<nobr>Nov 23, 2009</nobr>

Senate to Begin Consideration of Health Bill After Thanksgiving

The Senate last Saturday night (November 21) approved 60-39 a procedural motion allowing the Senate to begin consideration of the health reform bill (H.R. 3590) that Senate Majority Leader Harry Reid (D-NV) unveiled on November 18. The "Patient Protection and Affordable Care Act" is the merged version of the Senate Finance Committee bill and the bill approved by the Senate Health, Education, Labor, and Pensions Committee.

Following the Saturday night vote, the Senate reached a unanimous consent agreement to begin full consideration of the bill following the Thanksgiving break. The debate is set to begin on November 30 and likely will continue well into December, as senators are expected to offer numerous amendments during consideration of the bill. According to Senate leaders, the goal is now for the Senate to approve the legislation by the end of the year, and then begin a conference with the House at the beginning of next year.

Like the House bill, H.R. 3590 would mandate beginning in 2014 that individuals (with certain exceptions) purchase minimum essential coverage or pay a penalty of $95 in 2014, $350 in 2015, $750 in 2016 and indexed thereafter.

The Senate bill includes a national public option that would permit states to opt-out. Federal support also would be available for new non-profit, member run insurance cooperatives. States would be required to establish by 2014 an Exchange to facilitate the marketing and purchase of plans to individuals and small employers. Plans participating in the Exchanges would be accredited for quality, would present benefit options in a standardized manner, and would use one enrollment form.

The bill also calls for a number of reforms to the insurance market, including a prohibition on exclusions for pre-existing conditions, and premiums could vary only by family structure, geography, actuarial value, tobacco use, participation in a health promotion program, and age (by not more than three to one).

Some of the provisions of interest/concern to the employer community include:

Free Rider Surcharge: An employer with more than 50 full-time employees that does not offer coverage and has at least one full-time employee receiving the premium assistance tax credit would be required to pay $750 per full-time employee. An employer with over 50 employees that offers coverage deemed unaffordable or does not meet the minimum standard and has at least one full-time employee receiving the tax credit because the coverage is either unaffordable or does not cover 60 percent of total costs, would pay the lesser of $3,000 for each of those employees receiving a credit or $750 for each of their full-time employees total.

Excise Tax on High Cost Employer-Sponsored Health Coverage: The bill includes a 40 percent excise tax on health insurers that offer premiums in excess of $8,500 for individuals, and $23,000 for family coverage. The tax would apply to self-insured plans and plans sold in the group market on the amount of the premium in excess of the threshold. A transition rule would increase the threshold for the 17 highest cost states for the first three years. An additional threshold amount of $1,350 for singles and $3,000 for families would be available for retired individuals age 55 and older and for plans that cover employees engaged in high risk professions.

Additional Hospital Insurance Tax for High Wage Workers: The bill would increase the hospital insurance tax rate by 0.5 percentage points on an individual taxpayer earning over $200,000 ($250,000 for married couples filing jointly).

Eliminate the Deduction for Employer Part D Subsidy: The bill would eliminate the deduction for the subsidy for employers who maintain prescription drug plans for their Medicare Part D eligible retirees.

Employer W-2 Reporting of Value of Health Benefits: It would require employers to disclose the value of the benefit provided by the employer for each employee’s health insurance coverage on the employee’s annual W-2 Form.

Executive Compensation Limitations on Insurance Providers: The bill would limit the deductibility of executive compensation for insurance providers if at least 25 percent of the insurance provider’s gross premium income is derived from health insurance plans that meet the minimum essential coverage requirements in the bill. The deduction would be limited to $500,000 per tax year and would apply to all officers, employees, directors, and other workers or service providers performing services for or on behalf of a covered health insurance provider.

Questions or comments on health reform should be addressed to either Gretchen Young (gyoung@eric.org) or Adam Solander (asolander@eric.org).

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Websites:

Link to Bill Text and Summaries

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