Lawmakers move to block ACA union exemption

Originally posted November 22, 2013 by Ilyse Wolens Schuman on

Senators John Thune (R-S.D.), Lamar Alexander (R-Tenn.) and Orrin Hatch (R-Utah) introduced a bill (S. 1724) on Tuesday that would prevent the Obama administration from exempting multi-employer health plans from a $63 reinsurance fee that the Affordable Care Act will impose on each enrollee in self-funded and fully insured health plans beginning 2014 through 2016. Unions — whose members typically rely on multi-employer health insurance plans — have been vocal in their criticism of provisions of the ACA.

The reinsurance fee established under ACA Section 1341 was designed to mitigate the risk to insurance companies for signing up too few enrollees in the ACA exchange plans or of signing up too few young and healthy individuals in the plans. On October 30, 2013, the U.S. Department of Health and Human Services published a rule finalizing a number of policies related to the implementation of the ACA, including provisions regarding the reinsurance fee. In the final rule, the agency stated that it intends to propose further rulemaking that would exempt “self-insured, self-administered” group health plans from the requirement to pay the reinsurance fee for the 2015 and 2016 benefit years. The proposal is widely viewed as a carve-out for multi-employer plans.

Senator Thune released the following statement: “Unions should not be granted a special exemption from PPACA’s reinsurance tax just because the president fears further union backlash on his signature law.” To this end, the bill would prevent the administration from providing the fix that would exempt union plans from the reinsurance tax. Specifically, the bill includes the following provision:


Notwithstanding any other provision of law, the payments required to be made by health insurance issuers and third party administrators (on behalf of group health plans) under section 1341(b)(1)(A) of the Patient Protection and Affordable Care Act (42 U.S.C. 18061(b)(1)(A)) shall be applied equally to all such issuers and administrators and may not be waived on behalf of any such issuer, administrator or group health plan.

The legislation follows a letter sent by the bill’s sponsors to the White House Office of Management and Budget stating that the regulation in question “makes no justification as to why union members should be exempted from this fee while other similarly situated organizations (and ultimately, their beneficiaries) must continue to pay it.”

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Used with permission by Ilyse Wolens Schuman, co-chair of the Workplace Policy Institute at Littler Mendelson. She can be reached at


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