Access to Health & Life Insurance Benefits

Families

Health Care

Access to Health & Life Insurance Benefits

If health insurance benefits are offered in the workplace (whether public or private), employees should be able to choose to extend benefits to people living in their households if non-employee benefits are offered in the plan.

Proposal: Revise the Regulations Governing Health Insurance Coverage for State Employees to Offer Coverage for An Otherwise Qualified Adult Residing in the Employee’s Household

(OFFER STATE EMPLOYEES THE CHOICE OF INCLUDING IN COVERAGE EITHER A SPOUSE OR AN OTHERWISE QUALIFIED ADULT DOMICILED IN VIRGINIA AND LIVING IN THEIR HOUSEHOLD)

PROPOSED LANGUAGE[1]:

Under the Other Qualified Adult (OQA) program, an employee who does not already enroll a spouse in the health plan may enroll one adult individual for benefit coverage if all of the following eligibility criteria are met:

The employee is eligible for benefits;
The Other Qualified Adult, at the time of proposed enrollment, i) shares a primary residence with the employee and has done so for the previous 12 continuous months; ii) is domiciled in the Commonwealth of Virginia; iii) is not employed by the employee; and iv) is not a boarder, renter or tenant of the employee; and
The employee pays the full cost of extending coverage to the OQA.

Dependent children of an Other Qualified Adult may also be enrolled if they meet the eligibility requirements and the employee agrees to pay the cost of insurance.

POSITIVE POLICY REASONS FOR OFFERING SUCH COVERAGE

· This proposal would permit employees an additional choice of health insurance coverage available at their expense.

· If offered, health insurance coverage would be available to some adults and children who might otherwise be uninsured.

· Offering such benefits will bring state agencies and higher education institutions in line with prevailing benefits practices of employers of choice in Virginia and across the nation, and enhance recruiting and retention of the best and the brightest. 66% of the top private employers in Virginia offer such benefits (see, Workplace Fairness Policies of Virginia’s 50 Largest Employers). Almost 60% of the Fortune 500 companies choose to offer such expanded benefits to their employees. At least 12 Virginia-based Fortune 500 or Fortune 1000 companies offer such benefits including: Altria Group, Capital One, CarMax, Dominion Resources, Gannett, Genworth, MCI Group, MeadWestvaco, Owens & Minor, Philip Morris USA, SprintNextel, and SLM Corp. (Sallie Mae) (see, Workplace Fairness Policies of Virginia-Based Businesses on the Corporate Equality Index and the 2010 Corporate Equality Index, www.hrc.org).

· Sixteen (16) state governments, including Alaska, Arizona, Connecticut, Maine, New Jersey, New York, Pennsylvania, Rhode Island and Vermont, and one hundred and fifty two (152) city and county governments offer domestic partner health insurance benefits to their employees. Included among the local governments offering benefits are 9 cities and counties in Maryland, including Baltimore and several localities in the DC area, 5 in North Carolina and the City of Atlanta and close in counties.

· Three hundred and eight (308) colleges and universities offer expanded benefits either to domestic partners specifically or to otherwise qualified adults, including Hollins, Sweet Briar and Washington and Lee in Virginia and public and private research universities such as Brown, Columbia, Cornell, Dartmouth, Emory, Georgetown, George Washington, Harvard, Johns Hopkins, Michigan State, NYU, Ohio State Penn State Princeton, Stanford, SUNY Vanderbilt, Wake Forest, Yale, and the Universities of Alabama, Alaska, California, Chicago, Colorado, Connecticut, Florida, Illinois, Indiana, Louisville, Michigan, Minnesota, Oregon, Pennsylvania, Pittsburgh, and Washington. In addition, Phi Beta Kappa has announced that whether a university offers benefits will be considered as a factor in chapter recognition.

· Of Fortune Magazine’s “Top 20” companies to work for, 18 offer expanded health insurance coverage to employees.

NO PUBLIC COST

· Concerns about costs of this proposal, due largely to perceived consequences of self-selection, are unfounded. The proposal is based on the requirement that the full premium cost be paid by the employee (in contrast to the cost to the employee for current coverage for spouses and family members).

· Limited numbers of employees will choose this benefit. The fact that the value of any Otherwise Qualified Adult coverage would be taxable to the employee as ordinary income has had a significant downward effect on the numbers of employees who choose this benefit. In addition, the requirement that the Otherwise Qualified Adult be domiciled in Virginia and in continuous residence in the household of the employee for 12 months will limit coverage to persons who are bona fide residents of employee households and taxpaying Virginians.

· Premium rates for this coverage would be negotiated with insurers just as coverage for any other employee health insurance offering.

· Experience has shown that the cost of coverage for any persons who would qualify as Otherwise Qualified Adults would be de minimis, even if not borne entirely by the employee. For example, studies by HR consultants and professional associations have found that the effect on employer benefit costs of domestic partner coverage ranges from no increase to less than 2%. A 2005 Hewitt study found that 65% of employers reported that benefits extension added less than 1% to benefit costs and 88% reported costs of less than 2%. A 1997 study by the Society of Human Resource Management found that 85% of employers experience no cost increase. Finally, the Congressional Budget Office has estimated that extending such benefits to federal employees would increase the cost of benefit programs by less than one-half of 1%. When Arlington County offered expanded benefits to employees through its self-insured program, the financial value of the premiums paid by the two dozen employees who chose the benefit exceeded the cost of coverage.

