Delta Air Lines told federal officials earlier this summer that complying with the new health care law will cost the company and its employees tens of millions of dollars a year.
Delta’s acknowledgement of the warning on Thursday came one day after another large Atlanta company, UPS, confirmed it will eliminate employed spouse coverage because of the cost of reform.
In a letter sent in June to Marilyn Tavenner, Administrator for the Centers for Medicare & Medicaid Services, Delta detailed $38 million in extra costs. It said its total health care costs will rise nearly $100 million next year if inflation is included.
The letter, which the company said was “shared” with Delta employees, was signed by Robert Kight, vice president global human resources services and labor relations for the airline. It surfaced in a Thursday blog post by WSB radio talk show host and RedState.com editor Erick Erickson, who said he’d received calls about it from Delta employees.
In the letter, Kight told Tavenner that he and other large employer representatives did not agree with her that the Affordable Care Act is “business as usual” for them.
Health care reform will result in increased costs and reduced benefits, Kight wrote. Among the key “drivers” of higher costs, he said:
— A $63 fee per covered health plan participant that employers will have to pay to help stabilize state insurance exchanges. For Delta, with about 160,000 enrolled active and retired employees and their family members, that amounts to more than $10 million in added costs next year.
— The requirement that employers cover children until age 26 on their parents’ insurance if they seek the coverage. This has added more than 8,000 children to Delta’s coverage and translates to $14 million a year in increased costs, the company said.
— The individual mandate. Delta actuaries have estimated the number of previously uninsured employees who will opt to take coverage now that it will be required. The estimated additional cost to cover them, the airline said, is $14 million a year, minus the premiums they will pay.
In a statement, Delta said Thursday: “Like many large companies, Delta faces significantly increased costs in 2014 and beyond.” Delta had $35 billion in revenue last year, with profit of $1 billion.
The high cost of health insurance is a problem that hits employees and employers alike. Visit our premium website to read more on the topic and listen to a business owner discussing how the new federal health care law affects her business and hiring.