Market News
Repeal of Free Choice Vouchers
April 26, 2011
Many employers are breathing a deep sigh of relief now that Congress has passed, and the President has signed, appropriations legislation that will “undo” several provisions contained in the Patient Protection and Affordable Care Act. Most significantly, the legislation repeals health care reform’s free choice voucher provisions. These vastly unpopular provisions were to go into effect in 2014, and generally would have required plan sponsors of group health coverage to provide cash to certain employees, in the form of vouchers, for the purpose of buying health coverage through an exchange. The cash provided by the employer was to be equal to the contribution that the employer would have made to its own plan, and if the cash provided exceeded the premium value for the exchange plan purchased, the employee could keep the remaining unused money as taxable income. Although the vouchers only applied to certain employer group health plan members with household incomes at or under 400% of the Federal Poverty Level, many employers were highly concerned about the long term implication of these vouchers on their health plan benefit design and cost.
Another component of this new legislation includes the cancellation of more than one-third of the funds for the Consumer Operated and Oriented Plan (CO-OP) Program. This CO-OP program contains a requirement that the Government Accounting Office (GAO) audit and submit a report to Congress on annual limit waiver requests. The report identifies the number of waivers approved and denied, along with the reasons for the decision.
The President has also signed separate legislation that repealed the expanded Form 1099 information reporting rules that were also enacted as part of health care reform. In addition to the 1099 repeal, this other legislation also contained changes regarding repayment of the premium assistance credit.
