for violations of confidentiality provisions.
Reduction in the amount of Flue-cured and Burley tobacco that would be marketed without penalty from 110 percent to 103 percent of the farm marketing quota.
Established the annual marketing quota announcement date for:
(1) Burley tobacco as February 1; and (2) other tobacco as March 1of each year.
The Act required cigarette manufacturers to submit to the Secretary on a confidential basis at the end of each marketing year the amount of Flue-cured and Burley tobacco purchased during such year.
COBRA subjeced manufacturers to a penalty for failure to purchase at least 90 percent of their Burley and Flue-cured projected purchases. It insisted on penalties to be transmitted to the appropriate associations for deposit in the No Net Cost Fund or Account.
It required the Flue-cured and Burley tobacco purchasers to pay to the appropriate associations assessments on all purchases of such tobacco marketed by a producer from a farm. The Act further stated that such assessments be determined so that producers and purchasers could share equally in maintaining association Funds.
The Act provided for assessments to be collected from:
- the persons who acquired the tobacco;
- the warehousemen or agents that the tobacco was marketed through such person; or
- the producer on sales (by the producer) to a person outside the United States.
COBRA subjected persons who fail to collect and remit such assessment to a penalty.
The Act provides for:
- a notice and a hearing opportunity; and
- a U.S. district court review.
It further provided that for the 1986 and subsequent Burley crops assessments should be determined without regard to any losses the Commodity Credit Corporation (CCC) had sustained with respect to the 1983 Burley Crop.
With regard to inventory purchases that:
- 1976 through 1984 Flue-cured stocks were offered for sale at the base prices (including carrying charges) in effect on the offer date, reduced by 90 percent for 1976 through 1981 tobacco, and ten percent for 1982 through 1984 tobacco; and
- 1982 Burley stocks were offered for sale at the July 1, 1985, price and 1984 stocks wereoffered for sale at the associations’ costs as of the date of enactment of this Act.
The Act directed the CCC, the 1983 Burley crop, to:
- take title to such crop held by the associations by calling in the loans on such tobacco;
- offer such crop for sale as the CCC deems appropriate; and
- offer any stocks remaining two years after such loan call-in at the associations’ costs on the loan call date, reduced by 90 percent.
It authorized the cigarette manufacturers to purchase tobacco inventories over an eight-year period for Flue-cured tobacco and a five-year period for Burley tobacco.It also required the Secretary to approve purchase agreements.
It directed the Secretary to conduct studies of:
- the tobacco grading system; and
- the feasibility of establishing grades to designate disaster-affected crops, including price support adjustment authority. Requires a report to the appropriate congressional committees.
COBRA amended the Tobacco Inspection Act that gave the Secretary authority to invest tobacco inspection fees to cover the cost of related services.
TITLE II: ARMED SERVICES AND DEFENSE-RELATED PROGRAMS –
The Act amended the Federal armed forces’ medical care provisions to give the United States the right to collect from a third-party payer the reasonable cost of inpatient hospital care in a facility of the uniformed services provided to certain members of the armed forces and their dependents. It allowed hospital records to be examined to determine the reasonable costs of such services. Directs the Secretary of Defense to prescribe regulations to administer this provision.
COBRA also amended the Department of Defense Authorization Act, 1985 to extend from February 28, 1985, to June 30, 1986.
TITLE III: HOUSING AND COMMUNITY DEVELOPMENT PROGRAMS
Housing and Community Development Reconciliation Amendments of 1985 amended the Housing and Community Development Act of 1974 that prohibited the Federal Financing Bank from purchasing certain locally-issued notes and obligations guaranteed by the Secretary of Housing and Urban Development. It authorized a specified sum for public housing operating subsidies in FY 1986.
It amended the United States Housing Act of 1937 that directed the Secretary to pardon the repayment of outstanding principal and interest on certain loans made to public housing agencies and on certain notes and obligations issued by the Secretary to the Secretary of the Treasury with respect to Indian housing.
It authorized levels of rural housing loans in FY 1986. It further set forth requirements regarding the Secretary’s sale of rural housing loans issued, or guaranteed and purchased, by the Secretary.
It extended to March 17, 1986:
- Federal Housing Administration mortgage insurance programs established under the National Housing Act;
- Rehabilitation loan authority provided by the Housing Act of 1964;
- Rural housing authority provided by the Housing Act of 1949;
- Flood and crime insurance programs established under the National Flood Insurance Act of 1968; and
- Miscellaneous provisions of other specified Federal laws.
TITLE IV: TRANSPORTATION AND RELATED PROGRAMS – SUBTITLE A: RAILROADS
Amtrak Reauthorization Act of 1985 amended the Rail Passenger Service Act that authorized appropriations for the National Railroad Passenger Corporation (Amtrak) for FY 1986 through 1988.
It required that certain appropriated funds designated by Amtrak for non-operational capital projects be used to maintain Amtrak’s rail system operations at the level in effect on the date of enactment of this Act .
It amended the Rail Passenger Service Act to provide that preferred stock issued by Amtrak to the Secretary of Transportation in return for Federal financial assistance shall be deemed to have been issued as of the date that Amtrak received such assistance thi allowed Amtrak to take advantage of a certain depreciation allowance.
It permitted Amtrak to participate in the contract air program administered by the General Services Administration in markets where service provided by Amtrak was competitive.
It set February 15 every year as the annual deadline for Amtrak to submit specified data to the Congress.
It repealed the requirement that Amtrak entered into industry-wide rail carrier agreements regarding the operation of special and charter trains between specific routes.
It further authorized the Comptroller General to conduct annual audits of Amtrak activities this made such audits discretionary instead of mandatory.
