Voucher Provision Repealed

PUTTING PEOPLE FIRST

After much negotiation and the threat of a government shutdown the budget was passed last week.  This is good news for employers as members of Congress agreed to have the Voucher Provision taken out of the Patient Protection and Affordable Care Act (PPACA) in an effort to reduce the budget.  This provision was originally instituted last spring as part of health care reform.  Although it won’t affect the budget until 2014, this repeal removes the large burden that would otherwise have been felt by employers.

Under the provision, an employer offering health coverage for employees would have been required to provide free choice vouchers to each employee meeting two criterion.  First, the employee’s premium contribution must be between 8.0% and 9.8% of the employee’s household income, assuming such employee’s household income is less than 400% of FPL; and second the employee is enrolled in the Exchange.The voucher amount would have been equal to the amount the employer would have paid toward such employee’s coverage (individual vs. family based on the coverage the employee elects through the Exchange) with respect to the plan to which the employer pays the largest portion of the cost.  The value of vouchers would have been adjusted for age, and the vouchers would have been used in the exchanges to purchase coverage that would otherwise have been unsubsidized.  In addition, if the employee had opted for a plan through the Exchange that had cost less than the value of the voucher, the employee would have kept the difference.

Employers can breathe a sigh of relief knowing this provision is repealed.  Essentially the employer would have potentially been giving the employee an unearned raise without recourse in cases where the Exchange plan was cheaper than that of the employer.  For retailers and other employers with large numbers of low-earning workers, the cost to the employers would have been quite significant.

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