Report: Unions May Get Obamacare Tax Relief

Wednesday, 06 Nov 2013 07:06 PM

By Cynthia Fagen

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Labor unions may get tax relief from Obamacare, according to The Weekly Standard, citing a report Wednesday by the Kaiser Family Foundation, which analyzes healthcare issues.

"Weeks after denying labor's 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 law's substantial taxes," according to the foundation report.

The administration says it will propose exempting "certain self-insured, self-administered plans" from the law's temporary reinsurance fee in 2015 and 2016, the report says.

That description applies to Taft-Hartley union plans acting as their own insurers and claims processors, said Edward Fensholt, a senior vice president at Lockton Cos., a large insurance broker.

"We were really scratching our heads about who actually benefits from this. It certainly isn't aimed at employers, because employers don't really self-administer their plans," he said.

The move drew criticism from Republicans, who charged that it unfairly favors key White House allies.

Union officials said most of their plans would not be eligible for the exemption because they also use third parties to process claims.

"Our understanding is that it's not going to apply to us because of the third-party administration," said Jay Lederer, spokesman for the International Union of Operating Engineers. "If they are leaving out everybody who uses a third-party administrator to manage their health funds, it's our belief that leaves out the vast majority of plans."

David Mallino, legislative director of the laborers union, also said the "vast majority" of his union's health plans use third-party administrators.

"As the new regulations offer no substantive relief for our healthcare plans, [we] will continue to look for opportunities to fix this egregious tax on our members and their families," Mallino said.

Labor unions have spent months complaining the new law will drive up the costs of certain health plans that are jointly administered by unions and smaller employers.

The White House has rejected a broader request that union members in those plans be eligible for federal subsidies.

Unions and many business groups also have been complaining about reinsurance fees, which start next year at $63 per person for everyone who has coverage. The fee drops to about $40 a person in 2015 and less the following year.

The temporary fee is designed to raise $25 billion over the next three years. The money collected is intended to provide a cushion for insurers from the initial, hard-to-predict costs of covering previously uninsured people with medical problems.

But unions and large employers argue they shouldn't have to pay the fee because they won't benefit from the fund.

Utah Republican Sen. Orrin Hatch, ranking member on the Senate Finance Committee, said he is suspicious of the administration's motives.

"It certainly looks like the Obama administration is looking at a special deal for unions, which is deeply concerning given the problems that all Americans are facing due to Obamacare," Hatch said.

Gretchen Young, senior vice president for health policy for the ERISA Industry Committee, a group that represents large employers on benefits issues, said it would be "very unfair" to single out one group of employers who are contributing money.

The White House did not return calls for comment.

The Associated Press contributed to this report.

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