It repealed title VII of the Rail Passenger Service Act, which provided for federally guaranteed emergency financial assistance to enable railroads to enter into operating contracts with Amtrak.
Amendement of the Railroad Revitalization and Regulatory Reform Act of 1976 that repealed the requirement that Amtrak and the Secretary of Transportation should submit annual reports to the Congress regarding revenues and ridership of the Northeast Corridor Improvement Project.
Amendment of the Rail Passenger Service Act that repealed the requirement that Amtrak established a Performance Evaluation Center.
Requirement that Amtrak should set a goal, beginning in FY 1986, of recovering at least 61 percent of its operating costs from its revenues presently the statutory goal is to recover 50 percent of operating costs from revenues.
Required that Amtrak and its representatives and employees negotiated for changes in existing agreements that resulted in cost savings to Amtrak, and also required that the results of such negotiations to be reported to the Congress within a specified time.
Prohibited Amtrak from reducing the frequency of service on any line which, on May 1, 1985, had three or fewer trains operating per week.
It amended the Regional Rail Reorganization Act of 1973 that required the Railroad Retirement Board to issue a warning to any railroad which failed to notify the Board of job vacancies. It also established a civil penalty to be imposed upon a railroad which was found guilty of two or more failures to notify the Board of job vacancies.It extended from four years to six years the expiration date of the central register of railroad employment maintained by the Board.
Amends the Rail Passenger Service Act to provide for Amtrak auto-ferry service of unoccupied vehicles when space is available.
It amended the Rail Passenger Service Act that authorized Amtrak to discontinue commuter train service which did not meet the avoidable loss per passenger mile criterion for short distance trains unless an affected State agreed to ensure that such criterion was met.
Stateed that a joint congressional resolution should be the congressional oversight mechanism for any changes proposed by Amtrak to its Route and Service criteria.
Eliminated the passenger mile per train mile criterion for Amtrak route service.
Amended the Northeast Rail Service Act of 1981 that prohibited the Interstate Commerce Commission from allowing cross subsidization between intercity and commuter rail passenger service in the Commission’s resolution of Northeast Corridor cost disputes involving non-Amtrak commuter authorities and freight railroads.
Amended the Northeast Rail Service Act of 1981 that repealed the requirement that the Commission determine within a specified time a costing methodology for compensation to Amtrak by Conrail for certain rail freight service over the Northeast Corridor.
Subtitle B: Highway Programs
It amended the Highway Improvement Act of 1982 that reduced highway apportionments for the primary system. It also amended the Highway Safety Act of 1982 that reduced apportionments for bridge replacement and rehabilitation.It further amended the Federal-Aid Highway Act of 1978 to the reduction of highway apportionments for resurfacing, reconstructing, rehabilitating, and restoring routes on the National System of Interstate and Defense Highways. It directed the Secretary of Transportation (the Secretary) to determine apportionment adjustments based on such reductions on the first day following the effective date of this Act.
It directed the Secretary to permanently withhold ten percent of highway funds apportionments from any State which did not have in effect a permanent 21-year-old minimum drinking age on the first day of FY 1989. It also deemed a State to be in compliance with the 21 year old national minimum drinking age requirement if such State had enacted a law within a specified time period which allowed persons under 21 who had the right to drink under previous law to retain their legal drinking age status.
It amended the Federal-Aid Highway Act of 1978 that provided that funds which exceeded the amounts needed for certain bridge demonstration projects should be available to be implemented certain state-of-the-art bridge technology demonstration projects in Ohio.It also required the Secretary to report to the Congress regarding the results of using such technology.
TITLE V: CORPORATION FOR PUBLIC BROADCASTING AND FEDERAL COMMUNICATIONS COMMISSION –
Amendment of the Communications Act of 1934 that authorized appropriations for FY 1986 through 1988 that were used by the Secretary of Commerce in assisting in the planning and construction of public telecommunications facilities. Repealed a provision that required 75 percent of the funds appropriated for such purposes in a fiscal year to be available to extend delivery of public telecommunications services to areas not receiving such services. Authorized appropriations, to match up to a specified amount of non-Federal contributions to public broadcasting entities, for the Public Broadcasting Fund for FY 1987 through 1990. Repealed a provision that required that a specified portion of the amount made available to the Corporation for Public Broadcasting from the Fund be earmarked for expenses of research, training, technical assistance, engineering, instructional support, and the payment of interest on indebtedness.
Repealed provisions that required a public telecommunications entity to be refunded to the Corporation for Public Broadcasting an amount of Federal funds equal to the amount of any unrelated business income tax paid by such entity.
Authorized appropriations for the Federal Communications Commission for FY 1986 and 1987. Extended the effectiveness of provisions concerning the reimbursement of travel expenses of Commission officers or employees through FY 1987.
Changed the deadline for the Commission’s annual report to the Congress from January 31 to March 31.
It set forth a schedule of charges to be implemented and assessed by the Commission for specified administrative services. Directed the Commission to review and adjust such charges (in certain increments) every two years to reflect changes in the Consumer Price Index. Exempts from such charges specified radio public services. The Commission had the permission to:
- Dismiss any application or other filing for failure to pay any charge in a timely manner; and
- Waive or defer payment of a charge to promote the public interest.
TITLE VI: MARITIME, COASTAL ZONE, AND RELATED PROGRAMS – SUBTITLE A: BOATING SAFETY FUND
Transfers a specified amount from the Boat Safety Account to be used by the department in which the Coast Guard is operating for various Coast Guard activities.
- NOAA Nautical and Aeronautical Products – Revised generally provisions concerning the sale by the Secretary of Commerce of nautical and aeronautical products created or published by the National Oceanic and Atmospheric Administration (NOAA).
