Feds would feel health care reforms

The House sent a bill to President Obama’s desk late Sunday. The House sent a bill to President Obama’s desk late Sunday. Alex Wong/Newscom
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:

  • Forecasting Cloud's Future

    Conversations with Federal, State, and Local Technology Leaders on Cloud-Driven Digital Transformation

  • The Big Data Campaign Trail

    With everyone so focused on security following recent breaches at federal, state and local government and education institutions, there has been little emphasis on the need for better operations. This report breaks down some of the biggest operational challenges in IT management and provides insight into how agencies and leaders can successfully solve some of the biggest lingering government IT issues.

  • Communicating Innovation in Federal Government

    Federal Government spending on ‘obsolete technology’ continues to increase. Supporting the twin pillars of improved digital service delivery for citizens on the one hand, and the increasingly optimized and flexible working practices for federal employees on the other, are neither easy nor inexpensive tasks. This whitepaper explores how federal agencies can leverage the value of existing agency technology assets while offering IT leaders the ability to implement the kind of employee productivity, citizen service improvements and security demanded by federal oversight.

  • IT Transformation Trends: Flash Storage as a Strategic IT Asset

    MIT Technology Review: Flash Storage As a Strategic IT Asset For the first time in decades, IT leaders now consider all-flash storage as a strategic IT asset. IT has become a new operating model that enables self-service with high performance, density and resiliency. It also offers the self-service agility of the public cloud combined with the security, performance, and cost-effectiveness of a private cloud. Download this MIT Technology Review paper to learn more about how all-flash storage is transforming the data center.

  • Ongoing Efforts in Veterans Health Care Modernization

    This report discusses the current state of veterans health care


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