Health Care Reform
- April 2015
Throughout the nearly five years that have elapsed since enactment of the Affordable Care Act (ACA), Congressional Republicans have waged an unrelenting battle – a battle that will continue to rage throughout the new GOP-controlled 114th Congress – to repeal/de-fund/delay/alter the President’s signature first-term legislative achievement known as Obamacare. Most recently, that battle featured House passage of HR 596, a bill to repeal Obamacare in its entirety. HR 596 passed almost exclusively along party lines; just three Republican Members voted with a united Democratic caucus in opposition to the measure.
NAW and our allies in the employer community are working in various issue or subject matter-specific coalitions (principally Affordable Health Benefits Coalition, Small Business Coalition for Affordable Health Care, and Stop the HIT Coalition) in the health care space to fix some of the Affordable Care Act’s most serious flaws. Among the issues in the legislative mix are bills to replace the ACA’s 30 hours per week definition of “full time employee” with a 40 hours per week standard (HR 30/S 30); repeal the health insurance tax (HIT) on fully insured coverage (HR 928/S 183); to repeal the ACA’s redefinition of “small group market” to include groups up to 100 (HR 1624); and to protect self-funded health plans by excluding stop-loss insurance coverage from the definition of health insurance coverage (HR 1423/S 775). Despite the threat of a presidential veto, the House in early January passed the full time employee bill (HR 30) on a bipartisan basis. Nonetheless, the bill remains stalled in the Senate. Indeed, all legislative initiatives to modify the ACA face the challenges of sufficient Democratic strength in the Senate to sustain legislative filibusters, and President Obama’s presence for another two years in the White House.
In the regulatory space:
In February 2014, the Treasury Department issued final rules for implementation of the ACA’s employer mandate. Rules include transition relief delaying until January 1, 2016 enforcement for employers with 50 – 99 full-time employees. Employers with 100 or more full-time employees must offer affordable minimum essential coverage to 70% of full-time employees on January 1, 2015; the ACA-mandated 95% threshold begins on January 1, 2016.
In November 2014, the Department of Health and Human Services (HHS) issued its “Notice of Benefit and Payment Parameters for 2016.” The proposed rule allows states to choose new benchmark plans for 2017. The Affordable Health Benefits Coalition (AHBC) submitted comments in connection with this rulemaking (NAW is member of the AHBC Steering Committee) in support of the benchmark approach for essential health benefits (EHB) and for clarifying that newly-selected benchmark plans may not include state benefit mandates enacted after December 31, 2011, and may only contain mandates that states can demonstrate have a strong evidence base. AHBC further endorsed the proposal’s approach to drug coverage under the benchmark approach; and cautioned the Center for Medicare and Medicaid Services (CMS) against an approach to out-of-pocket maximums/cost sharing that impedes the availability of HSA (Health Savings Accounts) – compatible High Deductible Health Plans (HDHP), and against a broader habilitative services mandate that results in benefits not typically covered under a small employer plan and which will increase premium costs.
In February 2015, the Internal Revenue Service (IRS) announced a delay until July in the imposition of penalties of up to $100 per day per employee, on small businesses (fewer than 50 employees) who provide workers tax-free payments to buy coverage on the individual market.
Also in February, the IRS and Treasury Department published Notice 2015-16 to “initiate and inform the process of developing regulatory guidance regarding the excise tax on high cost employer-sponsored health coverage under §49801 of the Internal Revenue Code.” This is the “Cadillac tax” enacted with the ACA (which goes into effect for tax years after December 31, 2017), a 40% excise tax on the cost of “applicable employer-provided coverage” to the extent the cost exceeds a statutory dollar limit. The Notice discusses three issues:
Definition of “Applicable Coverage.” The ACA defines applicable coverage “with respect to any employee,” as “coverage under any group health plan made available to the employee by an employer which is excludable from the employee’s gross income under section 106, or would be so excludable if it were employer-provided coverage (within the meaning of such section 106).” A “group health plan” is “a plan (including a self-insured plan) of, or contributed to by, an employer (including a self-employed person) or employee organization to provide health care (directly or otherwise) to the employees, the employer, others associated or formerly associated with the employer in a business relationship, or their families.” “Applicable coverage” is without regard to who pays for the coverage or whether the employer provides the coverage.
Determination of cost of applicable coverage, generally under rules similar to those for determining the COBRA applicable premium, and using one of two prescribed methods for self-insured plans to make this determination.
- Applicable dollar limits. The baseline 2018 per-employee annual dollar limits are $10,200 for self-only coverage and $27,500 for other-than-self-only coverage. The statute provides for annual revision of the annual dollar limits.
From the judiciary:
On March 4, 2015 the U. S. Supreme Court heard oral arguments in King v. Burwell. At issue is the validity of premium subsidies to economically-qualified insurance buyers in the federal exchange. The Court is expected to hand down its decision in June. If the Court finds that the ACA doesn’t allow subsidies in states that haven’t set up their own exchanges, premium assistance to approximately seven million purchasers in the 34 states that use HealthCare.gov will evaporate, resulting in a 255% average premium increase to affected individuals. Additionally, penalties under the ACA’s employer mandate would not be applicable in those states.