Latest Health Reform Proposal Bumps up Employer Assessment

According to Business Insurance, the blueprint – released three days before a televised White House health care reform summit – would increase the assessment to $2,000 for each full-time employee. However, in determining the assessment, an employer’s first 30 employees would be excluded from the calculation. In comparison, the Senate plan calls for employers with more than 50 employees that do not offer coverage to pay a $750 assessment for each full-time employee.

Assessments would not apply for employees who had to wait for up to 90 days before they were eligible for coverage, whereas, the Senate-approved reform bill, by contrast, imposes a $600-per-employee assessment for employers with waiting periods between 61 and 90 days, Business Insurance reported.

The news report noted that for many employers, the most significant provision in the administration’s reform outline involves an excise tax on costly health insurance plans. Under the administration’s plan, the excise tax would not kick in until 2018, while the amount of premiums exempt from the tax would be $10,200 for single coverage and $27,500 for family coverage.

However, if health care costs rise unexpectedly quickly between now and 2018, the cost thresholds triggering the tax would be automatically adjusted upwards. After 2018, the cost thresholds, as under the Senate bill, would increase each year to match the rise in the index, plus one percentage point.

According to Business Insurance, the cost threshold would be further eased by providing an actuarial adjustment for employers whose health care costs are higher due to the gender and age of their employees. The proposal also would exempt dental and vision care costs in calculating health care plan costs.

By comparison, the reform package passed by the Senate in December would impose a 40% excise tax on health insurance premiums exceeding $8,500 for single coverage and $23,000 for family coverage. The tax would begin in 2013 and the cost threshold would rise in succeeding years to match the annual rise in the Consumer Price Index, plus one percentage point. The House bill would make no changes in the tax-free status of group coverage.

While not explicitly spelled out, Business Insurance said, the White House plan is believed to retain a Senate reform provision in which employers would be liable to pay up to $3,000 a year for each employee whose share of the health insurance premium exceeds 9.8% of income and if those individuals receive subsidized coverage through state health insurance exchanges. It also is believed to retain a provision in the House and Senate bills that would impose a $2,500 annual cap, starting in 2011, on the annual contributions that could be made to health care flexible spending accounts.

The administration’s proposal would also require group plans to extend coverage to employees’ adult children up to age 26, ban annual and lifetime dollar limits, and require plans to cover “proven” preventive services with no employee cost sharing.