Health Insurance

A closer look at the recently-proposed changes to health insurance mandates in Massachusetts.

In an effort to control skyrocketing healthcare spending, which now represents 40 percent of the Commonwealth’s overall budget, Gov. Charlie Baker recently proposed significant changes to current health insurance laws in Massachusetts. One of the most dramatic is the intention to fine employers who do not provide their employees with health insurance $2,000 per employee/per year.

In many ways, Baker’s proposal returns Massachusetts to the 2006 Mass. HealthCare Law, which mandated that all companies with more than 10 employees must provide healthcare insurance. The 2006 law required employers to file quarterly “Fair Share Contribution” reports to document that they were offering “adequate” health insurance coverage. Companies who were found not to be in compliance were fined $295 per employee.

In addition to the much higher per-employee penalty – $2,000 vs. $295 – the new proposal differs from the 2006 law in two other key ways.

Unlike the earlier version, Baker’s proposal establishes a minimum threshold of employee participation. If less than 80 percent of employees are not enrolled in the company-offered healthcare insurance, fines would be levied against the employer. It is important to note that the minimum threshold portion of the proposal does not make an exception for employees who are covered under a spouse’s or parent’s plan.

The second notable difference between Baker’s proposal and the 2006 law is that, while the earlier mandate included a required employer contribution, the latest version sets it at a higher minimum. In ’06, the required minimum employer contribution was 33% of the annual premium. The new law would raise that contribution to a minimum of $4,950 per year toward the total annual premium for fulltime employees (those that works more than 35 hours per week).

Reaction from business groups within Massachusetts to the proposed changes was swift and almost entirely negative.

“On the surface, it looks like a tax especially for small business. They already have the highest premiums not only in the state, but probably in the country,” said Jon Hurst, president of the Retailers Association of Massachusetts

Rick Lord, the president of AIM – the largest employers’ association in Massachusetts, informed the Baker administration that they will oppose the per-employee assessment.

“Assessing employers $2,000 per employee does not seem to address the problem in any meaningful way,” said Lord, while also asserting that employers are dropping coverage or employees are not signing up because health insurance is too expensive.

Several important questions remain to be answered: How will part-time or seasonal employees be counted? What will the compliance reporting look like? Will affordable small group plans be offered through the Health Connector?

We’ll be following this issue closely and providing updates as they become available.