3/30/10: In signing H.R. 4872 into law, the FEHBP provisions that NTEU advocated, are now final. Importantly, the integrity of FEHBP has been preserved. As you will recall from earlier Union reports, there were amendments proposed early in the process to open up FEHBP to additional groups without separate risk pools, or to require federal employees and retirees to buy their health insurance through the health insurance exchanges. Fortunately, we were able to convince the congressional committees and members of Congress to defeat or withdraw those proposals. The integrity of the FEHB program remains.

Secondly, as the Union reported last week, we opposed the excise tax on insurers from the beginning on the grounds that insurance companies would simply pass along the cost of the tax to enrollees by either raising premiums or cutting benefits. The first health care bill, H.R. 3590 included a provision calling for a 40% tax on plans with individual premiums over $8,500 and family premiums over $23,000 beginning in 2013. This measure (H.R. 4872) increases the taxation threshold to $10,200 for individuals and $27,500 for families and delays the implementation until 2018. NTEU fought to have FEHBP included under these higher thresholds. In addition, H.R. 4872 allows the thresholds to be increased more in 2018 if medical inflation has increased more than anticipated. The FEHBP’s Blue Cross/Blue Shield standard option will be used as a yardstick to determine whether the 2018 thresholds need to be increased further. After 2018, these premium thresholds would be indexed for inflation, based on the Consumer Price Index. While we oppose any excise tax, the provisions of H.R. 4872 are much better than H.R. 3590, and for that reason we urged they be included in the final law.

Third, NTEU was an early advocate of allowing FEHBP enrollees to cover dependents past the age of 22. Dependents are currently dropped when they reach 22. Under the new laws, child dependents are covered up to age 26, in other words through their 25th year, if they do not have access to another employer-sponsored health plan. There was some early concern that a technical clarification might be needed with respect to FEHBP dependents, but OPM has indicated that it is moving forward with implementing the dependent coverage provisions in time for the fall open season period. The effective date in the law is the first day of the plan year six months after enactment, or January 1, 2011, for FEHBP. It is our belief that young dependents who have been dropped on current plans will be able to be returned to the family plans. However, regulations must be written to implement all of these provisions, and we will be monitoring this closely.

Fourth, under H.R. 4872, the $2,500 limit on contributions to Flexible Spending Accounts has been delayed until 2013. While NTEU would have preferred no limit on employee contributions to this pre-tax program, H.R. 4872 will give federal employees additional years to plan for their medical expenses. We preferred the delay to the earlier enacted H.R. 3590, which would have given virtually no time to plan ahead.

Finally, the new law does not change the language NTEU sought to ensure that OPM will receive adequate resources to administer new national plans that will be available to the public. NTEU proposed the language ― which was included in H.R. 3590 ― to ensure that there would be no diminution of OPM’s core federal personnel-related functions, and to ensure that the new plans are entirely separate from FEHBP. Fortunately, that language was not changed in the newly signed law.

The comprehensive health care reform package contains many other important provisions, and NTEU will continue to provide you with more information as it becomes available. However, we wanted to update you on these critical provisions that NTEU worked on for some time.