New Orleans It isn’t hard to understand the thinking behind the new IRS regulations to clarify the rules for employers who might be trying to hustle the margins on the Affordable Care Act and “dump” workers onto the system to save a couple of bucks. The problem is that the rules completely ignore the reality of lower wage workers and the inadequacy of the ACA to provide them with basic health care in a flawed system dependent on shoring up private insurance companies. Here’s why.
The new rules say that employers cannot fulfill their obligations by transferring money to workers to assist them in enrolling by paying their premiums and cost-sharing. The IRS has effectively determined that so-called “employer payment plans” make employer contributions taxable and do not qualify to prevent penalties for not providing employee health insurance. Part of this is based on an assumption that may hold true for large scale, legacy employers, but is non-existent in the service industry where so many lower wage workers are employed. As Robert Pear writes in the Times:
When employers provide coverage, their contributions, averaging more than $5,000 a year per employee, are not counted as taxable income to workers. But the Internal Revenue Service said employers could not meet their obligations under the health care law by simply reimbursing employees for some or all of their premium costs.
As Local 100 of the United Labor Unions bargains with large regional and national healthcare companies on units with hundreds and thousands of workers, we grapple with this problem continuously. These employers offer health insurance but historically the premiums have been so high for workers making less than $12.00 hour that participation was minimal, certainly less than 10% of the workforce and usually less than 3% of the workers, most of whom were confronting health issues so were willing to sacrifice paychecks for health coverage. Now companies have giant loopholes which allow them to qualify their plans by reducing the premiums to less than 9.5% of income but putting no limits on the level of the deductibles, which are often ranging over $5000, effectively meaning that the workers in normal circumstances will be paying for so-called health insurance that will give them virtually no benefits. All of these workers would be better served by accessing the marketplace and they would save money doing so because they would access subsidies and cost sharing support. Because the Act in its current form is largely an insurance company support mechanism rather than a comprehensive health care alternative, we have been desperate to convince employers to work with us to find a solution that would not cost them anymore than they have to pay, but give the workers real coverage. In state after state where the reimbursements for nursing homes, mental health and mental retardation, and other health support services have been frozen or cut, the companies aren’t sitting on extra money, so they’ve been listening, but now the mountain has become even higher to climb.
Oh, the new rules threw a scrap on the table for organizations like Local 100 and our partners who have been determined to help people enroll in Obamacare.
In a separate rule, the administration prohibits states from imposing onerous restrictions on insurance counselors, who educate consumers and help them enroll in health plans. Under the rule, states cannot establish standards that impair the counselors’ ability to help consumers or to perform other tasks required by federal law.
So, states will not be able to block the work of navigators, though unfortunately navigators will be forced to tell lower waged workers that their options are in many cases somewhere between bad and non-existent in service sector jobs. The IRS regulations are meant to prop up private health insurance companies with more robust employer participation, but are presuming a workforce from the 1950’s, not the dominant lower waged, service sector employment of the 21st century.
This isn’t going to end well for lower wage workers and their families.