- Foreign Fishing Permit Fees – Amended the Magnuson Fishery Conservation and Management Act to revise provisions concerning payment to the Secretary of Commerce of fishing fees by the owners or operators of foreign fishing vessels operating within the fishery conservation zone of the United States.
- Ocean and Coastal Resources Management and Development Block Grant Act – Established within the Treasury an Ocean and Coastal Resources Management and Development Fund. Limits the total amount payable into the Fund during any fiscal year.
Directed the Secretary of Commerce to use specified portions of such funds to provide national ocean and coastal resources management and development block grants to each coastal State.
Required such States to report grant allocation and project information and provide opportunity for public comment before receiving such grants. Required the States receiving block grants to submit audits to the Secretary concerning the amount of grant received and its allocation. Directed the Secretary, after receiving such audits, to take appropriate action regarding the continued use by such States of grant funds. It further directed the Secretary to promulgate regulations to carry out these provisions.
- Amendments to the Coastal Zone Management Act – Coastal Zone Management Reauthorization Act of 1985 – amended the Coastal Zone Management Act to phase-down the Federal share of the development, implementation, and operation of coastal zone management programs from 80 percent to 50 percent over a three-year period. Directed any State receiving Federal funds to promptly notify the Secretary of Commerce of any proposed program changes. Required the Secretary to notify the State of its approval or disapproval to such changes within 30 days of notice from the State of such proposed changes.
- National Oceanic and Atmospheric Administration – Authorized appropriations to the Department of Commerce for fiscal years 1986 and 1987 to enabled the National Oceanic and Atmospheric Administration to carry out specified functions during such period.
- Marine Protection, Research, and Sanctuaries Act Amendments – Made various amendments to the Marine Protection, Research, and Sanctuaries Act of 1972 that concerned reports, research requirements, and regional management plans under such Act. Authorizes appropriations under such Act for fiscal years 1986 and 1987.
- National Ocean Pollution Planning Act Amendments – Amended the National Ocean Pollution Planning Act of 1978 to add as a purpose of the Act to provide for the effective coordination of research concerning the environmental quality of the Great Lakes, the Chesapeake Bay, Puget Sound, and other estuaries of national significance. Authorized appropriations under the National Ocean Pollution Planning Act of 1978 for fiscal years 1986 and 1987.
- Weather Modification – Authorized appropriations under “An Act that provided for the reporting of weather modification activities to the Federal Government” for FY 1986 through 1988. Directed the Administrator of NOAA to take such actions that ensured the future availability and usefulness of ocean satellite data to the maritime community.
Restricted the awarding of contracts by the NOAA for the performance of any commercial activities until certain reporting requirements have been met.
Amended the National Climate Program Act to revise provisions concerning the establishment and functions of the Climate Program Policy Board.
- Maritime Authorizations – Authorized appropriations to the Department of Transportation for FY 1986 for specified activities, including funds for the Federal Maritime Commission.
TITLE VII: ENERGY AND RELATED PROGRAMS – SUBTITLE A: PIPELINE PROGRAMS
- Authorizesd appropriations for FY 1986 that implemented the Federal grants-in-aid provisions of the Natural Gas Pipeline Safety Act of 1968 and the Hazardous Liquid Pipeline Safety Act of 1979. Directed the Secretary to:
- prepare a grants-merger report regarding the Secretary’s recommendations for a potential merger and joint administration of the Federal grants-in-aid under such Acts; and
- establish a user fees schedule for natural gas and hazardous liquid pipelines starting FY 1986.
- Stategic Petroleum Reserve
Required the Strategic Petroleum Reserve to be filled at an annual average rate of 35,000 barrels per day for FY 1986 through 1988. Authorizes appropriations for such purpose for FY 1986 through 1988.
Authorized appropriations for the implementation of the Strategic Petroleum Reserve Plan for FY 1986 through 1988.
Amended the Energy Policy and Conservation Act to:
- increase from 500,000,000 to 527,000,000 the minimum quantity of crude oil barrels which were to be in storage within the Strategic Petroleum Reserve (SPR) before any portion of the Federal share of crude oil in the Elk Hills Naval Petroleum Reserve may be sold or disposed of; and
- decrease from 100,000 barrels to 35,000 barrels the minimum average daily rate increase of crude oil that was to be in storage in the SPR before such Federal portion in the Elk Hills Naval Petroleum Reserve may be sold or disposed of.
- Federal Energy Conservation Shared Savings –
Amended the National Energy Conservation Policy Act to:
- authorize the head of a Federal agency to contract for energy savings for maximum periods of 25 years; and
- require progress reports regarding such energy savings to be included in certain annual reports submitted by the Secretary of Energy.
Subtitle D: Biomass Energy and Alcohol Fuels Loan Guarantees – Amended the Biomass Energy and Alcohol Fuels Act of 1980 to:
- extend from September 30, 1984 to June 30, 1986, the authority of the Secretary of Energy to incur specified financial obligations (including loan and price guarantees); and
- authorize the Secretary to modify any conditional loan guarantee commitments made prior to October 1, 1984.
E. Synthetic Fuels
Synthetic Fuels Corporation Act of 1985 terminated the United States Synthetic Fuels Corporation within 120 days of enactment of this Act. Transfered to the Secretary of the Treasury the duties of the Chairman of the Board of the Corporation. Required the Corporation to report to the Congress regarding the implementation of a specified business plan and of a national synthetic fuel production strategy.
F. Uranium Enrichment
Authorized appropriations to the Department of Energy for FY 1986 through 1988 for the implementation of uranium enrichment service activities. Required the Secretary of Energy to deposit into the Treasury general fund as partial repayment of unrecovered Federal cost specified revenues received by the Department of Energy for providing uranium enrichment service activities.
