Senate Health Plan Headed to Final Approval

With a filibuster-proof majority intact, Senate Democrats are poised to approve an $871 billion health care reform bill containing small but consequential last-minute changes for employers.

Following a procedural vote early Monday, December 21, it appears Democrats are likely to pass the measure by the holiday recess. The effort to reshape health care coverage would resume in 2010 when the separate reform bills passed in the House and Senate will have to be reconciled into one piece of legislation.

Over the weekend, Democratic leaders in the Senate introduced the final changes they had made to the bill. One amendment that rankled employers is a new rule that would allow certain employees to cash out of their employer-sponsored health insurance and use their employer’s health care money to buy insurance on their own.

Employees who spend between 8 and 9.8 percent of their income on insurance premiums would qualify for the “free choice voucher,” as it is called by the amendment’s sponsor, Sen. Ron Wyden, D-Oregon. Wyden has long favored severing ties between employment and health insurance coverage, and the amendment would allow certain employees to buy their own coverage with employer money.

Other amendments likely to be of interest to employers:

• A requirement that employers limit waiting periods before an employee can enroll in an employer health plan to 60 days or face a fine of $600 per full-time employee.

• A requirement that the secretary of health and human services determine whether contributions to health savings accounts count toward the actuarial value of a plan. This would clarify whether certain high-deductible plans would meet the legislation’s minimum actuarial value of 60 percent—meaning a health plan would have to pay 60 percent of the cost of insurance.

• A study by the secretary of health and human services of the differences between self-insured and fully insured health plans to determine whether the new health care reform laws create adverse selection—a scenario in which only those who use a lot of medical care, namely the sick and older people, sign up for a group health plan. Employer groups are concerned this study will create political pressure to prohibit employers from self-insuring.

• An increase in a payroll tax from 0.5 percent to 0.9 percent for individuals making $200,000 or more and couples making $250,000 or more a year to help pay for Medicare’s hospital insurance trust fund. Employers have criticized the amendment as a tax on small businesses structured as tax pass-through entities, such as S corporations.

• An appropriation of $200 million to small businesses that want to establish work-site wellness programs.

The Senate health care reform plan would newly insure 31 million people and reduce the federal deficit by $132 billion over a 10-year period ending in 2019. While considerably less onerous on employers than the reform bill passed by the House in November, the Senate bill would come with new employer requirements and penalties.

Employers with 50 or more full-time employees that do not offer health insurance would face a penalty of $750 per full-time employee if an employee receives a premium subsidy from the federal government.

Individuals would be required to carry insurance or face a fine.

—Jeremy Smerd

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