The recently enacted Health Care Reform may raise insurance premiums, or eliminate benefits for many couples with existing infertility treatment coverage. The new law contains an excise tax provision of 40% for so called “Cadillac” insurance plans: high cost employer-sponsored health plans. Insurance plans with infertility coverage are likely to fall into the high cost category for a variety of reasons, making it highly likely that these plans will rise in cost, or benefits will be cut. Couples trying to conceive should consider their current payroll deductions, state of employment, and union membership, to get a sense of what holds for their future. ybe-dc.com
The health care reform calls for a 40% excise tax to be paid by insurers for plans costing more than $8,500 annually for individuals, and $23,000 for non-single plans. These costs include what you contribute via payroll deduction, what your employer contributes, plus any amount that is funded by your Flexible Spending Account. Many employers pay the majority of employee insurance premiums. Consider your employer’s contribution when looking at the total cost of your plan.
A 40% tax paid by insurers is quite high.
Insurers may react in one of two ways: increasing premiums, or cutting benefits. If they raise premium, the increase may need to exceed the 40% tax because the premium increase means a subsequent tax increase. Each premium increase of 40% yields another 40% tax increase, and so on. Just one 40% premium increase means a tax increase of 56%. And that comes on top of an already “high cost” plan. Perhaps insurers will look to cut plan benefits, and premium costs in order to stay under the excise tax threshold instead.
You may be asking: what does this have to do with infertility insurance? The connection is quite direct. High cost plans are the most likely to have infertility coverage. High cost plans are often found in states with the highest level of state imposed insurance mandates. Fifteen states have some form of infertility health insurance mandate in place. These same states tend to have a variety of other mandates to cover as well. Mandates increase health insurance premiums. If your employer sponsored plan has infertility coverage, chances are good that you are in a high cost plan. Therefore, your premiums are likely to increase, or your benefits may be cut.
Health care reform and union membership combine for an ironic twist. The package was voted in on party lines: Democrats in favor, Republicans opposed. Union members lean heavily Democrat. While the excise tax on high cost plans sounds like the typical “soak the rich” Democratic platform, the reality is: Union members enjoy the richest health care plans. Unions fought hard in the past to win top-notch benefit programs for members: benefits paid almost exclusively by the employer.
Union members will bear the brunt of this excise tax. The insurers will need to pay the tax, pass costs along to employers, who will need to introduce employee (union member) cost sharing to help balance the books. Union leaders saw this coming, and negotiated exemptions for certain high risk occupations (police, firefighters, etc), along with an extended phase for union plans. If your union sponsored plan has infertility insurance coverage, move fast. Your costs may be going up, or your coverage may be cut.
Meanwhile, consider using supplemental insurance to help create maternity leave income,