Insurance agents and employers are breathing a sigh of relief that Congress has repealed a healthcare reform law provision that would have required employers to offer low-income employees so-called “free-choice” vouchers starting in 2014.
According to officials at the National Association of Insurance and Financial Advisors, this provision could have “potentially hurt” an employer’s insurance risk profile if too many young, healthy workers qualified for vouchers to buy insurance through newly created exchanges.
That’s because it would leave the employer plan “with too many older, sicker workers,” NAIFA officials say.
Included in the 2011 budget agreement passed by Congress on April 14, the provision would have affected low-income employees whose employer-provided health insurance premiums cost between 8% and 9.8% of household income. The employee could have then used the vouchers to purchase health insurance in the exchanges and keep excess amounts tax-free if the voucher exceeded the cost of health coverage.
The provision was included in the Senate bill at the request of Sen. Ron Wyden, D-Ore.
The American Benefits Council was a strong supporter of repeal, as was the ERISA Industry Committee.
In a recent letter to members of the Senate, ABC officials said a “much more appropriate way to address this situation, in addition to any possible modifications to eligibility for subsidies in the exchanges, would be to allow those individuals who are not able to afford coverage offered under an employer plan to purchase low-cost catastrophic coverage (which includes comprehensive coverage for preventive care and access to primary care services).
The ABC said Sen. Susan Collins, R-Maine, has proposed an amendment during the markup process for PPACA that would accomplish that.
ABC said in its letter that any other possible proposals to require employers to provide vouchers even more expansively to employees who decline coverage under their employer plan “should be summarily rejected.”
That’s because, the ABC letter said, under such approaches, “employees who remain in the employer’s plan would lose the value of the premium contributions from their co-workers who opt out and obtain coverage in the insurance exchanges.”