Issues: Excise Tax on Health Plans
Repeal the Unfair 40% Excise Tax on "High Cost" Health Plans
Issue: NRECA has worked to ensure that all member cooperatives have access to comprehensive, flexible and affordable health insurance programs for employees and their dependents. Electric cooperatives provide health insurance benefits to over 100,000 employees, retirees and their families. Under the federal Employee Retirement Income Security Act (ERISA), the NRECA Group Benefits Trust is a national plan that allows each member co-op to design a health benefit package tailored to its employees and retirees. Whether an electric co-op provides health insurance through NRECA or from another source, ever-rising health care costs threaten our ability to provide health insurance. We support all efforts to make health care more affordable, so that all electric co-ops can maintain these critical benefits. Reforms must also preserve each electric co-op's ability to tailor its health benefits package as currently allowed under ERISA, and should not be taxed in order to fund other government spending.
Status: Since passage of the Affordable Care Act, NRECA has been working to ensure that employer sponsored plans like ours comply with the complicated Act -- especially the devastating impact of the 40% excise tax on "high cost" plans. NRECA strongly supports H.R. 879 and H.R. 2050 in the House with over half of all House Members as cosponsors, as well as S. 2045 and S. 2075 in the Senate with over 1/4 of all Senators cosponsors to repeal the tax. Additional legislation is expected in the House & Senate.
NRECA Position: This unfair tax should be repealed as soon as possible. While the IRS will not start collecting this tax until 2018, companies of all shapes and sizes, labor unions and state and local governments are already making drastic insurance plan changes that jeopardize coverage for hundreds of millions of Americans. No co-op, whether they provide health insurance through NRECA's Group Benefits Trust or from another source, should be penalized for "doing the right thing" for their employees. Despite Congress recognizing that electric cooperative employees are in a "high risk" industry and deserve a higher threshold before being subject to the 40% tax ($11,850 (self-only) and $30,950 (self-plus)), ALL electric cooperatives in the United States could be subject to this 40% tax in the first year; not because we have "Gold-Plated Cadillac Plans," but because our employees live in rural communities where limited access makes the cost of that health care disproportionately higher than in urban areas.
NRECA's Group Benefits Trust is a not-for-profit, self-insured/self-administered trust fund that operates "at cost" like our members It utilizes group purchasing to lower drug costs and PPO provider discounts. Collaboration with our provider networks ensures that our employees can access health care where they live. All assets are used only for member employee benefits, and premiums are priced to meet expenses.
In short, taxing any part of any co-op employee's health care benefits will all leave electric cooperative families with less comprehensive health coverage and/or higher costs. Congress should focus on strengthening the employment-based system that currently covers over 100,000 electric cooperative employees, retirees and their families. Congress and the Administration should agree to immediately repeal this unfair tax for all Americans.
