Update On Government Employee Benefit Loss

As I mused in my last post, one argument in Congress is not ONLY should Congressional staff receive a subsidy as they are moved out of FEHBP and into the Exchange, it has also become who else should be moved without an employer match.  According to a recent Robert Wood Johnson survey, slightly more than half of employers provide subsidized health care with an average subsidy of approximately 75%.

During the Senate debate on the Continuing Resolution, Sen. Vitter (R-LA) introduced an amendment (SA 1967) that would revoke the subsidy for Congressional personal office staff that, back in August, the Office of Personnel Management (OPM) regulations said could continue.  In addition, Vitter’s amendment would expand the class of employees covered to Congressional Committee and Leadership office staff, the President, the Vice President, and all political appointees.

The actual law (42 USC 18032 (d) (3) (D)) is very fuzzy in the area of employer share, and compelling arguments can be made on either side.  As of September 26th, more than 66,000 comments had been filed with none made available for public inspection online.  Senator Ron Johnson (R-WI) is exploring the possibility of challenging the OPM regulation if it is finalized.

OPM provided guidance, a fact sheet, and an FAQ to all House and Senate offices on the proposed regulations.  Among other items, the FAQ spells out the tax treatment, eligibility for SHOP, and in which states they must apply.  In addition, OPM recently suggested that staff NOT sign up when the Exchanges enrollment opens on October 1st pending the finalization of the regulations mentioned above.  Of note, the FAQ also spells out that if someone retires from Congressional service while in an Exchange, they are NOT eligible to go back into the FEHBP for their annuity care.  That single decision is likely to lead many to retire in December.

Sen. Vitter’s argument that eliminating the subsidy would treat everyone in the Exchange the same is valid as far as it goes.  It is true that if an employee chooses an Exchange over an employer offered plan, that employee cannot still receive the employer benefit.  The provision, Sec. 1512, is to keep the Exchanges as a last resort for those whose employers do not provide benefits, not a competitor plan with private plans that an employer is offering.  What is not said is that Members of Congress and their staffs are the only employees in the country working for an employer that provides a benefit and are REQUIRED to obtain health care in an Exchange.

Companies that currently offer subsidized health care do so as a competitive advantage when trying to recruit the best workers.  Given that pay is low and hours long, a subsidized health benefit is one of the few enticements that Members of Congress can offer to prospective and current staff.

That sound you are hearing is the clicking of keyboards all over Capitol Hill as staff polishes their resumes.

Harkins_100x100Mark Harkins is a Senior Fellow at the Government Affairs Institute.

E-mail: mbh62@georgetown.edu
Twitter: @mbh1165