Each year, AREF Major Objectives are fully reexamined and prioritized and the top proposals are supported by White Papers to assist the NRLN and other advocacy organizations to educate policymakers.

1.  Stop Direct Contracting from Destroying Medicare

The Centers for Medicare and Medicaid Services (CMS) under President Biden’s administration is moving ahead with Direct Contracting (DC), an ill-conceived plan announced, but not fully implemented by December 2020 under President Trump’s administration. The NRLN is demanding that President Biden and Congress kill the program.

The DC plan is aimed at the 41 million in original Medicare who would be auto-enrolled in a private plan. Furthermore, investor-backed startup so-called Direct Contracting Entities (DCEs) can be Accountable Care Organizations (ACOs), commercial insurers, and even Medicare Advantage (MA) new or existing MA plans. This could mean that the 24.9 million enrollees in MA plans might be converted to original Medicare to come under DCEs. The Health Affairs publication reported that already the pilot program includes 53 DCEs in 38 states and that 23 of them are investor owned. More DCEs are expected to be rolled out 2022.

While seniors can switch from an MA plan to original Medicare by their decision, they will be involuntarily placed into DCEs without their knowledge or permission. 

DCEs will be paid monthly by the CMS to cover a specified portion of a patient’s medical care. This is a terrible shift from original Medicare’s direct reimbursements to healthcare providers. DCEs are allowed to pocket the funding they don’t spend on healthcare. This is a prescription for private insurers to skimp on healthcare for original Medicare patients. 

Watch our Podcast on Direct Contracting with Special Guest Diane Archer

2. Time to End Taxpayer Rebates to Health Care Insurance Industry 

The National Retiree Legislative Network (NRLN) and most Americans support competition from private healthcare plans and the NRLN understands the financial challenges ahead for Medicare and the federal budget. However, we do not support bonus and rebate subsidies or anti-competitive restrictions placed on original Medicare Fee-for-Service (FFS) just to preserve the notion that private insurance plans may be more cost effective or provide better care than FFS, when the record shows they are not and do not. 

The number of over-age 65 U.S. retirees will grow 25%, from 60 to 75 million between now and 2030 and to 100 million by 2060. Baby boomers are a small piece of the puzzle; they are all over age 65 by 2030 and by 2060 only 3 million remain. Total Medicare healthcare costs will grow 101%, from $796 billion to $1.7 trillion from 2019 to 2030. We are an aging country. However, Medicare Trustee Reports and U.S. Census data reveals that, healthcare costs are rising four (4) times faster than Medicare enrollees. – MEDICARE


 There are four realities that can’t be denied: 1) healthcare costs are rising four times faster than Medicare enrollees, 2) private plan Medicare market share rose by 2% to a 43.1% (to 27.4 million enrollees) in 2021, enough sales to reel in $370 billion revenue, 3) after 24 years, despite gobbling up over $450 billion in taxpayer rebates, the Center for Medicare and Medicaid Services (CMS) payments per Medicare Advantage (MA) enrollee increased to 103% of payments made to original Medicare FFS enrollees in 2020 and to 104% in 2021, 4) with MA plan market share at 43.1% it’s time to realize subsidized growth can no longer be justified! 

For more details, read the White Papers on Time to End Taxpayer Rebates to Private Health Insurance Industry.

3. Protect Retirees from Pension Plan Recoupment

When retirees receive their first pension check, they trust the amount shown on the check will be what they should receive monthly.  Far too often, pension plan sponsors later find an error in the pension payment calculation and force retirees to pay back thousands of dollars and suffer a large cut in benefits as well. 

Over the years, retirees from companies such as AT&T, FCA/Chrysler, General Motors, and Lucent Technologies, have been victimized by pension plan overpayment recoupment and have had to pay back millions of dollars. 

Current ERISA and Department of Treasury guidance mandates that plan sponsors recover overpayments, but rules are vague in deciding a dollar amount and reasonable time required to recoup overpayments. There have been incidents where plan sponsors have hired collection agencies to recover overpayments to retirees. On the other hand, rules have been relaxed for some plan sponsors to pursue recoupment, but no statues exist for this.

The AREF/NRLN proposal to limit pension recoupment is in Senate bill S.1770, Retirement Security and Saving Act and House bill H.R. 2954, Securing a Strong Retirement Act of 2021. Our proposals clarify that a pension plan fiduciary does not have to recoup overpayments, but if it does, it must be done within three years of the initial overpayment. (Now there is no limit to back years.) The company may not recoup more than 10% of the amount of the overpayment per year, and it may not recoup against a beneficiary of a participant. 

4.  Amending Section 420 Surplus Transfer Rules to Protect Welfare Benefits

Retirees worry about losing unprotected welfare benefits, such as, health care and/or life insurance benefits. In many cases their pension plans are comfortably funded and hold surplus assets that plan participants and companies would like to use to help sustain these benefits. Unfortunately, Internal Revenue Code (IRC) Section 420 prohibits the use of plan asset surplus unless a plan is funded at 125% or higher. 

Pension plans funded above 110% but under 125% are well protected but companies may need plan assets to extend or virtually save welfare benefits, that IRC Section 420 was created to protect. The Section 420 outdated threshold of 125% indirectly places welfare benefits at risk. 

In Senate bill S.1770, Retirement Security and Saving Act is an AREF/NRLN proposed amendment that would amend the Employee Retirement Income Security Act (ERISA) and IRC Section 420 to reduce the Section 420 surplus transfer limits from 125% to 110%, subject to the requirement that annual plan surplus transfers may not exceed the combined annual life insurance and health insurance benefits or 1.75% of plan assets whichever is lower. 

