Earlier this week, the Big “I” urged Congress to provide relief from the impending 40% “Cadillac” tax on employer-sponsored health coverage before the end of this year. The Big “I” joined 35 organizations, representing thousands of employers which provide quality, affordable health coverage to more than 178 million Americans, in writing a letter to Congress about this issue. 

In 2015, Congress acted to protect Americans from the “Cadillac” tax by delaying it for two years, from 2018 until 2020. While Congress delayed the effective date of the “Cadillac” tax, the policy is already having an adverse impact. Many employers determine benefits up to two years in advance. These employers are already restructuring their health care benefit offerings to avoid the future tax. If the “Cadillac” tax is not repealed, many employers will be forced to make additional benefit modifications. Further, employees will be hurt by higher copays and deductibles and lower Health Savings Account contributions. 

While the “Cadillac” tax ostensibly was intended to target only high-value plans, more modest plans are projected to trigger the tax due to the health costs of the workers and families covered by the plans. In reality, the tax unfairly and disproportionately affects middle-income Americans, women, seniors and working families. Moreover, small businesses would also be heavily penalized as they would potentially be forced to choose between paying the tax or reducing benefits for their employees. 

In other Affordable Care Act-related news, Reps. Billy Long (R-Missouri) and Kurt Schrader (D-Oregon) recently introduced bipartisan legislation, H.R.4575, the “Access to Independent Health Insurance Advisors Act of 2017,” with strong Big “I” support. The bill would clarify that agent compensation is not part of the Medical Loss Ratio (MLR) formula as enacted in the ACA.

The ACA established MLR requirements for insurance carriers that went into effect Jan. 1, 2011. The law mandates that a carrier must spend at least 80% (individual and small group) or 85% (large group) of collected premiums on claims payments and “health care quality improvement.” These restrictions mean no more than 20% or 15% may go towards “non-claims costs” such as profits, advertising and administrative costs. If a carrier does not fulfill these ratios, it must issue rebates to the consumer. 

The law did not statutorily discuss how to classify independent agent compensation under the MLR formula. Although agent compensation does not benefit insurers’ bottom lines, the regulatory process included agent compensation under the “non-claims costs” category. H.R. 4575 corrects this issue by specifically excluding agent compensation from the MLR formula.

The Big “I” continues to inform legislators that since taking effect, MLR regulations have had a detrimental impact on insurance agents as well as consumers who rely on those agents for advice. This bill offers a legislative fix that would provide much-needed relief to agents and brokers across the country who continue to help consumers navigate the post-ACA health insurance marketplace.

In addition to working with Congress, the Big “I” has been advocating before the Center of Medicare & Medicaid Services, including recently submitting multiple comment letters on the issue.

Wyatt Stewart is Big “I” senior director of federal government affairs.