Retiree Medical Supplemental- Obamacare, Refundable?

[Bagbelt]

I really don't think anyone knows yet. There are court challenges already filed (and probably more to come as people finally see the final last approved amended copy of the bill).

Plus, November 2010 isn't that far away. Given the number of Democrats who announced their retirements or intent not to run for re-election during the last three months, I can't say that repeal is out of the question.

If AA starts refunding Supp Med, prefunding, etc, can you imagine the chaos if there's a repeal in the next three years?...

Maybe there's an opportunity for the unions to insist on putting those pre-payments into escrow until reform is actually implemented...

There isn't likely to be a repeal, neither party is popular and the chances of the minority picking up enough seats to overcome a presidential veto are slim. The mandate may be called into question, but the coverage changes will be the new third rail politically. I forget the Latin that lawyers use but the saying is no foul without law, whatever was paid into the system under the old rules isn't likely to be refundable.

 

[Boomer]

Sorry, it seems I answered the question in a later post, on another thread. In the interests of keeping things straight, I post the answers I sought here.

LINK PROVIDED:
American Airlines Retiree Medical Insurance "Grandfathered" for five years.


"...4. Freedom to keep your existing plan

This is the freedom that the President keeps emphasizing. Yet the bills appear to say otherwise. It's worth diving into the weeds -- the territory where most pundits and politicians don't seem to have ventured.

The legislation divides the insured into two main groups, and those two groups are treated differently with respect to their current plans. The first are employees covered by the Employee Retirement Security Act of 1974. ERISA regulates companies that are self-insured, meaning they pay claims out of their cash flow, and don't have real insurance. Those are the GEs (GE, Fortune 500) and Time Warners (TWX, Fortune 500) and most other big companies.

The House bill states that employees covered by ERISA plans are "grandfathered." Under ERISA, the plans can do pretty much what they want -- they're exempt from standard packages and community rating and can reward employees for healthy lifestyles even in restrictive states.

But read on.

The bill gives ERISA employers a five-year grace period when they can keep offering plans free from the restrictions of the "qualified" policies offered on the exchanges. But after five years, they would have to offer only approved plans, with the myriad rules we've already discussed. So for Americans in large corporations, "keeping your own plan" has a strict deadline. In five years, like it or not, you'll get dumped into the exchange. As we'll see, it could happen a lot earlier.

The outlook is worse for the second group. It encompasses employees who aren't under ERISA but get actual insurance either on their own or through small businesses. After the legislation passes, all insurers that offer a wide range of plans to these employees will be forced to offer only "qualified" plans to new customers, via the exchanges.

The employees who got their coverage before the law goes into effect can keep their plans, but once again, there's a catch. If the plan changes in any way -- by altering co-pays, deductibles, or even switching coverage for this or that drug -- the employee must drop out and shop through the exchange. Since these plans generally change their policies every year, it's likely that millions of employees will lose their plans in 12 months..."
_______________________________________________________________

LINK PROVIDED:
Obama To Penalize Self-Insured Companies that seek to eliminate plans or cost-shift to employees.

White House moves to keep employers from dropping insurance
By Mike Lillis - 06/14/10 08:19 PM ET

The White House on Monday outlined broad new rules designed to prevent employers from dropping health insurance benefits for their workers or shifting huge new costs onto them.
The regulations empower the administration to revoke the so-called grandfather status of businesses that shift “significant” new burdens onto employees — a considerable penalty that would subject those plans to all the consumer protections in the Democrats’ new healthcare reform law.

Unveiling the rules Monday, Health and Human Services Secretary Kathleen Sebelius told reporters that the changes will make good on one of the administration’s central promises during the contentious debate over reform: “If you like your doctor and your plan, you keep it,” she said.

Democrats exempted existing health insurance plans from a number of provisions of the new law as a concession to the insurance industry and business community. For example, grandfathered plans — those up and running when the legislation became law in March — don’t have to offer an insurance product without a cost-sharing requirement. Businesses, particularly large companies, prefer that arrangement because they don’t have to make sweeping changes to their existing plans.

The new rules say that employers can make “routine and modest” adjustments to their premium, deductible and co-pay requirements, Sebelius said, but “significant” cost hikes or benefit cuts would cost them their exempted status. The goal is to ensure that grandfathered plans “don’t use this additional flexibility to take advantage of their customers,” she said.

“We don’t want a massive shift of cost to employees,” Sebelius said.

Officials expect the new rules to have the greatest impact on the roughly 133 million employees at large companies, whose insurance offerings tend to remain more stable than at smaller businesses. Labor Secretary Hilda Solis told reporters Monday that the new rules will help “minimize market disruptions.”

Republicans, however, are not convinced. Senate Minority Leader Mitch McConnell (R-Ky.) said Monday that the rules would force more than half of the U.S. workforce out of their current health plan — which “flatly contradicts” Democrats’ promises during the debate.

“Here’s one more promise the administration has broken on healthcare,” McConnell said.

