Repeal of Affordable Care Act Free Choice Voucher


As you may have read, the 2011 budget "deal" includes a section (§1858 of H.R. 1473, Department of Defense and Full-Year Continuing Appropriations Act, 2011) that repeals the Affordable Care Act's "free choice voucher" requirement for certain employer-sponsored group health plans.

Who opposed the change? Why?

The Act contains two different penalties. One imposes a penalty on employers that do not offer employer-sponsored group health plan coverage to all full-time employees (that penalty is not affected by free choice vouchers).

The second penalty applies to an employer who offers a plan to all full time employees, but the plan is not "affordable." A plan is not "affordable" if either (1) the employee's share of the single coverage premium exceeds 9% of the employee's household income, or (2) the plan's share of health care expenses (the portion of health care expenses eligible for reimbursement AFTER reduction for all employee-owed copayments, co-insurance, and deductibles) is less than 60% of the total health care expenses eligible for reimbursement.

If an employer's plan falls prey to either of these shortcomings, then the employer owes a penalty equal to $3,000 times the number of bona fide full time employees who (1) are eligible for the new tax credit subsidy that will reduce the premium the employee must pay to acquire coverage under a health plan offered on the new exchanges, and (2) actually enroll in one of those plans. To be eligible for the subsidy, the employee's household income must be less than 140% of the federal poverty level.

Note that the penalty won't be incurred if those "poor" full time employees fail to enroll in an exchange plan. In addition, prior to this repeal, if an otherwise credit-eligible employee was also eligible for a free choice voucher and enrolled in an exchange plan and used the voucher instead of the credit, the penalty would not apply to that employee.

Please see full article below for more information.

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Published In: Administrative Agency Updates, Insurance Updates, Labor & Employment Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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