G. Nuclear Regulatory Commission Annual Charges
Required the Secretary of Energy to report to the Congress regarding a certain court decision that Federal utility services uranium enrichment contracts are null and void.
Directed the Nuclear Regulatory Commission to report to the Congress regarding the establishment of a system for the assessment of annual charges from licensees for the purpose of funding Commission activities.
TITLE VIII: OUTER CONTINENTAL SHELF AND RELATED PROGRAMS – SUBTITLE A: AMENDMENTS TO THE OUTER CONTINENTAL SHELF LANDS ACT – Outer Continental Shelf Lands Act Amendments of 1985 authorized affected coastal States and localities to use certain mineral resources leasing receipts to mitigate adverse economic and environmental effects related to the development of such resources.
It amended the Outer Continental Shelf Lands Act (OCS Lands Act) that required the Secretary of the Interior to provide specified information to the Governor of any coastal State within whose seaward three-mile boundaries lie lands for which lease nominations are being solicited by the Secretary. Required the Secretary to deposit into a separate Treasury account all revenues (excluding Federal income and windfall profits taxes) derived from any Federal tract lease lying wholly or partially within such seaward boundary of any coastal State.
The Act set guidelines for the disposition of:
- common potentially hydrocarbon-bearing areas underlying Federal and coastal State boundaries;
- oil and gas lease sale revenues involved in boundary disputes between the United States and a coastal State;
- revenues from tracts leased by the Secretary lying wholly or partially within three nautical miles of the seaward boundary of two or more States; and
- revenue distribution derived from federally-leased tracts to certain designated coastal States.
Amended the Submerged Lands Act that provided that any boundary between a State and the United States which has been fixed under a final Supreme Court decree should remain immobilized under such decree.
- Coordination and Consultation with Affected States and Local Governments
Amended the OCS Lands Act to authorize the Secretary of the Interior to reject the recommendations made by the Governor of an affected State regarding a proposed lease sale if the Secretary determines that such recommendation would significantly impair the national interest.
- Use of American Built Rigs for OCS Drilling
Amended the OCS Lands Act that required that any structure used for exploration or production of oil and gas on the Outer Continental Shelf (at certain geographic locations) be built in America from materials which have been at least 50 percent made or mined in the United States. Specifies exemptions. Authorized the Secretary of the Interior to waive the materials requirement under certain circumstances.
TITLE IX: MEDICARE, MEDICAID, AND MATERNAL AND CHILD HEALTH PROGRAMS
Medicaid Budget Reconciliation Amendments of 1985 amended part A of the (Hospital Insurance) of title XVIII (Medicare) of the Social Security Act that providedfor the increase in payments for inpatient hospital services should be one percent for cost reporting periods beginning during FY 1986 and a percentage increase determined by the Secretary of Health and Human Services thereafter, but not exceeding the market basket percentage increase in the cost of such services.
Required the Secretary to publish a notice of the projected increase in the inpatient hospital deductible by September 15th of each year.
Provided that certain skilled nursing facilities can choose to be paid a prospective payment for all routine service costs of extended care services provided in a fiscal year. Set out the time by which the Secretary must establish the prospective payment amounts, and such facilities must notify the Secretary of their choice of prospective payment for the fiscal year. Provided that the Secretary may pay for the ancillary services of such facilities on a reasonable charge basis, rather than on a cost basis, if such would ease the reporting burden of the facility. Required that the Secretary to annually publish the data and criteria to be used in adjusting payments to skilled nursing facilities for routine service costs.
Provided for the appointment of two additional members to the Prospective Payment Assessment Commission.
Part 2: Provisions Relating to Parts A and B of Medicare – Required that payment for health care items or services, to the extent possible, should be made by an employed individual’s group health plan before any Medicare payments are made. Amended the Age Discrimination in Employment Act of 1967 to prohibit an employer from discriminating, under the employer’s group health plan, against an employee over age 65.
Replaced the current reasonable cost methodology in calculating Medicare payments to hospitals for graduate medical education of full-time equivalent residents with a determination based on average direct graduate medical education costs and the number of hospital interns and residents. Provided restrictions as to who will be counted as a full-time equivalent resident.
Altered the amount of, and method of applying limitations on, payments for services furnished by home health agencies.
Required the Secretary, to determine whether payments to a home health agency should be denied, to apply a presumption of compliance until 12 months after certain regional intermediaries have begun to service such agencies. Prohibited the implementation of certain regulations regarding payments for home health services.
The Act permitted an individual to be represented by a provider during a Medicare related hearing or appeal.
The Act removed the prohibition on comments by Medicare and Old-Age, Survivors and Disability Insurance (title II of the Act) actuaries relating to economic assumptions underlying the annual reports of the Trustees of the Social Security Trust Funds on the status of such funds.
Amended the Tax Equity and Fiscal Responsibility Act of 1982 to earmark a specified sum for FY 1986 through 1988 for provider cost audits, medical necessity reviews, and third-party liability payment recoveries.
Part 3: Provisions Relating to Part B of Medicare – Extended, for one year, the current freeze on physician charge levels for non-participating physicians while it provided incentives for participating physicians.
It freezed the customary and prevailing charges for non-physician and non-laboratory supplies and services through January 31, 1986, and until the end of 1986 for rented durable medical equipment and consumable oxygen. Provided that the, beginning of 1987, the prevailing charge level for durable medical equipment and consumable oxygen may not exceed the increament in the Consumer Price Index. Required the payment on an assignment basis for durable medical equipment furnished on a rental basis and for oxygen therapy services.
Revised the provisions relating to the dates for revising payments for clinical laboratory services. Sets limits on payment rates. Requirea a report from the Secretary to the Congress concerning standards for clinical laboratories.
