NABIP: Eliminating the employer tax exclusion would spell disaster for employer-based health market

Image of figure surrounded by clouds indicating glloom and doom.

By Susan Rupe

The employer tax exclusion is looking attractive to some members of Congress, after the Congressional Budget Office found that eliminating it could result in nearly $600 billion in federal revenue.

But eliminating or capping the employer tax exclusion could be disastrous for the employer-based health insurance market, forcing many employers to exit the market.

That was the word from Marcy Buckner, senior vice president of government affairs for the National Association of Benefits and Insurance Professionals, during the NABIP Capitol Conference Monday morning.

"If this exclusion is capped or repealed, many employers would not be able to stay in this market.”Marcy Buckner, senior president of government affairs , NABIP

“If this exclusion is capped or repealed, many employers would not be able to stay in this market,” she said. “Eliminating or capping the exclusion also would be detrimental toward lowering the uninsured rate.”

Urging Congress to leave the employer tax exclusion alone is among the issues NABIP members will discuss with their representatives during their Capitol Hill visits this week.

Employees benefit the most from the tax exclusion because it allows employers to pay for all or part of their health coverage without those payments considered taxable compensation.

The one thing that most of these issues have in common is that they address the cost of care, something NABIP members have been asking Congress to deal with.

Site-neutral payments a priority

Site-neutral payments is one cost-of-care issue and is a new legislative priority for NABIP, Buckner said. Site-neutral, she said, means that the cost of care is the same regardless of where it is provided. With an increase in mergers and acquisitions in the health care market, more hospitals are buying physician practices. The result is that patients often are charged more for a procedure –- an X-ray, for example –- performed in a hospital than they would in a physician’s office.

NABIP wants Congress to require providers that own multiple facilities to charge the same amount for the same care.

Health savings accounts were created almost 20 years ago. But regulations have not kept pace with today’s changing benefits landscape. NABIP wants to change that by urging Congress to modernize the definition of an HSA-qualified high-deductible health plan to allow primary care provided before the plan deductible is applied.

NABIP supports several other HSA innovations including allowing those over 65 enrolled in Medicare to continue contributing to their HSA and allowing HSA-qualified HDHPs to cover telehealth services before reaching the deductible.

Independent Medicare agents impacted

Independent Medicare agents have been impacted by changes to federal marketing requirements aimed at cracking down on third parties who sell Medicare Advantage plans. Agents have been lumped into the definition of third-party marketing organizations for the purposes of these marketing regulations. NABIP supports legislation to exclude independent agents and brokers from the current requirement to record calls with Medicare beneficiaries.

During the COVID-19 public health emergency, Medicare beneficiaries were exempt from the requirement that they must be on active hospital admission status for three days in order to qualify for have toward the three-day mandatory inpatient stay for Medicare coverage at a skilled nursing facility. NABIP is asking Congress to allow observation stays to be counted toward the three-day inpatient stay requirement for Medicare coverage of skilled nursing care.

NABIP wants those who are moving from COBRA coverage to Medicare to be allowed to have their COBRA coverage count as creditable coverage just as employer-sponsored coverage is counted as creditable coverage. Buckner said that currently, someone moving from COBRA to Medicare is penalized. NABIP is asking for a one-time special enrollment period to allow someone to move from COBRA to Medicare without penalty.

Many Medicare beneficiaries enroll in their plan during the annual enrollment period and are locked into their Part D coverage. But when the plan year begins, they are no longer able to switch to another plan.

Medicare Advantage offers a three-month open enrollment period at the beginning of every year to allow beneficiaries to switch between plans if needed. NABIP supports creating a new Part D open enrollment period like Medicare Advantage offers.

Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at [email protected]. Follow her on Twitter @INNsusan.