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National Restaurant Association - Two states weigh additional health-care related fines for businesses

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Two states weigh additional health-care related fines for businesses

Lawmakers in two states are considering legislation that would make employers liable for staggering penalties—far above the penalties that could be assessed against some “large employers” starting in 2014 under the 2010 health care law—if any of a business’s employees receive state assistance to purchase individual or family health coverage.

Employers say the measures would introduce widespread confusion, bureaucracy, litigation and costs at the same time as employers are already struggling to figure out how to implement the 2010 federal health care law.

In California, AB 880 would force employers of 500 or more individuals to pay fines to the state of 110 percent of the average cost of health coverage for any employee who chooses to enroll in the state’s health plan. The law would be applicable for any employee who works at least eight hours a week.

Those proposed penalties against employers would likely range from $6,000 to $15,000, based on current estimates of the cost of individual and family health care. The state penalties would be imposed on top of federal penalties that many employers could face starting in 2014 under the 2010 health care law when full-time employees receive a federal tax subsidy to purchase insurance through a public exchange.

California Assembly member Jimmy Gomez proposed the bill, claiming that it was necessary to ensure that the state’s largest employers don't attempt to avoid their requirement to provide coverage under the federal health care law. Most of the money collected would be used to help fund the cash-strapped state’s Medi-Cal program.

The Alliance for a Healthy California, a coalition of businesses and business organizations that includes the California Restaurant Association, is working to get the message to state lawmakers that the proposed measure could have a devastating impact on the state’s economy and businesses’ ability to create jobs.

The California bill also stands to impact the ability of companies to make decisions regarding personnel, as it would levy heavy fines of 200 percent of the cost of health coverage against companies with 500 employees or more if the employer terminated, demoted or suspended any employee using a public health benefit.

Under the 2010 federal health care law, employers with 50 or more full-time-equivalent employees could face annual penalties of up to $2,000 per full-time employee, minus the first 30 full-time employees, if the employer fails to provide health care coverage and any full-time employee gets a federal tax subsidy to buy an insurance policy through a government exchange. 

Connecticut legislators are considering a similar bill. HB 6614 would apply to companies that directly employ at least 100 individuals in the state and at have at least 250 employees overall.  The bill is currently being revised and the Connecticut Restaurant Association is working hard to defeat it.

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