US Pay or Play: Employer Mandates Resources in United States

US Pay or Play: Employer Mandates Resources

State programs and budgets are being increasingly strained as the number of uninsured citizens increases.  The uninsured are seeking public health insurance (in the form of Medicaid and other state-sponsored programs) or costly treatment in emergency rooms for ailments that preventative care might have cured.  Recently, policymakers have been debating ways to require more participation by employers in the health insurance market.  “Pay-or-play” refers to states using their tax authority to assess employers (pay) while giving them the option to avoid the fee by providing health care or coverage to their workers (play).

In the early weeks of 2006, Maryland overrode the governor’s veto of legislation passed in 2005 and established the Fair Share Health Care Fund.  This new law requires that employers with 10,000 or more employees spend at least 8 percent of their total payroll on health care for employees, or pay the difference into a state controlled fund.  Fair Share Health Care Fund Acts–often dubbed “Wal-Mart legislation”–like Maryland’s were under consideration in several states during the 2006 session.  A major question about the validity of the law was resolved on July 19, 2006, when a U.S. District judge struck down the Maryland law, stating that it was preempted by the Employee Retirement Income Security Act (ERISA).

2007 Bills

Michigan
SB 87 – Provides for collection of a fee from employers based on amount paid for health care relative to total wages paid. Committee on Commerce and Tourism

Minnesota
HB 39 – Establishes the fair share health care fund; requires employer payments to the fund. Committee on Health and Human Services

2006 Bills

Alaska
HB 449 – Would require employers with more than 2,000 or more employees to spend at least eight percent of their payroll on employee health care or pay into a state fund for the uninsured. In committee. Did not pass out of committee during regular session.

Arizona
SB 1232 – Would require employers of 100 or more in the state to reimburse the state for costs incurred by the Arizona Health Care Cost Containment System for the provision of health care coverage for their employees. In committee. Did not pass out of committee during regular session.

California
SB 1414 – Establishes the Fair Share Health Care Fund; requires for-profit employers with 10,000 or more employees to spend at least eight percent on health insurance and non-profit companies of the same size to spend six percent. If employers do not meet the mandated expenditure level, they must pay the difference into a fund to support the Medi-Cal program. Bill includes a reporting component. In committee.

SB 593 – Requires for-profit companies with 20,000 or more employees to reimburse the state for costs incurred in the public assistance programs by providing benefits to the company’s employees. In committee.

Colorado
HB 1316 – Would establish the Colorado Fair Share Health Care Cash Fund. Requires both for-profit and non-profit employers with at least 3,500 employees to spend 11 percent of their total payroll on health care. If this threshold is not met, the employer must make up the difference. Failed.

Connecticut
SB 462 – Requires retailers that do not provide health insurance and employ 5,000 or more employees to pay the state a “fair share” surcharge equal to $2.50 per hour (not to exceed 40 hours per week) per employee. In committee. Did not pass out of committee during regular session.

Florida
HB 813 – Would establish the Fair Share Health Care Fund. Non-profit employers with 10,000 or more employees would be required to spend at least seven percent of their total payroll on health care; businesses with 10,000 or more employees organized as for-profit would be required to spend nine percent. Organizations which do not met the threshold would be required to make up the difference by paying into the Fair Share Health Care Fund. Bill includes a reporting component (Identical bill 1618). Both died in committee.

Georgia
SB 579 – Establishes the Fair Share Health Care Trust Fund. Requires employers with 10,000 or more employees in the state to spend at least six percent (for non-profits) or 10 percent (for-profit companies) of total wages on health care or pay the difference to the state-controlled fund. In committee. Did not pass out of committee during regular session.

Iowa
SB 2246 Fair Share Health Care Fund; Requires non-profit employers with 10,000 or more employees to pay 6 percent of total payroll on health care; for-profit entities must pay eight percent. Includes a reporting component. Died.

HF 2430 – Creates the Fair Share Health Care Fund. Requires nonprofit employers with 10,000 or more employees in the state to spend at least six percent of total wages on health care; for-profit employers of the same size must spend eight percent. Includes a reporting component. Introduced. Did not pass out of committee during regular session.

