Feds would feel health care reforms

The House sent sweeping health care reform legislation to President Obama's desk late on Sunday night that would alter insurance coverage for many Americans, including federal employees. But the Senate has yet to vote on a package of changes to that legislation, including a tweak to a tax on high-value health plans that could affect federal workers.

The bill introduces an excise tax on high-value employer-sponsored plans, including many available through the Federal Employees Health Benefits Program. If the Senate accepts the changes, then insurance companies would pay a 40 percent tax on health care plans valued above certain thresholds, starting in 2018. The thresholds would be plans worth more than $10,200 in yearly premium payments for single coverage, and those worth more than $27,500 for family coverage. Levels at which plans are eligible to be taxed could rise if the cost of coverage under FEHBP's Blue Cross Blue Shield Standard Option increased faster than projected between 2010 and 2018.

Walton Francis, author of the Consumers' Checkbook 2010 Guide to Health Plans for Federal Employees, said with the planned adjustments to the excise tax, it would be years before federal employees notice any effect. But he warned that tying the tax to FEHBP's most popular plan could have unintended consequences.

"The White House could make national decisions and could affect the national excise tax, by decisions it made on what changes to allow or insist on in the Blue Cross standard plan," Francis said.

The bill the House passed on Sunday also would expand the Office of Personnel Management's responsibilities to include providing nonprofit health care plans to uninsured Americans through state-based exchanges. While this would not affect federal employees directly, it would add to the responsibilities of the agency responsible for administering FEHBP.

OPM would contract with at least two nonprofit carriers, to offer national plans that would compete with private plans on state-based exchanges. The bill instructs Congress to appropriate enough money for OPM to meet these new demands. It also requires OPM to set up separate risk pools for new customers versus federal employees and annuitants in FEHBP, a provision employee groups have backed.

In addition, the bill would require all health plans that offer dependent coverage to continue it for unmarried children until they turn 26. The package of changes would require existing health plans to offer the extra coverage within six months of the bill becoming law.

The National Active and Retired Federal Employees Association has expressed concern that Congress has not made it clear enough that FEHBP must extend the period during which children are eligible to stay on their parents' health insurance, because FEHBP was not included in the definitions of which plans would apply. NARFE will pursue such a clarification in a future package of technical fixes to the bill.

The House-passed legislation also would impose a limit on the tax deductibility of flexible spending accounts, which many federal employees use through FSAFeds. Currently, there is a $5,000 annual limit on how much can be contributed to such an account tax-free, but the legislation would cap that amount at $2,500. If the Senate approves the package of changes, then the cap will go into effect in 2013.

The Senate is expected to take up the revisions later this week. Beth Moten, legislative director for the American Federation of Government Employees, said she was confident they would pass.

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
Close [ x ] More from GovExec

Thank you for subscribing to newsletters from GovExec.com.
We think these reports might interest you:

  • Going Agile:Revolutionizing Federal Digital Services Delivery

    Here’s one indication that times have changed: Harriet Tubman is going to be the next face of the twenty dollar bill. Another sign of change? The way in which the federal government arrived at that decision.

  • Cyber Risk Report: Cybercrime Trends from 2016

    In our first half 2016 cyber trends report, SurfWatch Labs threat intelligence analysts noted one key theme – the interconnected nature of cybercrime – and the second half of the year saw organizations continuing to struggle with that reality. The number of potential cyber threats, the pool of already compromised information, and the ease of finding increasingly sophisticated cybercriminal tools continued to snowball throughout the year.

  • Featured Content from RSA Conference: Dissed by NIST

    Learn more about the latest draft of the U.S. National Institute of Standards and Technology guidance document on authentication and lifecycle management.

  • GBC Issue Brief: The Future of 9-1-1

    A Look Into the Next Generation of Emergency Services

  • GBC Survey Report: Securing the Perimeters

    A candid survey on cybersecurity in state and local governments

  • The New IP: Moving Government Agencies Toward the Network of The Future

    Federal IT managers are looking to modernize legacy network infrastructures that are taxed by growing demands from mobile devices, video, vast amounts of data, and more. This issue brief discusses the federal government network landscape, as well as market, financial force drivers for network modernization.

  • eBook: State & Local Cybersecurity

    CenturyLink is committed to helping state and local governments meet their cybersecurity challenges. Towards that end, CenturyLink commissioned a study from the Government Business Council that looked at the perceptions, attitudes and experiences of state and local leaders around the cybersecurity issue. The results were surprising in a number of ways. Learn more about their findings and the ways in which state and local governments can combat cybersecurity threats with this eBook.


When you download a report, your information may be shared with the underwriters of that document.