Directed that the Secretary by regulation to:
- describe the factors to be used in determining if a reasonable charge is inherently reasonable; and
- provide, in those cases where the reasonable charge is not inherently reasonable, for factors that will be considered in establishing a reasonable charge that is realistic and equitable. Revises the computation of customary charges with respect to certain former hospital-compensated physicians.
Part 4: Peer Review Organizations – Amendment of the Act required peer review organizations to conduct pre-procedure review, in accordance with guidelines to be developed by the Secretary, on at least ten elective surgical procedures. Authorized such organizations to require a second opinion as part of such review where it may assist the beneficiary regarding the need for the procedure.Required the reimbursement of peer review organizations on a monthly basis.
It required a peer review organization’s denial of payment to a health care provider by reason of its failure to meet professionally recognized standards of care to be based on criteria developed by the organization pursuant to a plan approved by the Secretary. Protects beneficiaries against being charged for services for which Medicare payment is denied.
Subtitle B: Medicaid and Maternal and Child Health –
Amended title XIX (Medicaid) of the Act to:
- include within the definition of “qualified pregnant woman” any woman who meets the income and resources requirements under part A (Aid to Families with Dependent Children) of title IV of the Act;
- provide that the making available to covered pregnant women of pregnancy-related services shall not require the making available of such services to other individuals; and
- provide that a woman who, while pregnant, is eligible for, has applied for, and has received Medicaid, shall be deemed, for purposes of the provision of all pregnancy-related and post-partum medical assistance under Medicaid, to remain pregnant until the end of the 60-day period beginning on the last day of her pregnancy.
Provided for the coverage as home or community-based services of services provided to individuals who would otherwise continue to receive inpatient hospital services, skilled nursing facility services, or intermediate care facility services because they are dependent on ventilator support, the cost of which is reimbursed under Medicaid. Made other revisions concerning home and community-based services with respect to:
- total expenditures for such services;
- expenditures for certain disabled patients; and
- maintenance income standards.
Provides for five year (currently, three year) renewals of waivers for home and community-based services.
Required the State agency administering home and community-based service programs to enter into cooperative arrangements with the State agency administering the program for children with special health care needs under title V (Maternal and Child Health Block Grant) of the Act so as to assure such children’s improved access to coordinated services.
Amended the Employee Retirement Income Security Act of 1974 to preserve State laws prohibiting the reduction of benefits under an employee benefit plan by reason of a participant’s eligibility for Medicaid. Authorized States to condition the individual’s eligibility under a State plan on their cooperation in the pursuit of liable third parties.
Provided that State plans may include home respiratory care services for an individual who is medically dependent on a ventilator for life support services for at least six hours a day and who meets certain other requirements. Enabled the provision of the coverage of hospice care under Medicaid.
- Subtitle C: Task Force on Long-Term Health Care Policies – Directed the Secretary to establish a Task Force on Long-Term Health Care Policies. Required the Task Force to develop recommendations for long-term health care policies and report to the Secretary and the Congress. Requires the Secretary:
- to provide for the dissemination of the report to each of the States; and
- to report to the Congress annually concerning such recommendations.
TITLE X: PRIVATE HEALTH INSURANCE COVERAGE
Amended the Internal Revenue Code to deny income tax deductions to employees for contributions to a group health plan unless such plan meets specified continuing coverage requirements.
Amended the Employee Retirement Income Security Act of 1974 (ERISA) to require the plan sponsor of each group health plan to provide that each qualified beneficiary who would lose coverage because of a qualifying event is entitled to elect continuation coverage. Defines a qualifying event as:
- the death of the covered employee;
- the termination or reduction of hours of such employee’s employment;
- the divorce of the employee;
- the covered employee becoming entitled to Medicare benefits; or
- a dependent child ceasing to be a dependent child under the generally applicable requirements of the plan.
Sets forth the requirements that continuation coverage must meet and the limits on the applicable premium for such coverage.
HOW DOES ONE ENROLL FOR COBRA
Participation in COBRA is not automatic. The employee or dependent has the obligation to provide notice of becoming ineligible for coverage within 60 days after the date of the qualifying event or they will not be entitled to COBRA. To continue coverage, the following guidelines must be met.
- The employee or dependent must complete, sign and return a COBRA application to Benefits Administration within 60 days of the latter of the date coverage would end or the date on the notification letter. If the participant becomes covered with another insurance plan, the participant may only continue COBRA coverage with the state if their new coverage has a preexisting condition clause. In these instances written documentation must be submitted from the employer or claims administrator explaining that plan’s preexisting condition clause and how long it applies. A letter from a physician stating the preexisting condition must also be submitted.
- As there must not be a lapse in coverage, past due premium payments must be sent to the state within 45 days of the date the application is signed by the appropriate person. Claims will not be processed until such time as all current premiums are paid.
Benefits Administration will send a COBRA notification letter with an application to an employee’s home address automatically within 30 days from the date insurance coverage terminates if:
- An employee’s job terminated n A job appointment changed causing reduced work hours
- An employee dies It is very important that the application be signed by the appropriate person. This would be:
- The employee, if the employee is continuing coverage
- The dependent (ex-spouse, widow or single dependent) wanting to continue coverage
- The oldest child, if only children are extending family coverage
Employees and/or dependents continue the same coverage they had when active. The same eligibility, benefits, guidelines and restrictions apply. There will be no change in the process for submitting claims and, for claims purposes, the identification number will remain the same if the employee is retaining coverage. Continued enrollment is subject to all regular terms and conditions including non-payment or reduced benefits for nonemergency services received out-of-network without prior approval of the claims administrator.
WHEN DOES COVERAGES END
Continuation of coverage through COBRA will end on the earliest of the following:
- The premium is not paid by the due date.
