When the Patient Protection and Affordable Care Act (ACA) was enacted, a majority in Congress voted to mandate that Members of Congress and their staff would be required to purchase health insurance through the Marketplaces. The rationale behind this effort was that if Members of Congress were going to establish these Exchanges and they were so wonderful, then Members of Congress and their staff should use these Marketplaces.
Currently, Members of Congress and Congressional staff receive health insurance through the Federal Employees Health Benefits Program, and the government covers about 75 percent of premium costs. Because of the language included in the ACA, it was determined that rather than continuing to use the FEHB program to purchase insurance, Members of Congress and Congressional Staff would have to make their purchases through the District of Columbia’s Health Insurance Exchange or if the staff worked in a state or Congressional District office, through the Exchange in that jurisdiction.
This raised a significant issue that was not fully debated or considered at the time Congress approved this change: Would the Federal government continue to subsidize the insurance purchases of these individuals?
In early August, the Office of Personnel Management (OPM) issued a rule ensuring that the federal government will contribute to the cost of premiums for Members of Congress and Congressional staff purchasing health insurance through the exchanges created by the ACA.
One major change, however will be that the number of plan options available to these individuals will be severely limited. Currently through the FEHB program, DC based employees can choose from among dozens and dozens of health plans with a variety of premium and copay options.
According to the most recent information available from the DC Exchange, they expect that 3 – 4 insurance companies will offer health plans in the Exchange and each will have 4 pricing options (Bronze, Silver, Gold and Platinum). Unlike the FEHB program which offers several fee-for-service options, the DC Exchange plans all appear to be network (HMO or PPO) plans. It is also not clear how the pricing of the Exchange plans will compare to what has been available through the FEHB program both in terms of the overall premiums or the amount of the subsidy the federal government will give to the individual to lower the actual cost of the premiums.
According to the OPM, staff members and lawmakers will not be eligible for federal tax credits or other subsidies to help them purchase insurance through the Exchange, regardless of their income.
The language in the ACA that created this situation was proposed by Sen. Charles E. Grassley, (R-Iowa). Essentially his proposal requires lawmakers and their personal staffs to buy insurance through the Exchanges. However, the Grassley language did not specify how the OPM, which manages government employees’ benefits, would implement the provision, and whether the government would contribute to staff members’ premiums. The new OPM guidance answers those questions.
ADVOCATE will continue to provide updates as information becomes available.
Kirk Reinitz, CPA