5. Make Social Security Financially Sound  

The AREF/NRLN believes Social Security should be made financially sound without reducing current and future retiree benefits. Our view is that the Social Security system is not broken. Threats to the system can be averted without dismantling the program.  Current and future retirees and their employers have paid taxes to fund this benefit and the annual inflation adjustment. 

Elements of legislation to make the program sound for current and future generations should include:

  • Ensure the solvency of the program for the next 75 years.
  • Change the annual Cost-of-Living Adjustment (COLA) from the current CPI-W index pegged to urban wage earners’ living expenses to CPI-E (Elderly) based on older Americans’ spending patterns, including high medical costs.
  • Provide an across-the-board benefit increase equivalent to about 2% of the average Social Security benefit.
  • Increase the minimum benefit to ensure that workers with many years of low earnings do not retire under the poverty line.
  • Raise the payroll tax rate starting in 2022 so that by 2043, workers and employers each would pay

7.4% toward Social Security, instead of the 6.2% each worker and employer pays today.

  • Impose payroll tax rate to the current earnings amount above $400,000. While there appears to be a doughnut hole between the current $147,000 taxable limit and the $400,000 limit, this doughnut hole will shrink annually as under existing law the current maximum earnings amount subject to the payroll tax increases each year.

Annual increases in Social Security benefits should equal or exceed the percentage of any Congressional pay raises for that year.

6. Congress Must Take Action to Reduce Price of Prescription Drugs

Americans, especially the 65 million Americans on Medicare, being caught in the terrible perfect storm of prescription drug price gouging. Seniors are taking more expensive medications while living on fixed incomes. Even with their Medicare Part D prescription drug plan they are paying substantial out-of-pocket costs. 

The pharmaceutical industry began January 2022 as it has in other years by raising prices on prescription drugs. Drug manufacturers raised wholesale prices by a median of 4.9% on more than 450 prescription medicines, an overall annual increase that is comparable to the price hikes seen over the past three years. Additional price increases are expected later in 2022.

The AREF/NRLN bases its support to reduce prescription drug prices on:

  1. Remove the prohibition on Medicare negotiating prescription drug prices. It should replace it with a competitive bidding mandate to be applied wherever two or more FDA approved generic drugs, or two or more brand drugs, or a generic and brand drugs (upon patent expiration) treat the same medical condition.
  2. End pay-for-delay and other brand-name drugmakers’ tactics that keep generic drugs off the
  3. Allow individuals to import prescription drugs manufactured at FDA-inspected facilities from licensed Canadian sellers and import drugs from other countries that meet FDA safety standards.

For more details, read our White Paper on Reduce Price of Prescription Drugs.

7. Protecting Retirees in Pension De-risking by Companies  

Many companies are deciding to shed pension plan liabilities. A number of financial institutions are willing, for a fee, to takeover plan assets in exchange for annuity payments. Protections are proposed by the NRLN/AREF that would make de-risking in the form of buying annuities more secure for plan participants:  

If the plan is not terminated pursuant to ERISA Section 4041, after review and approval by PBGC, the plan has a fiduciary duty to continue to hold the annuity contracts as a plan asset, so that retirees do not lose PBGC or other protections. 

Alternatively, the plan sponsor can choose to permanently transfer its liability for individual retirees to a qualified annuity provider, as if the plan were terminated, but only if it complies with one of the following requirements: 

  • the plan obtains the affirmative consent of individual retirees.


  • the plan can purchase reinsurance from a separate, highly-rated insurer that guarantees the payment of benefits, in case of default, of each individual participant’s loss to the extent it is not covered by state insurance guarantee associations (SGAs).

The purchase of the annuity contract – and any reinsurance purchased must be reviewed and approved by the Department of Labor (DOL) based on the criteria in the safe annuity rule adopted in DOL’s Interpretive Bulletin 95-1. 

The plan sponsor must send a formal notification to all plan participants at least 90 days prior to the transaction, with specific disclosures about the impact on participants and on the plan’s funding status, as well as any alternatives available to the participant (such as choosing not to participate). 

If Federal agencies do not act, Congress must at a minimum require plan sponsors to maintain back-up insurance, either from the PBGC or a highly-rated reinsurance carrier. 

For more details, click on the White Papers tab and in the Pensions section select Pension Plan “DeRisking”: Strengthening Fiduciary Duties to Protect Retirees.

8.  Protecting Retirees in Mergers, Acquisitions and Spin-offs 

The advent of globalization and attendant behavior of U.S. firms in forming joint ventures and engaging in mergers, acquisitions and spin-offs involving foreign and U.S.-owned corporations has added complexity to the determination of how U.S. retirees’ pension and welfare benefits are protected from being reduced or eliminated as a result of change in ownership.  

Mergers and acquisition activity can ultimately result is dissolution of a corporation, loss of jobs and loss of retiree pension and welfare benefits. Consequently, the involvement of Bankruptcy Courts and the PBGC are always possible outcomes of M&A efforts done badly. Thus, pension plan asset protection issues are very important to the AREF/NRLN.

The AREF’s white paper describes the foundation for determining which U.S. statutes must be modified or created to better protect retirees. The paper includes proposed legislative solutions and/or regulatory rule changes that are required to protect U.S. plan participants. For more details, click on the White Papers tab and in the Pensions section select Protecting Retirees in Mergers, Acquisitions & Spin-offs.