Businesses get waivers to opt out of health care mandate

Nearly 20 businesses with Las Vegas ties have obtained waivers exempting them from an insurance-coverage mandate in the 2010 Affordable Care Act.

It’s hard to determine how many locals fall under the waived plans, though, because few local operations would discuss the exemptions.

Waivers are temporary and are granted a year at a time to businesses, labor groups and government agencies that say they can’t offer employees affordable insurance based on the reform law’s mandates.

Allowing some to opt out of the national health care program has proven controversial nationwide. Detractors say the waiver-granting process isn’t transparent and because exemptions are going mostly to large businesses and labor unions, they smack of favoritism. There’s even a “Where’s My Waiver” movement encouraging people to seek exemptions from individual insurance mandates in the Affordable Care Act.

Debate over the waivers isn’t as pitched in Las Vegas, though the number of area businesses with exemptions is growing.

The Palms received a waiver on Jan. 12 affecting 569 employees, but the company declined to comment on the exemption. Mission Linen Supply, a California company that does big business in Las Vegas providing hotels with clean bedsheets, won a waiver on Nov. 23 involving 541 workers, but the company didn’t respond when asked why it applied for the exemption and how many employees are affected.

Sporting goods retailer REI, department store Dillard’s, eatery Jamba Juice and O’Reilly Auto Parts also hold waivers. None would discuss the number of local workers affected.

Just two companies with local ties — restaurant chains Ruby Tuesday and Olive Garden and Red Lobster parent Darden Restaurants — commented on their waivers. Both said they needed the exemptions to continue offering employees affordable health insurance.

Nor did many local resort operators go on the record before press time to say whether they would seek waivers.

Only MGM Resorts International commented, with a spokeswoman saying the company “never even considered” seeking a waiver because it doesn’t offer the low-benefit insurance plans that require exemptions from coverage limits.

Blame the reticence on controversy surrounding the insurance-reform law, said Larry Levitt, a senior vice president with the Kaiser Family Foundation, a California nonprofit that studies health care trends and policies.

“It’s become a real lightning-rod political issue. It’s gotten tied up in the larger politics of the health-reform law and attempts to repeal it,” Levitt said.

But there’s nothing unseemly about the waivers, Levitt added. The federal government is offering them, after all, so it’s not like businesses are sneaking through loopholes or breaking the law. Waivers merely provide a “safety valve” to avoid disrupting coverage too much up until 2014, when new consumer protections kick in, he said.

At issue are mini-medical plans, or low-cost policies for workers who can’t afford traditional coverage. The plans don’t offer many benefits, but they do carry a low cost.

McDonald’s Corp., for example, offers employees a plan that costs $14 in weekly premiums and pays $2,000 a year in benefits, The Wall Street Journal reported in October. A separate plan charged $32 a week in premiums with an annual payout of $10,000. The idea? To help lower-earning employees cover routine care. Without mini-med plans, some workers couldn’t afford health insurance at all, employers say.

The problem, according to officials at the U.S. Department of Health and Human Services, is that mini-med plans don’t help if a worker runs up major medical expenses due to serious illness or an accident. So Congress banned mini-med plans in the Affordable Care Act, prohibiting annual coverage caps in 2014 and beyond. Until then, the payout floor gradually rises. In 2011, employers must offer insurance guaranteeing at least $750,000 in annual coverage. The cap moves to $1.3 million after September, and $2 million in 2012 and 2013.

That kind of coverage simply isn’t affordable for some employees, businesses say. They’re applying for waivers that exempt them from the mandate and let them keep their mini-med plans.

That’s the case with both Ruby Tuesday and Darden.

Florida-based Darden makes insurance available to all employees the day they start, said spokesman Rich Jeffers. The waiver will allow the company to keep providing coverage as health reform phases in over the next three years, he said. The company doesn’t track insurance participation by market, so Jeffers couldn’t say how many local workers buy the company’s affordable insurance plans.

At Maryville, Tenn.-based Ruby Tuesday, hourly employees can purchase insurance through the company regardless of how many hours a week they put in, spokeswoman Meredith Hammond said. The chain’s waiver applies to coverage for more than 3,200 workers, though Hammond didn’t specify how many of those employees live in Southern Nevada.

“The premiums for a full medical plan are more than this group of employees could reasonably afford,” Hammond said in an email. “Since the insurance exchanges that the government is proposing are not yet operational, it was our concern that these employees would be without viable medical coverage had we not obtained a waiver for the plan.”

Darden and Ruby Tuesday qualified for waivers in the program’s early days, back in October. Just 30 businesses and labor groups held waivers that month; by May 13, nearly 1,400 entities, including at least 17 businesses with a Las Vegas presence, had waivers on plans covering roughly 3 million Americans.

Those numbers will grow, Levitt said.

It’s likely that nearly all current waiver holders will ask to renew their exemptions in coming years, and as those annual benefit limits increase, they’ll probably be joined by additional businesses seeking first-time waivers.

Ideally, once 2014 arrives, the lower-income workers who typically sign up for mini-med plans will qualify for subsidies to help them buy health insurance in a market with more options, including state exchanges with cheaper plans, Levitt said. Businesses would then no longer enjoy coverage exemptions.

Contact reporter Jennifer Robison at
jrobison@reviewjournal.com or 702-380-4512.