Sen. Chuck Grassley (Iowa), senior Republican on the Finance Committee, echoed that message, calling the rules “more proof” that, under the new law, “you actually can’t keep what you like.”

“Change is coming for a lot of people,” Grassley said in a statement, “whether they want it or not.”

The new rules came on the same day analysts at PricewaterhouseCoopers issued a report projecting that employers’ healthcare costs will jump by 9 percent in 2011. The authors predict that employers next year will shift more costs onto workers, hiking deductibles and replacing co-pays with co-insurance policies.

The White House was quick to push back against the report, pointing out that the employer surveys on which it was based were conducted before the Democrats’ reform bill was passed. Also, the analysts noted that the new reform law, much of which takes effect in 2014, had only a “minor” influence on next year’s cost trends.

Asked about the report Monday, Sebelius conceded that many people will wonder why all the benefits of the health reform law don’t begin immediately. Still, she added, the survey “argues the case that we could absolutely not afford to do nothing.”

“People are being absolutely priced out of the marketplace,” she said.
Source:
http://thehill.com/b...e-unveils-rules

 

[The Goose]

... snip
If AA starts refunding Supp Med, prefunding, etc, can you imagine the chaos if there's a repeal in the next three years?...

Whether you care to see it or not, both "parties" wanted this badly, but it had to be done in a way that left the Repubs plausible deniability. This mess isn't going anywhere, unfortunately.

Maybe there's an opportunity for the unions to insist on putting those pre-payments into escrow until reform is actually implemented...

The unions, especially the TWU, will do exactly that, considering there may be a way for them to get their paws on some of it.

 

[Boomer]

I received the definitive answer today:
1) AA is terminating the supplemental medical coverage for TWU active employees effective 12-31-2010, citing the mandate for removal of lifetime maximums under Obmamacare;
2) AA is terminating the supplemental medical coverage for TWU retirees effective 12-31-2013, or, when the Obamacare Health Insurance Exchanges open, whichever occurs later.

So despite the fact that I was required to join and stay current from the first eligible date, and, the terms are contained in the current TWU CBA, it appears that the TWU has again screwed the pooch in some aspect of their negotiations of my required membership in this clusterflock.

 

[MCI transplant]

<_< ------ With the mid-term elections just a few weeks off, there still may be hope that Obama's heath care may be history!

 

[Boomer]

Had we approved the last obamination of a TA: we then have been left with having voted away our retiree medical insurnace, under fifty, and still left with no socialized medicine to cover us unitl medicare/medicade run out of money.

 

[MCI transplant]

Had we approved the last obamination of a TA: we then have been left with having voted away our retiree medical insurnace, under fifty, and still left with no socialized medicine to cover us unitl medicare/medicade run out of money.

<_< ------ Well, I'd say you did "good" by voting it down!------ Now, keep in mind AA/TWU still can try to force this down your gullet with a "revised" T.A.! Just make sure you read the fine print!

 

[Bob Owens]

Prefunding is still in place, thanks to our rejection of the TA.

To my knowlegde nobody ever got a refund on supplimental medical, they got half of their prefunding back, the company kept the match.

Supplimental medical is going away as Boomer said. The company did not say what they were going to do with the $78 million thats still in the fund. Some of course would be used to pay claims until 2014 but the rest is theirs, its as if we are back to the days of the company store, except now we buy insurance instead of pick-axes and candles. Unlike prefunding they maintain that the plan was a term plan, like car insurance, thing is I never heard of a car insurance company telling its customers that if they wanted coverage when they retire they had to buy in 20 years ahead of then.

While they cant directly distrubute whats left over to lets say the Executive Incentive Fund they could use it to pay medical expenses, which really is the same as adding it to their bottom line when you think about it, but its unclear if that would offset any increased costs that would be passed onto us since we gave up the pilot cap, probably not, or they could refund it to those who paid premiums, that would be the right thing to do, but thats doubtful.

 

[Boomer]

Prefunding is still in place, thanks to our rejection of the TA.

To my knowlegde nobody ever got a refund on supplimental medical, they got half of their prefunding back, the company kept the match.

Supplimental medical is going away as Boomer said. The company did not say what they were going to do with the $78 million thats still in the fund. Some of course would be used to pay claims until 2014 but the rest is theirs, its as if we are back to the days of the company store, except now we buy insurance instead of pick-axes and candles. Unlike prefunding they maintain that the plan was a term plan, like car insurance, thing is I never heard of a car insurance company telling its customers that if they wanted coverage when they retire they had to buy in 20 years ahead of then.

While they cant directly distrubute whats left over to lets say the Executive Incentive Fund they could use it to pay medical expenses, which really is the same as adding it to their bottom line when you think about it, but its unclear if that would offset any increased costs that would be passed onto us since we gave up the pilot cap, probably not, or they could refund it to those who paid premiums, that would be the right thing to do, but thats doubtful.

Bob,
The supplemental retiree medical coverage is part of our current CBA: going from having paid 20+ years worth of the supplemental premiums and now having my retiree medical coverage dropped from $500,000.00 to $50,000.00 while still under that CBA strikes me as a Management resort to a unilateral change in the terms and conditions of the CBA.