· Private corporations whose benefit packages provide this election either pass any cost along to their employees through premium charges or to absorb it as a business decision because the ROI of their decision was favorable.

[1] This language is carefully crafted to conform to the opinion to President John Casteen rendered by Attorney General Bob McDonnell upholding the University of Virginia’s plan to offer gym benefits to employees and one adult in their households. The key to the benefit plan’s validity is that it does not involve “relationship recognition” that could be precluded by the Virginia marriage amendment.

Download the Otherwise Qualified Adult Proposal

Further background information on access to health and life insurance benefits in Virginia

It has become commonplace for private employers and many public employers to extend health care coverage to employees and to those living in their households whom they wish to insure without limiting such coverage to those related by blood or marriage.

Almost 60% of the Fortune 500 companies choose to offer such expanded benefits to their employees. At least 12 Virginia-based Fortune 500 or Fortune 1000 companies offer such benefits including: Altria Group, Capital One, CarMax, Dominion Resources, Gannett, Genworth, MCI Group, MeadWestvaco, Owens & Minor, Philip Morris USA, SprintNextel, and SLM Corp. (Sallie Mae). Click here to download a list of companies headquartered in Virginia that offer these benefits (report generated by HRC employer database).

In addition, sixteen (16) state governments, three hundred and eight (308) colleges and universities, and one hundred and fifty two (152) city and county governments offer health insurance benefits to their employees. Included among the local governments offering benefits are 9 cities and counties in Maryland, including Baltimore and several localities in the DC area, 5 in North Carolina and the City of Atlanta and close in counties.

The growing and substantial experience with expanded benefits offered prove that any additional cost of such benefits is minimal. The Employee Benefit Research Institute (EBRI) in Washington D.C. reports that for 85 percent of companies, it adds less than 1 percent to the total cost of the health-care benefit. Less than 1.2 percent of eligible employees enroll in coverage for domestic partners.

Other studies by HR consultants and professional associations have found that the effect on employer benefit costs ranges from no increase to less than 2%. A 2005 Hewitt study found that 65% of employers reported that benefits extension added less than 1% to benefit costs and 88% reported costs of less than 2%. A 1997 study by the Society of Human Resource Management found that 85% of employers experience no cost increase. Finally, the Congressional Budget Office has estimated that extending these benefits to federal employees would increase the cost of benefit programs by less than one-half of 1%.

Arlington County's experience bears out the reliability of this research. According to testimony offered by Senator Mary Margaret Whipple before the Virginia legislature in 2008:

"Arlington made the economic decision to offer this benefit several years ago and the County's experience showed that the cost of doing so was negligible. In fact, the premiums paid by the two dozen employees who took advantage of the benefit exceeded the amounts we paid out. While we offered the expanded benefit, although relatively few employees used it, it was an important recruiting device. Unfortunately, a court ruling prohibited Arlington from continuing to offer this benefit without the passage of legislation by the General Assembly."

Whipple went on to explain that failure to offer such expanded benefits is not a cost free choice:

"Failure to permit locally elected officials the autonomy to make employee benefits decisions that best serve their employees and their localities is NOT a cost free choice. When our local governments cannot compete in the marketplace with benefit packages that compare favorably with those offered in the private sector or by other localities in other jurisdictions, we and our taxpayers incur a cost for that failure in increased costs associated with employee turnover, including advertising, head hunter fees and training costs, not to mention lost productivity.

With competition in Northern Virginia and other urban areas of the Commonwealth being extremely intense for many skilled labor categories such as engineers, health care and high-tech workers, local governments need this tool to compete with both private employers and localities in neighboring jurisdictions for the best employees."

Virginia Law

Health Insurnace Laws Thanks to legislation enacted by the 2005 General Assembly and signed into law by former Governor Mark Warner, private, employer-based health insurance can be offered voluntarily to individuals living in the same household as an employee by small businesses and their insurers covered by Virginia insurance laws. The new law went into effect on Friday, July 1, 2005.

At present, however, the state government offers no such benefits to its employees, public colleges and universities have no explicit authority to do so, and any county, town or city government that would like to extend health care benefits to additional members of an employee’s household are prevented from doing so by a Virginia Supreme Court interpretation of the Dillon Rule which holds that local governments are not allowed to make changes not expressly authorized by the General Assembly (Arlington County Board v. Virginia).

This means that, unlike many of their peers in the private sector, state and local government employees cannot seek to add mothers, fathers, adult children, partners, or other persons living in their homes to their health insurance plan even where state agency heads, college officials or local government officials would like to offer these valuable health insurance benefits to their employees.

Tools to Use

Add your company to the list of Virginia businesses that offer expanded benefits, write This e-mail address is being protected from spambots. You need JavaScript enabled to view it
Talk with your delegate and senator about the importance of allowing state and local government agencies to offer expanded health insurance benefits to employees and people living in their households.
Seek to have your town or city council or county board adopt a resolution in favor of legislation giving them the authority to offer expanded benefits. Write to This e-mail address is being protected from spambots. You need JavaScript enabled to view it for more information.
Seek to have the faculty, president and/or Board of Visitors of your university or college adopt a resolution calling for expanded benefits.
Prepare to support legislation that would permit the state government, public colleges and universities and/or local governments to offer expanded benefits.
Encourage your company or organization to offer expanded benefits if they do not already do so.