Massachusetts Employers Spared Higher Health Assessments

Legislation nearing final approval by Massachusetts lawmakers imposes new assessments on insurers and hospitals to help fund part of the state’s health care reform law, but it spares employers—at least for now—from making bigger contributions.

Massachusetts Gov. Deval Patrick said this month that he intended to propose tightening an existing rule—known as “Fair Share”—that requires employers with at least 11 full-time employees in the state to pass one of two tests to avoid an annual assessment of $295 per employee.

Revenue from that assessment, which has been running about $7 million a year, is used help fund the Commonwealth Care program. That program, which was created by the state’s 2006 health care coverage reform law, subsidizes health insurance premiums for roughly 175,000 previously uninsured lower-income state residents.

If the tightening of the rule didn’t generate $38 million in revenue, Patrick had proposed that legislators give a state agency authority to raise the $295 assessment to a level it projected that would meet that target.

However, the state’s House and Senate declined to include the governor’s proposal in budget legislation they approved this week. Legislators, though, did adopt proposals that levy assessments of $33 million on health insurers and $20 million on hospitals, and a proposal to divert $35 million from an employer-paid fund that pays health insurance premiums for the unemployed. Those funds would be used to help support Commonwealth Care.

A final version of the bill could be approved Thursday, July 31.

Business lobbyists warn, though, that the issue is not over. That is because they expect Patrick to propose a tightening of the fair share test through regulation.

Under the current rule, an employer is exempt from the annual assessment if at least 25 percent of full-time employees are enrolled in its group health insurance plans.

If that primary test is not met, employers that pass a secondary test—by paying at least 33 percent of the premium for individual coverage for employees within 90 days of their starting work—are exempt from the assessment.

Patrick has proposed that employers be required to pass both tests to be exempt from the $295 assessment, a change that would result in more employers, such as those in high-turnover industries that impose long waiting periods before new employees are eligible for coverage, being forced to pay, business groups say.

Filed by Jerry Geisel of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.