AARP Cites Obamacare When Increasing Employee Health Care Costs

by Amanda Griffin-Johnson While some of the provisions of the massive federal health care legislation don’t go into effect for some time, their impact is already being seen across the country. Last month, McDonald’s, the United Federation of Teachers Welfare Fund, and 29 other firms, representing nearly one million workers, received waivers from the Department of Health...

by Amanda Griffin-Johnson

While some of the provisions of the massive federal health care legislation don’t go into effect for some time, their impact is already being seen across the country. Last month, McDonald’s, the United Federation of Teachers Welfare Fund, and 29 other firms, representing nearly one million workers, received waivers from the Department of Health and Human Services to exempt the firms from the minimum coverage level regulation in the health care bill. Without the waivers, the regulation on minimum coverage levels would have induced those employers to drop health care coverage for certain employees altogether. Now this week, AARP, a key supporter of the health care legislation, informed their employees that their insurance costs would be increasing due, in part, to the legislation. TheAssociated Press reports:

And AARP adds that it’s changing copayments and deductibles to avoid a 40 percent tax on high-cost health plans that takes effect in 2018 under the law. Aerospace giant Boeing also has cited the tax in asking its workers to pay more. Shifting costs to employees lowers the value of a health care plan and acts like an escape hatch from the tax.

“Most plan co-pays and deductibles have been modified,” Jennifer Hodges, AARP’s director of compensation and benefits, wrote employees in an Oct. 25 e-mail. “Plan value changes were necessary not only from a cost management standpoint but also to ensure that AARP’s plans fall below the threshold for high-cost group plans under health care reform.”

AARP officials said medical inflation is the main reason employee costs will be going up. The health care law is “a small part,” said David Certner, legislative affairs director.

Although the tax on so-called “Cadillac” health care plans doesn’t take effect for years, employers are already beginning to assess their potential exposure because it is hefty: at 40 percent of the value above $10,200 for individual coverage and $27,500 for a family plan. The tax is intended as a savings measure, to prod employers and workers into more cost-efficient plans.

Certner said AARP’s plans are currently under the threshold for the tax. “We intend to stay below those thresholds,” he said. “It’s not in anybody’s interest to move above those thresholds, not the employees’ nor the employer’s.”
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AARP warned its employees that more cost-shifting could be in store. “AARP intends to make similar changes, as necessary, in the future to avoid the (health plan) tax,” said Hodges’ e-mail.

You can read the full article from the Associated Press here.