Labor Unions May Get Health Law Tax Relief

Weeks after denying labors request to give union members access to health-law subsidies, the Obama administration is signaling it intends to exempt some union plans from one of the laws substantial taxes.

Buried inis the disclosure that the administration will propose exempting certain self-insured, self-administered plans from the laws temporary reinsurance fee in 2015 and 2016.

Thats a description that applies to many Taft-Hartley union plans acting as their own insurance company and claims processor, said Edward Fensholt, a senior vice president at Lockton Cos., a large insurance broker.

Labor Unions May Get Health Law Tax Relief

Union member rally near the U.S. Capitol in Washington in May 2010 (Photo by Brendan Smialowski/Getty Images).

Insurance companies and self-insured employers that hire outside claims administrators would still be liable for the fee, which starts at $63 per insurance plan member next year and is projected to raise $25 billion over three years.

Unions, a key Obama ally, have increasingly criticized the Affordable Care Act as threatening the generous medical plans held by many members.

Eliminating the reinsurance fee was one ofat the AFL-CIOs September convention, along with giving union plans access to ACA tax credits for lower-income members.

In September the White Housefor union members on top of their company insurance. Now the administration seems to be moving toward part but not all of what labor wants on the reinsurance fee.

While it intends to waive the fee for 2015 and 2016, unions also wanted it scrapped for 2014, when it will be greatest. Taft-Hartley plans are collectively bargained andrun jointly by unions and employers to allow workers to move from job to job without losing coverage.

The AFL-CIO did not respond to a request for comment.

Although its too early to tell whether the Department of Health and Human Services will give union plans all of what they want on the fee, last weeks language is how HHS often breaks controversial regulatory news, benefits lawyer R. Pepper Crutcher, Jr. wrote. It’s not known when the administration will put out a new regulation on reinsurance.

The reinsurance fee made a cameo appearance in the October debt-ceiling negotiations when Senate Majority Leader Harry Reid reportedlyuntil 2015. Republicans objected and the delay was not in the final deal.

The fee, scheduled to kick in next year, would shrink to $42 in 2015 and $26 in 2016, disappearing afterwards. It would help insurers absorb the cost of carefor people with pre-existing illness enrolling in plans offered through subsidized marketplaces.

Both unions and business have criticized it as penalizing employer-sponsored health insurance to support plans bought directly from insurers.

The fee takes money from the pockets of each laborer covered by a health and welfare fund and gives it to for-profit insurance companies, Terry OSullivan, president of the Laborers International Union of North America,to President Barack Obama last summer.

A LIUNA spokesman declined to comment. The U.S. Chamber of Commerce and the White House did not respond to requests for comment.

Related Topics

InsuranceAffordable Care ActCost and Quality

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