Kansas
HB 2579 – Would establish the Fair Share Health Care Fund. The act states that companies organized in a nonprofit manner with 10,000 or more employees must spend at least six percent of their total payroll on health care. For-profit companies of the same size must spend eight percent; if organizations fail to meet the threshold, they must pay the difference into a state fund. Includes a reporting provision (Same as SB 557). In committee. Did not pass out of committee during regular session.

SB 557 – Would establish the Fair Share Health Care Fund. The act states that companies organized in a nonprofit manner with 10,000 or more employees must spend at least six percent of their total payroll on health care. For-profit companies of the same size must spend eight percent; if organizations fail to meet the threshold, they must pay the difference into a state fund. Includes a reporting provision. In committee. Did not pass out of committee during regular session.

Kentucky
HB 98 – Would establish the Fair Share Health Care Fund; requires for-profit employers with 10,000 or more employees in the state to spend at least eight percent of their total payroll on health care. Payments from companies that do not meet the minimum expenditure requirements would go to support the Kentucky Medicaid program. Includes a reporting provision. In committee. Did not pass out of committee during regular session.

HB 493 – Places the Fair Share Health Care Fund under the administration of the Cabinet for Health and Family Services; states that the purpose of the fund is to assist the Medicaid program with its costs; assesses a charge on employers with 10,000 or more employees who do not spend 10 percent of payroll on health care. Includes a reporting component. In committee.

Louisiana
SB 69 – Creates the Fair Share Health Care Fund. Requires employers with 8,000 or more employees to spend at least eight percent (for-profit companies) of total payroll on health care. Non-profit companies of the same size must spend six percent. Will not be heard in 2006 regular session. Did not pass out of committee during regular session.

Maryland
SB 790 – Would establish the Fair Share Health Care Fund. It would require large employers (more than 10,000 employees) that do not spend up to eight percent of total payroll on health insurance costs to pay into a state controlled fund. VETOED by Governor.Passed – Veto overridden by legislature January 12, 2006. Challenged in court; judge ruled 7/19/2006 that the Maryland bill was preempted by ERISA. Law will not go into effect. For more information on the Maryland bill, click here

HB 1510 – Creates the Small Business Health Care Incentive Program; states that employers with less than 10,000 employees must spend 4.5 percent of total wages on health care (3 percent for non-profit organizations) or pay the difference into a state-controlled fund. Unfavorable committee report; no further action. Did not pass out of committee during regular session.

Massachusetts
HB 4850 – Would create an act promoting access to health care. The bill is a multi-prong approach toward universal coverage. Requires all individuals who can afford to do so to maintain health insurance through their employer, a state-run program, or in the individual market; private insurance companies would be encouraged to provide lower-cost plans. The state’s Medicaid program would be increased to capture the approximately 160,000 uninsured residents who are eligible for the program but not enrolled. It eliminates the employers’ contribution to the free care pool, the state-operated fund that helps pay for the medical care of the uninsured. Employers who do not offer insurance to their workers would instead have to pay an assessment ($295 per employee per year) to a similar fund. Employers with 10 or fewer employees would be exempt. Creates the Commonwealth Health Insurance Connector; raises the age of dependency for health insurance purposes to 25, regardless of enrollment in higher education; offers tax benefits to individuals and businesses purchasing insurance. Passed 4/12/2006; Chapter 58 of the Acts of 2006. Governor vetoed portions of the bill; veto statement. Legislature overturned veto’s. For more information, click here: summary and fact sheet, presentation slides, joint rule 11A report, Health Care Access and Affordability.

Michigan
SB 734 – Would require that employers in the state with 10,000 or more employees spend eight percent of their payroll on health care or pay the difference to the state. In committee.

Minnesota
HB 2786 – Creates the Fair Share Health Care Fund; Requires nonprofit employers with 10,000 or more employees to spend 8 percent of total payroll on health care. Companies of the same size organized as for-profit entities must spend 10 percent of total payroll on health care. Penalties assessed will go to costs of medical assistance and Minnesota Care for the state’s uninsured workers. Includes a reporting provision and criminal penalties surrounding misreporting. In committee. New bill HB 3025 is also similar. In committee. HB 3143, SB 2673 similar; SF 2672 – limits set at six and eight percent. Did not pass out of committee during regular session.

