MANSFIELD – Town health benefits consultant Steve May outlined three fees that the town will have to be mindful of with the advent of the Affordable Care Act at a town council meeting Monday, and that there are “significant things” happening regarding the town’s health insurance plan beginning in 2015.
The first of the three fees that May outlined was the Patient-Centered Outcomes Research Tax or PCORI, which was instituted in July 2013. The fee – which is scheduled to end in 2019 – charges $2 per member per year, equating to a cost of about $3,000 for the Mansfield insurance pool.
The second fee May discussed in his presentation to the council was the Transitional Reinsurance Subsidy, a component of Obamacare instituted on Jan. 1, 2014, in an effort to stabilize insurance premiums for newly insured high-risk individuals. The fee, which May said was the largest of the three, charges $5.25 per member per month – creating an additional cost of around $80,000 for the town – and is scheduled to run until 2016.
“This is assessed to the self-insured world it’s also assessed to the fully-insured world,” May said. “As you can see, they’re looking for billions of dollars to help fund the Affordable Care Act, and the at risk that they know are going to be part of that first join, (the reinsurance subsidy) is to help pay for that.”
The third fee that May presented to the council was the excise tax or “Cadillac” tax, which according to UnitedHealthcare “charges a 40 percent fee on health insurance benefits if they exceed a certain threshold” starting in 2018.
May said that due in large part to the town’s wellness programs, its yearly reviews and its ability to control costs, Mansfield will not reach the “Cadillac” threshold four years from now. He said Mansfield’s situation is unique in comparison to other Connecticut towns.
“Most municipalities are facing a tax, and in 2018 this shows that if all things stay equal – we don’t have bad experience – in 2018 we won’t hit the tax yet,” May said.
Along with the three taxes, May also addressed the issue of affordability, the potential penalties that the town could trip if its insurance plan isn’t affordable for everyone and the need for the town to provide insurance to “substantially all” – defined as 95 percent – of its employees.
“If someone leaves Mansfield’s plan and goes to the exchange and receives a subsidy, and it’s deemed that you’re not offering to substantially all of your employees, there’s a penalty of $2,000 for everyone that’s eligible for benefits,” May said. “And as we’ll see, that can be significant, but that would be $2,000 times all 1,100 eligible, something like that. So that could be hundreds of thousands of dollars, even millions for Mansfield.”
Deputy Mayor Paul Shapiro asked May if a system could be set up to monitor if Mansfield was close to tripping a penalty and as a result being forced to pay a fee.
“Could you build something in so that if we are in the neighborhood of approaching tripping a penalty that we could do something about it?” Shapiro said.
Assistant Town Manager Maria Capriola said the town has started to develop strategies in an effort to avoid tripping penalties, most notably strategies ensuring that all town employees who work 30 hours or more per week are fully insured – another provision of Obamacare scheduled to be implemented next year.
“We’ve already engaged the people in those departments with our payroll administrator and set up a system,” Capriola said. “We sort of did a trial run, if you will, to identify who’s actually going to hit [30 hours per week] so we would have a good sense, and generally our folks are self policing pretty well.”
This story was written as an assignment for Newswriting II, a journalism course at UConn. The assignment required us to attend a Mansfield Town Council meeting, take notes and write a story about an issue raised at the meeting. This story was not published in any news outlets.