- The date after electing COBRA that the participant first becomes insured with another group health plan. (If the other plan contains a preexisting condition clause that affects the covered individual, coverage will not end for that individual as long as the exclusion or limitation applies.)
- The date after electing COBRA that the participant first becomes entitled to Medicare (refer to Medicare provision).
- he date the participant no longer meets the plan’s eligibility guidelines.
- The last day of the appropriate 18-, 29- or 36-month extension period.
- The plan terminates.
When any of these events occur, the covered person is no longer eligible to continue health coverage through COBRA. It is the participant’s responsibility to notify Benefits Administration, in writing, when they become ineligible under these guidelines. Legal action will be taken to recover any benefits provided to an enrollee who was not eligible for coverage. All questions concerning eligibility rules should be directed to Benefits Administration. Medicare Provision If a former employee becomes entitled to Medicare during an 18-month extension they may not continue COBRA coverage. However, the dependents are entitled to continue for the 18 months from the employee’s termination of employment.
COBRA premiums are equal to 102 percent of the total monthly premium (employee and employer contribution). Premium payments are due by the last day of the month for the following month’s coverage. Premium payments are automatically set up on a cash basis, where the participant sends a check for the premium. If desired, we can automatically deduct the premium electronically from the participant’s bank account each month. The necessary forms may be obtained from a representative in Benefits Administration. Premiums must be paid by the enrollee from the day coverage would have terminated. Payment must cover the period of coverage from the date of the COBRA election retroactive to the date of the loss of coverage due to the qualifying event. Payment of past due premiums is due within 45 days of the date the application is signed and mailed. Acceptance of payments by the state does not guarantee coverage. If an employee and/or dependent is not eligible to extend coverage through COBRA or becomes ineligible after the extension begins, any premium payment(s) made after ineligibility occurs will be refunded to the employee or dependent. Any paid medical claims must be refunded to the appropriate health plan by the employee or dependent.
TITLE XI: SINGLE-EMPLOYER PLAN TERMINATION INSURANCE SYSTEM AMENDMENTS
Single-Employer Pension Plan Amendments Act of 1985 amended title IV (Plan Termination Insurance) of ERISA to revise provisions relating to the single-employer pension plan termination insurance program.
The Act set forth new definitions relating to such program for several terms, including:
- contributing sponsor;
- controlled group;
- single-employer plan;
- composite single-employer plan;
- amount of unfunded guaranteed benefits;
- final benefit obligation; and
It amended the ERISA to increase from $2.60 to $8.50 per capita the annual premium rate payable to the Pension Benefit Guaranty Corporation (the Corporation) by single-employer plans for plan years beginning after December 31, 1985.
The Act set forth general requirements and procedures for standard termination of single-employer plans. It also allowed standard terminations of single-employer plans only if:
- the plan administrator provides 60 days notice to affected parties;
- the plan administrator provides notice to the corporation and to participants and beneficiaries of benefit commitments;
- the corporation does not issue a notice of noncompliance; and
- when the final distribution of assets occurs, the plan is sufficient for benefit commitments.
Required the plan administrator to use a specified method in distributing the assets of the plan and to:
- purchase insurance to provide the benefit commitments of the plan; or
- provide the benefit commitments in another manner. Requires the plan administrator to certify to the Corporation, within 30 days of the final distribution of assets, that the assets of the plan have been distributed.
Amended the ERISA to require the Corporation to establish a trust fund if the Corporation, during the distress termination of a single-employer plan, finds that:
(1) the plan was sufficient for guaranteed benefits but not sufficient for benefit commitments; or
(2) the plan was not sufficient for guaranteed benefits. Required the trust to be used exclusively for:-
- receiving liability payments from contributing sponsors and members of controlled groups;
- making distributions to participants and beneficiaries of the terminated plan; and
- defraying reasonable administrative expenses. Requires the Corporation to designate a fiduciary. Provides for distributions from the trust.
Amended the Internal Revenue Code to make such trusts tax-exempt. Permitted the rollovers of payments from the trust funds to eligible retirement plans.
TITLE XII: INCOME SECURITY AND RELATED PROGRAMS – SUBTITLE A: OLD-AGE, SURVIVORS, AND DISABILITY INSURANCE PROGRAM
Amendment of the Social Security Disability Amendments of 1980 to:
- extend the Secretary of Health and Human Service’s authority to waive compliance with the benefit requirements under titles II (Old Age, Survivors and Disability Insurance) and XVIII (Medicare) of the Social Security Act in connection with certain demonstration projects; and
- require that the Secretary’s final report shall not be due until June 9, 1990, with respect to such projects.
TITLE XIII: REVENUES, TRADE, AND RELATED PROGRAMS – SUBTITLE A: TRADE AND CUSTOMS PROVISIONS – PART 1: TRADE ADJUSTMENT ASSISTANCE
Trade Adjustment Assistance Reform and Extension Act of 1985 amended the Trade Act of 1974 to include agricultural workers and firms within the groups of workers and firms that can petition for trade adjustment assistance. Provided adjustment assistance for workers whose firms provide essential parts or services for articles that have been adversely affected by increased imports of like or directly competitive articles.
The Act required a worker who is otherwise eligible for adjustment assistance, in order to qualify for such assistance to:
- be enrolled in an approved training program;
- have completed such a training program; or
- have received a certification from the Secretary of Labor or from the appropriate State agency that it is not appropriate or feasible to approve a training program for such worker. Prohibits paying adjustment allowances to workers who fail to enroll in or stop participating in a training program and there is no justification for such failure or cessation. Requires the Secretary of Labor to report annually to the Congress on the number of workers who receive certifications that training is not appropriate or feasible for them.