Mississippi
SB 2684 – Creates the Fair Share Health Care Fund; provides that employers that do not spend a percentage of the total wages paid to employees on health insurance costs will pay to the division of Medicaid an amount equal tot he difference. Introduced Jan. 16, 2006. Died in Committee.

Missouri
HB 1463 – Requires large employers (10,000 or more employees) to spend a minimum on health care or pay a penalty. Withdrawn from further consideration.

HB 1805 – Requires employers with 7,500 or more employees to report their health care spending and number if employees to the legislature. Requires companies who do not spend the state average per person on health care to make up the difference (plus a two percent penalty for employers that are not organized as non-profit). Introduced. Did not pass out of committee during regular session.

Related bill SB 944 – Would require employers in the state with 10,000 or more employees to provide certain information regarding the amount of money spent by the employer on health care costs to the department of labor and industrial relations. Failure to provide the required information may result in a civil penalty of $250 for each day that the information is not timely reported. Did not pass out of committee during regular session.

New Hampshire
HB 1703 – Requires employers of 500 or more people to annually report their health care costs and benefit structures to the commissioner of health and human services. **NOTE: This bill ONLY requires reporting. No cash penalties for employers. Did not pass out of committee during regular session.

HB 1704 – Requires for-profit entities with 1500 or more employees in the state to spend at least 10.5 percent of total payroll on health care or pay the state the difference. Non-profit companies must spend 8.5 percent. Died

HB 633 – Requires employers who do not offer employees health insurance coverage to pay into the Employee’s Health Insurance Fund. The fee for not offering coverage is $0.50 per hour for full-time employees. No action since 2/2005. Carried over to 2006 session. Did not pass out of committee during regular session.

New Jersey
AB 2513 – Expanding Access to Health Care Act. Require nonprofit employers to spend at least six percent on health care for employees; for-profit companies must spend 8 percent. Only applies to large employers, with 10,000 or more employees in the state (Identical bill: SB 1320). 5/11/2006, combined with SB 477 (below).

SB 477 – Would require companies that have at least 1,000 employees to pay a minimum of $4.17 per hour on health care per worker (Similar bill AB 2891). AB 1705 is similar, requiring large employers with 10,000 or more workers in the state to pay a minimum wage of $9.68 an hour, with benefits totaling no less than $4.17 per hour. Both bills in committee.

New York
SB 7090 – Creates the Fair Share for Health Care Fund. Employers of 100 people or more must spend the equivalent of $3.00 per hour per employee (or the amount the legislature deems the employer’s “fair share”) on health care or pay into the state-controlled fund. Referred to Health 3/21/06.

AB 9534 – Creates the Fair Share Health Care Fund; Employers with 10,000 or more employees organized as a nonprofit entity must spend at least six percent of their total payroll on health care. Percentage for businesses not organized as nonprofit is eight percent. If companies do not meet this threshold, they must pay the difference into a state fund. Includes a reporting component. In committee; last action 3/15/06.

AB 4129 – Creates the Working New Yorkers Health Insurance Act; Requires all employers with 25 or more employees to pay at least 80 percent of insurance premiums into a health care purchasing fund for all their employees and their employees dependents. Requires that employees pay 20 percent of the premiums for themselves and their dependents, unless the employer agrees to pay more. Employees who earn less than 200 percent of the FPL are only required to pay five percent. The Civil Service Commission will then use collective bargaining power to purchase insurance coverage for all. Carryover from 2005; referred to Insurance Committee 1/9/2006.

SB 6989 – Creates the Health Care Insurance Fund. Employers must contribute $750 dollars per full-time employee per quarter if they do not offer insurance plans to their workers, of which the employer must pay at least 80 percent of the premiums. State and local governments are exempt as “employers.” The fund will be used to help the employees of companies that must pay into the fund purchase insurance. Same as A.B. 11328. Referred to Labor Committee 3/10/2006.

