RE: Final Regulations for the Health Insurance Premium Tax Credit, REG-131491-10
August 21, 2012
The Honorable Timothy Geithner
Internal Revenue Service
PO Box 7604
Ben Franklin Station
Dear Secretary Geithner:
New Yorkers for Accessible Health Coverage (NYFAHC) is a statewide coalition of 53 voluntary health organizations and allied groups who serve and represent people with chronic illnesses and disabilities for whom access to affordable, accessible comprehensive health coverage is essential to maintaining their well being.
We appreciate the opportunity to comment in response to the above-referenced final rule promulgated by the IRS and Department of the Treasury (Treasury) on May 23, 2012. We strongly support the coordinated efforts of the Department of Health and Human Services (HHS) and Treasury to implement the Patient Protection and Affordable Care Act (ACA) and make quality, affordable health insurance available to millions.
Section 1.36B-2(c)(3)(v)(A)(2) Employer-sponsored minimum essential coverage – Affordability for related individual
Under the ACA, premium tax credits are available to subsidize coverage through the Exchange for individuals and families with income between 100 and 400 percent of the federal poverty line who lack access to minimum essential coverage. Employer-sponsored coverage is considered minimum essential coverage only if it is affordable – i.e., if the premium contribution required by the employee is no more than 9.5 percent of household income.The final rule notes that future regulations will be issued with rules on determining affordability for related individuals and includes a placeholder for future rules at Section 1.36B-2(c)(3)(v(A)(2). We thank Treasury for considering changes to the proposed rule as it relates to affordability for related individuals and urge Treasury to ensure that individuals with an unaffordable offer of family coverage through an employer of a spouse or parent are eligible for the premium tax credits.
The proposed rule at section 1.36B-2(c)(3)(v)(1) would measure the affordability of employer-sponsored coverage on the cost of self-only coverage for the employee, even if the employee’s family members are also eligible for the employer plan. Under the proposed rule, so long as self-only coverage costs the employee no more than 9.5 percent of household income, the plan will be deemed affordable for the employee and all eligible family members, regardless of the actual cost to enroll the family. We believe Treasury’s interpretation of Internal Revenue Code (IRC) section 36B(c)(2)(C) (defining employer-sponsored minimum essential coverage) and its relationship to IRC section 5000A(e)(1) (providing affordability exemption from penalty for failure to maintain minimum essential coverage) was incorrect. For purposes of determining eligibility for the premium tax credit, the affordability of coverage should be based on the actual cost to eligible family members. This interpretation of affordability should apply with regard to determining eligibility for the premium tax credit and for determining if an individual is eligible for minimum essential coverage under 5000A from the individual responsibility requirement. This interpretation would best meet the intent of the statute.
Section 1.36B-2(c)(3)(v)(4)Wellness incentives and employer contributions to health reimbursement arrangements
We appreciate that the final rules commissioned future rulemaking to determine how wellness incentives should be factored into employees’ premiums for the purpose of determining affordability of their offer of employer-sponsored coverage and requested additional comments how wellness incentives affect affordability of coverage and how incentives are earned and applied. If not properly accounted for in affordability determinations, premium-based wellness incentives could force individuals into unaffordable employer-sponsored coverage, undermining the ACA’s goal of delivering affordable coverage to all individuals and families. Future guidance on this issue should clarify that the affordability determination should be calculated using the highest premium any employee could be charged under such a program.
Wellness incentive programs can vary workers’ premiums by up to 20% of the total cost of coverage (both employer’s and employee’s share) based on their achieving a set health outcome. Further, there is no limit on how much employers can vary workers’ share of premiums based on their participation in certain wellness program activities. Under these rules, existing wellness incentive programs can make employer-sponsored coverage unaffordable (based on the 9.5 percent of income threshold set under the ACA) exclusively for lower and middle-income workers who are unable to meet the wellness incentive requirement undermining the ACA’s goal of delivering affordable coverage to individuals and families to those in greatest need of health care and least able to afford an increase in their health care costs.
To avoid this, in situations where an offer of employer-sponsored coverage includes a premium-based wellness incentive, the larger premium that is assessed employees who do not meet wellness incentive requirements should always be used when determining whether an employee’s offer of employer-sponsored coverage is affordable. This could be a premium before a wellness premium discount or rebate is applied or, depending on how the incentive is designed, it could be a premium including an additional wellness premium surcharge.
Consistently using the larger premium that an individual would have to pay, assuming he or she does not meet wellness incentive requirements, is also critical to prevent premium-based wellness incentive programs from being used as a subterfuge for discrimination, in which employers only offer affordable coverage to healthier workers that meet wellness requirements and send their less healthy workers to the exchange for coverage. Such a practice would not only be a subterfuge for discrimination, it could threaten the affordability and sustainability of exchange coverage, as disproportionately less healthy individuals would seek exchange coverage.
If you have questions about these comments, please contact Heidi Siegfried at firstname.lastname@example.org or 646.442.4147. Thank you for your consideration of our comments.
Heidi Siegfried, Esq.