Federal employee groups are urging congressional leaders to reject a proposed 40 percent excise tax on so-called “Cadillac” health insurance plans.
They say the excise tax could apply to federal employees enrolled in the Federal Employees Health Benefits Program’s Blue Cross and Blue Shield standard plan. The tax, proposed in the Senate’s version of health care reform, would kick in for individual plans with premiums of more than $8,500 and family plans with premiums of more than $23,000 starting in 2013.
Sixteen federal unions and employee groups signed the Jan. 12 letter saying the FEHBP’s insurance options are in no way excessive and do not deserve to be taxed. The letter was sent to Senate and House Democratic leaders, committee chairmen involved in health care and members of the National Capital Area delegation.
“FEHBP insurers will simply reduce coverage and, as the taxes increase, a downward spiral toward less coverage will ensue, which is antithetical to health care reform’s stated purpose. Penalizing FEHBP enrollees with this tax is a huge disincentive to qualified applicants seeking federal or postal employment,” the organizations wrote.
The organizations also asked to be allowed to review and comment on the final agreement between the House and Senate on the role the Office of Personnel Management will play in health care. The Senate bill gives OPM responsibility for negotiating with private insurers to provide coverage for the uninsured; the House bill gives OPM no new obligations.
“OPM’s role in administering a national health plan for non-FEHBP participants is the most significant expansion of its duties in the agency’s history,” they wrote.
The House-passed health care bill would extend coverage for dependent children up to age 27. The unions want clarification in the final bill that the extension of benefits applies to FEHBP plans.
Groups signing the letter include the American Federation of Government Employees, Federal Managers Association, National Active and Retired Federal Employees Association, and National Treasury Employees Union.