The Act Limits the number of weeks of employer-authorized leave or weeks of work spent as a union representative that may be treated as weeks of employment qualifying an employee for trade adjustment assistance. Exempts weeks for which a worker receives a training allowance under the Trade Act of 1974 from causing a reduction in the number of weeks for which such a worker is eligible for a trade adjustment allowance.
Increased the trade readjustment allowance to an amount equal to 78 (currently 52) times the amount of one week’s trade readjustment allowance. Extended the coverage for trade readjustment allowances to 104 weeks.
Prohibited paying a trade adjustment allowance for any week during which the worker is receiving on-the-job training. Required that training for an adversely affected worker, in order to be approved by the Secretary of Labor, must be reasonably available.
Authorized the Secretary of Labor to approve certain training programs, including:
- on-the-job training;
- any training program provided by a State pursuant to the Job Training Partnership Act; and
- any training program approved by specified private industry councils.
Authorizes the Secretary of Labor to pay the costs of on-the-job training of an adversely affected worker only if ten specified conditions are met.
Requires the Secretary of Labor to approve job training for adversely affected workers who meet specified conditions. Permits such training to be provided through a voucher system. Limits the amount of training payments that may be made to $4,000. Prohibits any other Federal payment for such training if the costs of such training are provided under the Trade Act of 1974.
TITLE XIV: REVENUE SHARING
The Act terminated the general revenue sharing program. Required the Secretary of the Treasury to continue to be the trustee of the State and Local Fiscal Assistance Trust Fund which should remain in existence until all entitlement payments required under the Revenue Sharing Act are made in accordance with such Act. Required the local governments to use, obligate, or appropriate such payments by October 1, 1987
TITLE XV: CIVIL SERVICE, POSTAL SERVICE, AND GOVERNMENT AFFAIRS GENERALLY – SUBTITLE A: POSTAL SERVICE PROGRAMS
Established the ceiling for FY 1986 appropriations for revenue foregone for free and reduced mail.
Declared that an increase in postage rates for non-profit and certain other mailers shall not take effect until January 1, 1986. Terminated the rate phasing schedule for such increases.
Required the Postal Rate Commission to report to the Senate Committee on Governmental Affairs and the House Committee on Post Office and Civil Service with legislative recommendations for reducing the revenue foregone for such mailings for such fiscal years.
Restricted the use of funds to support in-county and second-class rates of postage for certain publications.
TITLE XVI: HIGHER EDUCATION PROGRAMS
Student Financial Assistance Amendments of 1985 – Subtitle A: Savings in Student Loan Program Operations – Amended the Higher Education Act of 1965 (HEA) to set forth provisions for recovery of outstanding advances to guaranty agencies. Requires the Secretary of Education to recover $75,000,000 of such advances during FY 1988. Sets forth guidelines for such recovery.
Required disbursement of federally insured student loans (FISL) and guaranteed student loans (GSL) to the institution the student attends.
Required multiple disbursement of the FISL and GSL loans. Repealed existing incentives to make such multiple disbursements. Requires the origination fee on such loans to be deducted proportionately for each installment. Prohibited a guaranty agency from filing a claim for reimbursement until 270 days after the loan becomes delinquent.
Title XVII: Graduate Medical Education Council and Technical Amendments to the Public Health Service Act – Amended the Public Health Service Act to add provisions relating to graduate medical education.
Established a Council on Graduate Medical Education to advise the Secretary and the Congress on:
(1) the supply of physicians in the United States;
(2) current and future shortages or excesses in medical and surgical specialities and subspecialities; (3) issues related to foreign medical school graduates;
(4) appropriate Federal policies
Provided that special pay provisions do not apply to Public Health Service officers serving in the Indian Health Service. Provided additional pay for service at the Gillis W. Long Hansen’s Disease Center.
Authorized the Secretary to use fiscal agents to:
- determine the amounts payable to persons who, on behalf of the Indian Health Service, furnish health services to Indians and to persons who, on behalf of the Public Health Service, furnish health services to persons at migrant health centers or to certain merchant seamen;
- receive, disburse, and account for such funds;
- make audits; and
- perform other functions.
Made the technical revisions to the Public Health Service Act relating to emergency medical services for children.
TITLE XVIII: SMALL BUSINESS PROGRAMS
Amended the Small Business Act to authorize program levels for FY 1986 through 1988 to the Small Business Administration (SBA) for direct and immediate participation loans for small business plant acquisition, construction, conversion, or expansion. Makes specified amounts available out of such authorization for:
- handicapped persons and organizations for the handicapped;
- small businesses either located in urban or rural areas with high unemployment and low incomes or owned by low-income individuals; and
- disabled veterans and Vietnam veterans.
Authorized program levels for FY 1986 through 1988 for deferred participation loans and debenture guarantees for small business plant acquisition, construction, conversion, or expansion and small business development companies under the Small Business Investment Act of 1958. Made specified amounts available out of such authorization for:
- handicapped persons and organizations for the handicapped;
- small businesses either located in urban or rural areas with high unemployment and low income or owned by low-income individuals;
- small businesses which design, manufacture, and distribute energy measures; and
- guarantees of debentures with respect to State and local development companies.
Authorized program levels for FY 1986 through 1988 under specified sections of the Small Business Investment Act of 1958 for:
- direct purchases and guarantees of debentures and purchases of preferred securities with respect to small business investment companies;
- surety bond guarantees; and
- payment guarantees for the installation of pollution control facilities by small businesses.
