PG&E EXAMINES IMPACT OF NEW
FEDERAL HEALTH CARE LAW
PG&E recently offered this analysis of the new federal health care law and its impact on employees. This analysis is offered by PG&E Senior Vice President John Simon and does not necessarily reflect the views of IBEW Local 1245. It is reprinted here as a courtesy.
The new laws are expansive and complex. PG&E is carefully analyzing the legislation and its impact on our plans. We believe that most of the provisions in the new legislation will have minimal direct impact on the PG&E benefit plans currently in place because the laws allow our plans to be “grandfathered”—in other words, not all of the new laws’ requirements will be applicable to PG&E’s existing plans. In addition, most PG&E plans provide a higher level of benefits than the laws require, so few changes will be necessary. It is too early to understand the full impact of other provisions on PG&E, such as the “employer pay or play” mandate that will become effective in 2014. Our initial analysis indicates that the impact of this provision may be mostly administrative because PG&E currently provides extensive health care coverage.
Changes for 2010
The initial impact of health care reform is primarily financial and administrative. There is little direct, immediate impact on employees.
Financial Impact: PG&E can no longer deduct the value of the subsidies it receives from the federal government for providing prescription drug benefits to retirees with Medicare.
Administrative Impact: Our Benefits, Information Systems Technology Services and Law Department teams have already started the substantial work required to comply with the new requirements. They are updating vendor contracts and plan documents, implementing new federal reporting and filing requirements and enhancing internal systems to meet the new accounting and employee health care cost tracking needs.
Changes for 2011 through 2013
In 2011, employees and retirees will see two key changes:
* Adult children up to age 26 must be offered coverage through their parents’ medical plan if they have no access to other employer-sponsored health care coverage. This goes beyond the dependent child coverage PG&E currently offers. The earliest this provision would go into effect is January 2011. However, many details require clarification before we can communicate exactly how this change will affect PG&E plans. We realize this may be an important issue for your family, and we will provide more information as soon as we have more details.
* Starting January 1, 2011, you no longer will be able to use the Health Care Reimbursement Account (HCRA) and the Wellness Account (for non-union represented employees only) to pay for many over-the-counter expenses that are currently eligible. More detail on eligible expenses for 2011 will be available during Annual Enrollment this fall. Amounts you pay out of pocket for eligible prescription drug, medical, dental and vision expenses can continue to be reimbursed through the HCRA and Wellness Account in 2011.
Key changes you are likely to notice in subsequent years include the following:
* In 2012, your W-2 form for 2011 will show the individual value of your health care coverage.
* In 2013, the maximum before-tax amount you will be able to contribute toward your HCRA will decrease to $2,500 from $5,000.
Other provisions, including various Medicare changes, require additional guidance from lawmakers before we can determine how they will affect PG&E plans.
Changes for 2018
In 2018, companies with high-cost health plans will be required to pay a 40 percent excise tax on the value of health coverage that exceeds federally approved thresholds. PG&E may be facing this tax, so it’s important that you help us manage our overall health care costs by using PG&E’s wellness and preventive benefits. Our wellness and preventive health care programs can help you avoid serious medical conditions. Fewer serious medical conditions will reduce expensive claims, resulting in lower costs for you and for PG&E. If we can reduce our overall health care costs by adopting healthier behaviors, we may be able to minimize the excise tax.
We would much rather invest our health care dollars in health and safety than pay a tax. You can improve the quality of your life and help PG&E become the leading utility in the United States by effectively using our health and safety programs. This is why we are focusing on wellness and safety as key components of our long-term health care strategy.
If you have questions about your current benefits, contact the HR Service Center at 415-973-4357 or 800-788-2363.