AB 9776 – Requires retail stores (including grocers) with 500 or more employees in the state to spend an (unspecified) amount on health care coverage for employees. The amount cannot be deducted from employee earnings. Held for consideration 6/6/06 (Similar bill: SB 6472).

SB 6644 – Requires large employers with 10,000 or more employees in the state to pay minimum wage plus a benefits package equal to no less than $4.17 per hour per employee. Benefits can include health insurance, education, life or accident insurance, etc. Referred to Labor Committee 2/6/2006.

Ohio
HB 471 – Creates the Fair Share Health Care Fund; Requires for-profit employers with 30,000 or more employees to spend a minimum of eight percent of their total payroll on health care. Nonprofit employers of the same size must spend at least six percent. Companies failing to meet the requirement must make up the difference. Includes a reporting provision (Identical bill: SB 256). Both in committee.

Oklahoma
HB 2678 – Creates the Fair Share Health Care Fund; Requires that nonprofit employers with 3,000 or more employees in the state spend at least eight percent of total payroll on health care. For-profit entities with 3,000 employees or more must spend a minimum of nine percent. Employers that fall short of this threshold must contribute the difference to the state controlled fund, which will support the Medicaid program in Oklahoma. Includes a reporting provision. In committee. Did not pass out of committee during regular session.

Rhode Island
HB 6917 – Creates the Rhode Island Fair Share Health Care Fund, requiring any employer with 1,000 or more employees to spend eight percent of their total payroll on health care coverage. If the eight percent threshold is not met in a given year, the employer is charged the difference or a penalty of $250,000, which ever amount is greater (Identical bill SB 2201) . In committee.Did not pass out of committee during regular session.

HB 6984 – Makes the Fair Share Health Care Fund the responsibility of the state treasurer and the comptroller. Outlines where the money for the fund will come from and what can be done with it. In committee. Did not pass out of committee during regular session.

Tennessee
SB 3392/HB3962 – Creates the Tennessee Fair Share Health Care Fund, requiring employers with 10,000 or more employees in the state to pay six percent (for non-profits) or eight percent (for-profits) of their total payroll to health care costs. If this threshold is not met, the company must pay the difference to the state, plus six or eight percent of their payroll, respectively. In committee. Did not pass out of committee during regular session.

HB 3354/SB 3729 – Creates the Fair Share Health Care Fund. Requires employers with 10,000 or more employees to pay no less than 10 percent of their payroll (for both non-profit companies and for-profit entities) for health care expenditures. Employers must pay the difference to a state-controlled fund if this minimum is not met. Introduced. Did not pass out of committee during regular session.

Virginia
HB 258 – Would require certain employers to report the amount spent and percentage of payroll spent on health insurance costs for employees. An employer not spending the required percentage or more would be required to pay the difference to the state. In committee. Died

Washington
HB 2517 and SB 6356 – Would establish minimum health insurance expenditure standards for certain large employers with 5,000 employees or more. A nine percent payroll tax on employers would be instituted for employers not meeting the standard. Died.

West Virginia
HB 4024 – West Virginia Fair Share Health Care Act; requires employers with 10,000 or more employees to spend a minimum of six percent (for nonprofits) or eight percent (for-profit companies) on health care or pay the state the difference. Includes a reporting component. Died. (Identical bill: SB 147) In committee.

Wisconsin
AB 860 – Requires employers with 10,000 or more employees to offer family health insurance benefits under a group insurance plan in which the employer pays 80 percent of the cost (excluding co-payments and deductibles) for both full and part-time employees. If an employer fails to meet this standard, they must pay the Wisconsin Department of Health and Family Services an amount equal to the cost incurred by society for their failure to insure workers (Identical Bill: SB 440). Failed.

SB 698 – Creates the Wisconsin Health Care Plan, establishing mandatory coverage of all private and publicly employed individuals and their dependents, exempts those eligible for Medicare. Self-employed individuals may buy into the system. Cost sharing plans include contributions from employers (flat rate per employee) and employees; a state-run board will negotiate plans and prescription drug discounts. Failed.