The Act authorized appropriations to the SBA for FY 1986 through 1988. Makes specified amounts available out of such authorization for:
(1) direct and immediate participation loans for small business plant acquisition, construction, conversion, or expansion, handicapped persons and organizations for the handicapped, small businesses either located in urban or rural areas with high unemployment and low income or owned by low-income individuals, and Vietnam veterans;
(2) deferred participation loans and debenture guarantees for small business plant acquisition, construction, conversion, or expansion and small business development companies;
(3) deferred participation loans to handicapped persons and organizations for the handicapped, small businesses either located in urban or rural areas with high unemployment and low incomes or owned by low-income individuals, and small businesses which design, manufacture, and distribute energy measures;
(4) guarantees of debentures with respect to State and local development companies;
(5) direct purchases and guarantees of debentures and purchases of preferred securities with respect to small business investment companies;
(6) surety bond guarantees under the Small Business Investment Act of 1958; and (7) SBA salaries and expenses.
Authorized appropriations for FY 1986 through 1988 for disaster loans to small businesses and permits the transfer of funds from the disaster loan revolving funds for the payment of SBA administrative expenses.
Required the Secretary of Labor, in determining labor surplus areas with respect to Government procurement with small businesses, to make such determination on the basis of criteria in effect at the time of such determination, provided that any minimum population criteria shall not exceed 25,000.
Amended the Small Business Investment Act of 1958 to provide that certain obligations issued by small business investment companies and guaranteed by the SBA are not eligible for purchase by the Federal Financing Bank.
Authorizedthe SBA to issue to small businesses trust certificates representing all or a part of the guaranteed debentures issued by small business investment companies and guaranteed by the SBA. Required such trust certificates to be based on and backed by a trust or pool approved by the SBA and composed solely of guaranteed debentures. Authorized the SBA to guarantee the payment of the principal of and interest on such trust certificates. Prohibited the SBA from collecting any fee for any such guarantees. Required the SBA to provide for a central registration of all trust certificates sold under this Act.
Amended the Small Business Act to exclude agricultural enterprises from eligibility for small business disaster loans and loans necessitated by Federal action or law. Repeals specified provisions concerning disaster loans to small businesses that are affected by Federal action.
Required the SBA to collect a guarantee fee equal to two percent of the amount of the deferred participation share of any loan under this Act except a loan repayable in one year or less or a loan to State and local development companies under the Small Business Investment Act of 1958.
Amended the Small Business Investment Act of 1958 to authorize and direct the SBA to conduct a pilot program for the sale to investors of the SBA guaranteed debentures issued by State and local development companies.
Provided that certain debentures that are issued by State and local development companies and that are guaranteed by the SBA are not eligible for purchase by the Federal Financing Bank. Required the SBA to report to the President and the Congress on the conduct of such pilot program. Authorized the SBA to issue trust certificates for such debentures under the same authorities that are applicable to trust certificates issued for loans pursuant to specified provisions of the Small Business Act.
Amended the Small Business Act to provide penalties for persons who make false statements with respect to their status as a small business concern or small business concern owned and controlled by socially and economically disadvantaged individuals with regard to Federal contracts.
Requireed the SBA to submit to specified congressional committees an internal report on:
- the options available to providing guaranteed loans to small businesses from sources outside the Government, specifically the creation of a Federal corporation to make such guarantees; and
- the imposition of an annual fee on each participating lender in such guaranteed loan program.
Requiree the SBA to submit, by a specified time, to specified congressional committees a report on user fees (fees for services related to the SBA).
Required the SBA to provide small businesses direct and guaranteed loans, debentures, payment of rentals, and other types of financial assistance and to purchase debentures and preferred securities and to guarantee sureties against loss pursuant to programs under the Small Business Act and the Small Business Investment Act of 1958.
Amended the Small Business Act to treat businesses owned by economically disadvantaged Indian tribes (including any Alaskan Native village or regional or village corporation) as socially and economically disadvantaged small businesses for purposes of the SBA’s business development program. Setted forth specified factors to be considered by the SBA in determining the economic disadvantage of an Indian tribe.
Provided that an agricultural enterprise shall be deemed to be a small business if it (including its affiliates) has annual receipts of less than $500,000.
Urged the SBA to:
- evaluate the effectiveness of the Veterans Business Resource Councils and to recommend improvements in their operations; and
- develop guidelines to assist in the establishment of such councils in States that do not have councils.
TITLE XIX: VETERANS’ PROGRAMS – Veterans’ Health-Care and Compensation Rate Amendments of 1985 amended the Federal law to direct the Administrator of Veterans Affairs to furnish hospital care, and allows the Administrator to furnish nursing home care as needed, to:
- any veteran for a service-connected disability;
- a veteran whose discharge from active duty was for a disability incurred in the line of duty, for any disability;
- certain described veterans;
- any veteran who has a service-connected disability, for any disability;
- a veteran who is a former prisoner of war, or a veteran of specified wars;
- a veteran exposed to a toxic substance or to radiation; and
- a veteran for a non-service-connected disability if the Administrator determines that such veteran is unable to defray the expenses of such care.
Authorized the Administrator to furnish such care to veterans who fall within certain low-income levels. Authorized the Administrator to furnish such care to otherwise ineligible veterans to the extent that resources and facilities are otherwise available.
Required veterans not otherwise eligible for such care who still receive such care to repay the United States a specified amount for such care. Limited the repayment by such veterans to the amount of the inpatient Medicare deductible in effect during the first day of any 90-day period of such care.
Authorized the Administrator to provide medical services furnished on an outpatient or ambulatory basis to:
- any veteran for a service-connected disability; and
- any veteran who has a service-connected disability rated at 50 percent or more, for any disability. Prohibits the provision of such services (including home health services) to veterans not otherwise eligible for such services unless such veterans agree to repay to the United States a specified amount of the costs of such services. Limits the repayment by such veterans to the amount of the inpatient Medicare deductible in effect during the first day of any 90-day period of such care.