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CCH® BENEFITS — 05/14/10

CRS Addresses Government Contributions For Congress Members’ Premiums

from Spencer’s Benefits Reports: Whether and how much the federal government should contribute to the health insurance of members of Congress under the Patient Protection and Affordable Care Act is unclear in the statute, but implementing regulations or an amendment to the law would “insure that contributions are provided, and at a particular level,” according to a recent report from the Congressional Research Service (CRS).

The CRS report also noted that there appears to be nothing in the language of the Affordable Care Act that precludes state or local governments from being considered employers and thus subject to the law’s employer responsibility requirements

The CRS prepared this analysis for Rep. Tom Price (Ga.) in response to his query as to whether the federal government is (1) required to pay a portion of the premiums for members of Congress and congressional staff, similar to the FEHBP, and (2) subject to the employer responsibility requirements under Sec. 1513 of the Affordable Care Act, as amended; and (3) whether state and local governments can be subject to the employer responsibility requirements, and whether imposing these requirements on a state and local government would run afoul of the Tenth Amendment.

The Affordable Care Act provides that the Federal Government “shall make available” to members of Congress and their staffs only health plans created under the reform law or offered through Health Insurance Exchanges. Once the insurance provisions of the Affordable Care Act take effect (Jan. 1, 2014), members of Congress and their staffs are ineligible for the FEHBP. Congress included this measure to make sure members of Congress and their staffs would be subject to the same health insurance markets as their constituents. Although the law does not specify terms, it seems that the federal government may provide a contribution toward Congressional members’ and their staffs’ health insurance premiums, according to the CRS. The federal government’s contribution, in this instance, will not necessarily be the same as the contributions it makes toward FEHBP premiums (currently 72% of the weighted average premium of all plans in the program, up to 75% of a plan’s premium), the CRS explained.

“Based on its ordinary meaning, one could reasonably argue that the term ‘make available’ means to provide, and that, following this line of reasoning, if the federal employer was not financially contributing to the health insurance coverage, it would not be making coverage available,” the CRS reasoned. “As Members of Congress and congressional staff may be eligible to participate in an Exchange without any assistance from the federal government, the federal government makes this coverage available by paying a portion of the premiums.”

Furthermore, the CRS notes that there appears to be nothing in the definitions of “employer” or “eligible employer sponsored plan” in the Public Health Service Act (PHSA) or in ERISA that excludes federal, state, and local governments from the Act’s “employer responsibility” requirement to provide health insurance to their workers. In fact, “eligible employer sponsored plan” is defined under Sec. 5000A(f)(2) of the Affordable Care Act to mean “a group health plan or group health insurance coverage offered by an employer to an employee and includes a governmental plan, as defined by the PHSA.

“On the other hand, it might be questioned whether the employer responsibility requirements would be interpreted to apply to the federal government since the effect of this provision would be the federal government taxing itself [in terms of any applicable penalties]….Except for employment taxes, we have found no example where an analogous federal tax has been imposed on the federal government…even if the employer responsibility requirements apply to the federal government, no assessable payment would apply if, for example, pursuant to Sec. 1312(d)(3)(D) of the Affordable Care Act, a contribution is offered that exceeds 60% of the allowed costs for plan benefits.

“In light of the employer requirements created in Sec. 1513 and the potential federal taxation of noncompliant employers, application of the employer mandate to state and local governments may face challenges alleging violations of the principle of federalism embodied in the Tenth Amendment and the doctrine of intergovernmental tax immunity because the employer mandate is enforced through the Internal Revenue Code.… A recurrent theme which one sees in the Tenth Amendment and intergovernmental tax immunity contexts is a disfavor of laws that specifically discriminate against states. In keeping with this theme, a court presented with this provision might rely upon its nondiscriminatory nature to find that it is constitutional.”

However, “based on lower courts’ use of this test [of discriminatory adverse financial impact on the state or local government], it is possible that a court would look at the extent to which the employer mandate imposes a burden upon a state’s finances.” But lacking the ability to determine “which states would be impacted, nor what the extent of that impact would be, any conclusions as to the unconstitutionality of the employer mandate under this standard would be premature,” the CRS concluded.

For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.

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