If you drive a car, I’ll tax the street,
If you try to sit, I’ll tax your seat.
If you get too cold I’ll tax the heat,
If you take a walk, I’ll tax your feet…
George Harrison, The Beatles
Massachusetts Governor Baker has included a new tax assessment on businesses in his 2018 proposed budget and it is a whopper. The proposed tax assessment would impact businesses with 10 or more employees if the employer does not contribute at least $4,950.00 toward each full time employee’s healthcare and have an 80% participation in its group health plan. This health related tax assessment would require a payment of $2,000.00 per full time equivalent employee. Full time employees are defined as those who work 35 hours or more per week. The proposal revives the “fair share” that was eliminated under the Affordable Care Act (ACA)—with a hefty increase. The goal is to raise $300 million to offset the costs of the projected 1.93 million enrolled in MassHealth for 2017. Baker is also proposing various caps paid to providers in an attempt to limit costs and close the gap on discordant charges for the same services.
The short version of how this happened: Way back in 2006, before the ACA, Massachusetts employers with 11 or more employees were required to offer health care coverage to full-time workers or pay a fee of $295 per worker. If an employer offered health insurance, employees were ineligible for MassHealth. To comply with the ACA, the employer fee and the restriction in choosing MassHealth were eliminated. Moreover, the ACA federal mandates to fine employers were pushed back and some eliminated. In Massachusetts that meant more people enrolling in MassHealth and less money to fund it. Can you say quagmire?
The attempt to shift this enormous burden onto the backs of business has understandable resistance. The sky rocketing cost of insurance is the central issue and throwing more money at insurance costs makes no sense. The interplay between the ACA and MassHealth has problems as well– Baker has requested a waiver from ACA provisions that conflict with or add unnecessary costs to the state. And finer points of Baker’s 2018 assessment must be addressed. For instance, what if employees reject employer offered coverage (perhaps in favor of coverage from a spouse) and participation drops below 80%? Under the current provision, the employer will still be required to pay the assessment.
The legislature needs to carefully examine this proposal and its massive potential impact on business. Did I just write “carefully examine” in the same sentence as the legislature? Desperate times… .We urge you to contact your representatives in the Senate and House. Call if you can, email or write if you cannot. We will monitor the progress of this proposed tax assessment and continue to update our clients on any new developments.