Kaiser Health News reports:
Partly blaming the health law, United Parcel Service is set to remove thousands of spouses from its medical plan because they are eligible for coverage elsewhere.
Many analysts downplay the Affordable Care Act’s effect on companies such as UPS, noting that the move is part of a long-term trend of shrinking corporate medical benefits. But the shipping giant repeatedly cites the act to explain the decision, adding fuel to the debate over whether the law erodes traditional employer coverage.
Rising medical costs, “combined with the costs associated with the Affordable Care Act, have made it increasingly difficult to continue providing the same level of health care benefits to our employees at an affordable cost,” UPS said in a memo to employees.
The company told white-collar workers two months ago that 15,000 working spouses eligible for coverage at their own employers would be excluded from the UPS plan in 2014. The Fortune 100 firm expects the move, which applies to non-union U.S. workers only, to save about $60 million a year, said company spokesman Andy McGowan.
UPS becomes one of the highest-profile employers yet to bar working spouses from the company plan. Many firms already require employees to pay a surcharge for working-spouse medical coverage, but some are taking the next step by declining to include them at all, consultants say.
“They are simply saying to the spouse outright, ‘If you have coverage somewhere else you are not eligible here,’” said Edward Fensholt, a senior vice president at Lockton Cos., a large insurance broker. “We don’t see a lot of that out there, but more than we used to.”
Whoops. For millions of working families with both spouses employed full time, it is common practice for the entire family to be insured on one policy. Employers and insurers like that arrangement, because it eliminates the confusion over claims responsibilities that would arise if the family was covered by multiple health policies. It was a simple arrangement that worked really well. Until now, that is.
After the new ACA rules kick in next year, “affordable” employer-provided health insurance may not seem like such a good deal.
Let’s assume that Bill and Mary are married and have two children. Both work full time, and both are eligible for their employer’s health care benefit. However, Mary has a better benefit package than Bill, so the family opts to be insured on Mary’s policy.
But there are still risks involved once the new ACA rules go into effect. Under the new ACA guidelines, employers are only required to provide “affordable” health benefits for their employees. Employers must also offer health benefits to qualified dependents of their employees, but these benefits are not required to be “affordable.” And employers will not be required to offer any health benefits to their employees’ spouses. The “affordable” rate cap is also misleading, since it is defined as being less than 9.5% of the family’s total income. Assuming an annual median family income of $52,000, an employer can require an out-of-pocket employee premium contribution of up to $400 a month and still be in compliance with the “affordable” rate cap. And this does not include additional contributions required if a spouse or dependents are added to the policy.
Now suppose Mary gets a letter in the mail stating that as of January 1, 2014, Bill will no longer be covered by her health insurance. Bill can’t simply switch back to his employer’s plan, because the enrollment period at Bill’s company runs July 1 to July 31, and Mary received her letter the week of August 19th. Bill will have to wait until July 1, 2014 to sign up for his company’s health benefit, and factoring in processing time, it could be August or September 2014 before he is fully covered.
The solution to this problem is supposed to be the ACA Health Exchange program, which should theoretically provide Bill with easy enrollment in a subsidized full coverage individual health plan until he is able to enroll again with his company. But there is a problem – the ACA rules state that if an individual declines enrollment in an employer-provided plan, regardless of how expensive it may be, that individual is disqualifed from receiving any premium subsidies from the ACA Exchange. And Bill would have been required to sign a document for his employer stating that he declined coverage in his company’s health care plan, even though he was eligible. He would also have to sign a document for Mary’s insurer stating that neither he nor his family was covered under any other health policy except for Mary’s.
It is entirely possible that Bill could receive no subsidy assistance from the ACA Exchange, which would force him to pay the entire cost of his Exchange policy out of pocket. For a male over the age of 40, the least expensive qualifying insurance policy (ACA “bronze”) could cost nearly $300 a month or more. If Bill can’t afford the premium he could remain uninsured for up to 8 or 9 months in 2014. Not only is he exposed to serious financial risk if he requires medical treatment, he may also face a penalty tax for being uninsured. Further, he has been failed by the fundamental promise of the Affordable Care Act – if you like your current plan, you can keep it.
The more we learn about the Affordable Care Act, the more obvious it becomes that no one actually read the bill, or spent time working through scenarios that were likely under its myriad of confusing provisions and guidelines. Employees who are currently covered under employer-sponsored plans have already seen sharp increases in premiums, deductibles, and copays. Thanks to the ACA, “part time – no benefits” seems to be the “new normal” for the majority of available jobs. The CBO estimates that 7 million workers may lose their employer-sponsored health benefits when the law fully takes effect next year. Over 1200 businesses, organizations, and labor union locals have received wavers from HHS for at least some of the ACA’s requirements. The Teamsters, UFCW, and UNITE-HERE published a jointly-authored letter earlier this year, stating that the ACA “will destroy the very health and wellbeing of our members.” And the National Treasury Employee’s Union, which represents employees of the IRS – the very agency that will enforce ACA compliance – has urged its members to oppose proposed legislation that would move Federal workers out of their own health care system and into the ACA Exchanges.
Even though the ACA has benefitted some Americans who are poor or have pre-existing conditions, the majority of Americans, especially those who currently have employer-provided health insurance benefits, will probably have little to be thankful for. The ACA is bad medicine for America, and the plug needs to be pulled before its negative effects become permanent.