AARP’s endorsement helped secure passage of President Obama’s health care overhaul. Now the seniors’ lobby is telling its employees their insurance costs will rise, partly as a result of the law.
In an e-mail to employees, AARP said health care premiums will increase by 8 percent to 13 percent next year because of rapidly rising medical costs.
And AARP added that it is changing co-payments and deductibles to avoid a 40 percent tax on high-cost health plans that takes effect in 2018 under the law. Aerospace giant Boeing also has cited the tax in asking its workers to pay more. Shifting costs to employees lowers the value of a health care plan and acts like an escape hatch from the tax.
“Most plan co-pays and deductibles have been modified,” Jennifer Hodges, AARP’s director of compensation and benefits, wrote employees in an Oct. 25 e-mail. “Plan value changes were necessary not only from a cost-management standpoint, but also to ensure that AARP’s plans fall below the threshold for high-cost group plans under health care reform.”
AARP officials said medical inflation is the main reason employee costs will be going up. The health care law is “a small part,” said David Certner, legislative affairs director.
Although the tax on “Cadillac” health care plans doesn’t take effect for years, employers are already beginning to assess their potential exposure because it is hefty: Forty percent of the value above $10,200 for individual coverage and $27,500 for a family plan. The tax is intended as a savings measure, to prod employers and workers into more cost-efficient plans.
Mr. Certner said AARP’s plans are currently under the threshold for the tax. “It’s not in anybody’s interest to move above those thresholds, not the employees’ nor the employer’s,” he said.
The 40 million-strong AARP represents people 50 and older, including retirees on Medicare and Social Security. Its endorsement of Mr. Obama’s health bill came at a critical time last year, just days before a vote on the House floor.
“The impact on AARP employees is not a factor at all in our policymaking, which is directed at the impact on our membership and on all older Americans,” said Mr. Certner.
The Obama administration argues that changes required by the law so far have only had a minimal impact on premiums. Many benefits experts agree with that assessment, but point out that the increases come on top of untamed health care inflation.
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