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The Pioneer organization wanted to alert you
to two proposed changes in the current
efforts to reform the health care system
that may have an impact on you.
The health care legislation now being
developed from the reforms passed by the
U.S. Senate and House of Representatives
might soon be headed for a final vote in
Congress and then on to President Obama to
be signed into law. You may want to quickly
contact your senators and congressmen to
urge them to
not
change the Retiree Drug Subsidy Program and
to
carefully consider the excise tax
proposal.
The first provision affects the Medicare
Part D subsidy for prescription drug
coverage, which has significant implications
for both retirees and employers
participating in the Medicare Part D program
to provide needed drugs.
The provision calls for the elimination of
the tax free status of the employer subsidy.
For Companies that still offer retiree
prescription drug coverage today, the
government provides a 28 percent subsidy to
help offset the financial burden of that
coverage. The subsidy was intended to help
employers continue to offer prescription
drug coverage so that these retirees would
not have to use the Medicare Part D program.
However, proposed changes affecting the Part
D subsidy will make it less valuable to
employers and, as a result, may have
significant implications for both retirees
and employers.
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As a result of this change, employers
may have to drop or revamp retiree
prescription drug programs, potentially
moving more retirees into the
government's program. Such movement of
people from retiree plans will generate
costs rather than revenue to the federal
government, thus adding to the federal
deficit, rather than financing health
care reform
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Under federal accounting rules (FAS
109), if the tax deduction for the costs
of providing prescription drugs is
permanently denied, companies will be
required to reflect the entire value of
that tax deduction for the entire
lives of their beneficiaries as a
loss immediately. For some
companies, this loss will measure in the
hundreds of millions of dollars and
place
the long-term impact of the new tax
liability on their books, which could
impact their stock prices.
The second provision taxes high- value
health plans, which could result in
diminished coverage for both active
employees and retirees.
It was intended to address only
excessive or luxury health benefits
plans, it will, in fact, impact the
health plans covering tens of millions
of workers, including those in
telecommunications, manufacturing,
construction, mining, and public
sectors.
While the Congressional Budget
Office estimates that 1 of every 5
workers would be impacted by the excise
tax in 2016, the number of impacted
workers will rise over time since the
thresholds for the tax are significantly
below actual health care cost increases.
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The
tax misses its mark because it assumes that
high cost health plans have rich benefits.
It does not recognize what we know to
be true:
the cost of health plans is heavily
influenced by the age of the covered
workforce and retirees, the proportion of
covered dependents, the health status of the
covered population, and the cost and
practice patterns in the markets covered.
These two significant issues would likely
have
the
unintended effect of discouraging the provision
of employer-sponsored health coverage, thereby
undermining one of the goals of health reform
legislation and placing more of the cost and
burden of providing this vital coverage onto the
federal government.
Please learn
more about these proposed provisions
in the legislation on the Retirees
Take Action
website
and contact your senators and
congressmen with your feedback.
The time for action is now!
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