Is the TWU International, as owner of the CBA, planning to Arbitrate the issue?

I would move that no further negotiations be conducted until we get an Arbitrators Decision: if the company and the union agreed to such poor language that would result in an arbitrary reduction of this magnitude over a contractual item, how do we trust that anything has been negotiated without the same fatal errors?

 

[Bob Owens]

Bob,
The supplemental retiree medical coverage is part of our current CBA: going from having paid 20+ years worth of the supplemental premiums and now having my retiree medical coverage dropped from $500,000.00 to $50,000.00 while still under that CBA strikes me as a Management resort to a unilateral change in the terms and conditions of the CBA.

Is the TWU International, as owner of the CBA, planning to Arbitrate the issue?

I would move that no further negotiations be conducted until we get an Arbitrators Decision: if the company and the union agreed to such poor language that would result in an arbitrary reduction of this magnitude over a contractual item, how do we trust that anything has been negotiated without the same fatal errors?

Good point, technically we cant file a grievance on what they say they are going to do so we would have to file in January for active workers. Its a unilateral change in the middle of negotiations and we would probably be able to appeal to the NMB to stop it. Clearly, since our cap for active employees has been $5,000,000 since 2001 those who paid in were paying in for Retirement, to say that they were paying for coverage beyond the $5,000,000 is a little far fetched.

 

[1AA]

I do not know if it was previously mentioned here or not but my friend who works as a gate agent told me their prefunding has ended and they will get a refund check soon. They had no option of keeping it above the age of 50.
AA just wiped out the plan totally for them. So for the guys over 50 that thought they would have it if this T/A passed it would have been a matter of time until they lost it as well. Proof is with the non union passenger service agents.

 

[xmarlin]

"So despite the fact that I was required to join and stay current from the first eligible date..."

You were never required to do anything. I think you chose to join, and that's a big difference.

 

[Veritas]

The supplemental retiree medical coverage is part of our current CBA: going from having paid 20+ years worth of the supplemental premiums and now having my retiree medical coverage dropped from $500,000.00 to $50,000.00 while still under that CBA strikes me as a Management resort to a unilateral change in the terms and conditions of the CBA.

No. Your retiree medical coverage did not drop from $500,000 to $50,000. As a matter of fact, thanks to the health insurance reform legislation there are no limits whatsoever effective with the renewal date of your policy.

Health Care Reform

Prohibition of Lifetime and Annual Limits

The lifetime limit portion of the provision, which applies to all health plans/coverage, is effective for plan years beginning on or after September 23, 2010 and prohibits the plan from imposing any lifetime limits on the dollar value of “essential health benefits.” The portion regarding the prohibition of annual limits applies to all health plans/coverage with the exception of grandfathered individual polices. For plan years beginning on or after January 1, 2014, no annual limits are permitted on “essential health benefits.” It sets up a transition period for plan years beginning before January 1, 2014 allowing “restricted” annual limits on “essential health benefits.”

The allowable annual limits for this time period are as follows: $750,000 for plan years that begin on or after Sept. 23, 2010 but before Sept. 23, 2011; $1.25 million for plan years that begin on or after Sept. 23, 2011, but before Sept. 23, 2012; and $2 million for plan years that begin on or after Sept. 23, 2012, but before Jan. 1, 2014.

 

[Bob Owens]

I do not know if it was previously mentioned here or not but my friend who works as a gate agent told me their prefunding has ended and they will get a refund check soon. They had no option of keeping it above the age of 50.
AA just wiped out the plan totally for them. So for the guys over 50 that thought they would have it if this T/A passed it would have been a matter of time until they lost it as well. Proof is with the non union passenger service agents.

Two separate issues,

Prefunding, which provided early retiree benifits plus post retiree benifits up to $50,000 and Supplimental medical, which provided addition coverage for active workers if they went over the lifetime cap and retiree coverage up to $500,000 beyond the $50,000 provided by prefunding.

When they raised the cap to $5 million it made the first part of the supplimental pretty much redundant but poeple kept it for the $500,000 when they retire, especially if they wanted to retire early. I think they raised the cap to $5 mill in 2001, so they have been paying in purely for the retirement for 9 years.

 

[Boomer]

"So despite the fact that I was required to join and stay current from the first eligible date..."

You were never required to do anything. I think you chose to join, and that's a big difference.


xmarlin,

The terms and conditions for eligibility clearly required that you begin the funding at the beginning of eligibility and continue funding it in an unbroken chain throughout your employment absent a qualifying life event: yes, expanding my retiree medical maximum from $50,000.00 to $500,000.00 was a choice but based on negotiated terms contained within my CBA.

If the company and the union represented something to me as a benefit and I paid it through a negotiated reduction in my take home pay: we have a contract.

If the company and the union now wish to change the terms and conditions of that contract without my consent: someone, other than me, needs to open up their checkbook to cover the $450,000.00 of coverage I am losing.