Health care reform bill brings big changes

From the Law Office of Beeson, Tayer & Bodine

The Patient Protection & Affordable Care Act (aka “the health care act”) that President Obama signed into law in March, will provide health care coverage for millions of Americans now without health coverage. The Act will also change the benefit plans of those who already have health care.

This article summarizes the parts of the Act likely the have the biggest impact on Teamsters covered through their employment in a Teamster or company health plan.

Coverage of Dependent Children Until Age 26:

Under most health plans a dependent child loses eligibility at age 19 unless he or she is enrolled in col- lege. The Act will require plans to cover your children until age 26 as long as they remain your “dependents” (living in your household and/or claimed by you as “dependents” on your federal income tax return). It will not matter whether your children are students or married (although your child’s spouse is not eligible for coverage under your plan).

Excise Tax:

Perhaps the change that got the most attention is a 40% tax on health plans that cost more than $10,200/year for singles and more than $27,500/year for families. The tax, (1) Does not apply until 2018; (2) Applies to the plan not the member; (3) Applies only to the medical and drug por- tions of the plan—dental, vision, etc. are excluded and these bene- fits usually add a lot to the overall cost of your plan; and (4) Applies to union plans as if everyone is subject to the higher family threshold (even singles with no dependents), so the plan will have to cost more than $27,500 in 2018 to be subject to the tax. Who knows what health care premiums will be in 2018, but as of now, no Joint Council 7 union plans cost more then $20,000 a year.

Lifetime Maximums:

For many union families, choosing between their plan’s HMO and a “PPO” option is based on the PPO plan’s lifetime maximum on medical benefits. Many PPO (also known as “indemnity” or “self-insured”) plans contain a lifetime maxi- mum of $1 million. With today’s hospital costs, members can burn through that much in claims over their working life. The Act will prohibit plans from imposing annual or lifetime caps on hospi- tal or prescription drug coverage.

Health Insurance Exchanges:

By 2014, every state must establish an “Exchange”—a clearinghouse for employers with 100 or fewer employees to buy health insurance in the private insurance market. Can the Exchanges offer cheaper benefits to employers now partici- pating in Union plans? That’s yet to beseen.

Individual Mandate:

By 2014, any adult who does not have health insurance—through their employer or otherwise—will be required to pay a penalty with their federal income tax.

Employer Free Rider Penalty:

Employers of 50 or more full-time employees who do not provide health insurance that meets or exceeds “minimum essential cover- age” will be subject to penalties of up to $2,000 a year per employee. Because most of the changes in the Act will go into effect between now and 2014, do not expect changes in your plan or health care generally to happen overnight. However, once in place, the Act will have a big impact on how much plans cost and who is covered.

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