White House Creates a Special ObamaCare
Subsidy Exemption For Congress & Staff

The White House, under pressure from Congress, last month has directed the Office of Personnel Management (OPM) to create special rules so that the Federal Employees Health Benefits Program can continue to contribute to the health plans used by Congress and congressional staff. These new rules will allow Congress and their staff to be treated differently than the rest of Americans.

Historically members of Congress and staff receive health care coverage through what is known as the Federal Employee Health Benefits Plan (FEHBP). The FEHBP allows individuals to choose from a range of coverage and plan options for the health plan that best meets their needs. As with any employer-based plan, the employer (in this case the federal government) can contribute to the health care premium of the employee and the contributions are not included in the employee’s taxes. Under some of the more popular current health plans, the government contributes $ 5,000 per year for individual and $ 11,000 per year for family coverage.

During the 2010 debate over the Affordable Care Act, Senator Chuck Grassley of Iowa, proposed an amendment requiring members of Congress and their staffs to purchase health insurance though state exchanges. Democrats at the time agreed with the idea and included it into the new bill. There was, however, one problem with the proposed language of the bill. It was silent about who would pay for that insurance, whether employer contributions would be permissible and how those contributions would be treated.

The exchanges were, of course, initially conceived for uninsured people who couldn’t get health insurance through their employer or qualify for Medicaid. Those who had access to health benefits meeting minimum coverage levels could still purchase insurance on the exchanges, but without a subsidy, and by using after-tax income. The problem of late, however, has been Section 1312 of ObamaCare law. That section, dating back to the 2010 amendment that was inserted into the law, requires that all members of Congress and their staff must get their health care coverage from a health plan created by ObamaCare or through an ObamaCare marketplace exchange.

The issue is (or was) that ObamaCare marketplace exchanges do not allow tax-exempt employer contributions to health care premiums.

The only subsidies available to individuals on ObamaCare are the premium tax credits for individuals whose income is under 400% of the federal poverty level (about $45,000 per year). The idea was, if Congress is going to write a law that forces tens of thousands of Americans onto ObamaCare through the individual mandate, Congress should be prepared to share in that experience including allowable contributions, their taxation and all else.

As a result of the White House’s recent Executive Order, it has been decided that members of Congress and their staffs can now receive tax-exempt contributions from their employer (the federal government) to their health care premiums on the ObamaCare exchange, thus seemingly creating one set of rules for the American people and a different set of rules for Congress.

The proposed rule also seems to include a surprise or two for lawmakers. They will generally not be able to get into or return to the Federal Employees Health Benefits Program when they retire. “Members of Congress and their staff who purchase health insurance coverage on the exchange will be eligible to carry that coverage, with the government contribution, into retirement,” the agency said. But, it said, lawmakers and aides “who retire with exchange plan coverage are not eligible for Federal Employees Health Benefits plan coverage in retirement.” In response, congressional aides have apparently said they would urge the administration to change this provision before it takes effect on the basis that the federal employee health insurance program has decades of experience providing benefits to retirees, but that the new exchange plans were conceived mainly for people under 65 and have no experience coordinating benefits with Medicare.

The proposed rule also allows lawmakers to decide which aides work in the “official office” of a member of Congress and must therefore go into the exchanges and which ones do not.

Should you have any questions on the new healthcare reform laws or most anything else insurance wise, please contact us. Our professional agents and underwriters would be happy to help. Please also visit us at morrisandreynolds.com to learn more.

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