Unfair Share? | Businesses, legislators question health insurance regulations
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Nancy Carlson, president of the Suburban Group, says temp firms like hers are struggling to meet the state's “fair share†health insurance requirements.
Almost all of Nancy Carlson’s employees have health insurance, either through her staffing agency’s benefit package, or from their spouses, Medicare or some other means.
So, Carlson is frustrated that she is expected to pay about $20,000 in fees to the state this year because not enough employees are enrolled in her company’s health care plan.
“It seems backwards,” said Carlson, president of The Suburban Group in West-borough and a past president of the Corridor Nine Area Chamber of Commerce. “We’re all honest businesses people, and now the state is coming around and penalizing us for our employees having health insurance.”
Carlson is not alone in her complaints.
Some small businesses, especially those in the temporary staffing field and others who rely on part-time workers, are having trouble complying with state’s so-called “fair share” health insurance regulations.
Recent Revision
The state used to require that business offer health insurance to their employees and pay at least 33 percent of the benefit’s cost or that 25 percent of the company’s employees are enrolled in the health plans.
In January 2009, however, the state amended the rules and began requiring that businesses comply with both mandates: a 33 percent contribution level and a 25 percent uptake rate.
That proved difficult for Carlson and numerous other temporary staffing agencies.
Carlson said in some quarters as many as 80 percent of her 250 temporary workers get health insurance through their spouses or some other means.
The employees have health insurance, just not through her plan. Because of that Carlson cannot meet the 25 percent threshold and she is fined $295 per full-time-equivalent employee.
“It’s just not fair,” she said.
Taking Notice
State Rep. Karyn Polito, a Republican from Shrewsbury, said when the state passed sweeping health insurance reform in 2006 the intention was to ensure that everyone in the state had access to health care.
Now, she said regulations to enforce the health insurance laws are hurting small businesses.
“We passed the general concept of the reform law and the regulations are supposed to fill in the details,” Polito said. “But the regulations have been heavy handed and unfair with regard to the employer’s responsibilities.”
Polito said regulations should be changed so that employees who get health insurance from means outside of their employer are not counted towards a business’s 25 percent uptake rate.
The state’s Division of Unemployment Assistance is responsible for enforcing the fair share health insurance regulations.
Director of the division, Edward Malmborg, said about 800 businesses in the state have been charged an assessment for not meeting the regulation. He said that is a small percentage compared to the 30,000 businesses that are regulated.
Malmborg admitted that new regulations have made it “more difficult” for companies to comply with the mandates.
But Malmborg said he simply enforces the regulations that are created by the state’s Division of Health Care Finance and Policy.
Stephen McCabe is interim director of the division and said the state is cognizant of employer struggles, but he said, based on two years’ worth of research before the regulations went into place, 97 percent of companies were meeting the regulations.
In fact, he said the median uptake rate for employees who enroll in company health care plans was 75 percent.
“The change in regulations goes back to what fair share is all about,” he said. “It’s about sharing the cost of health insurance between everyone to make it as equitable as possible.”
McCabe said the state is constantly evaluating its policies and is open to making changes.
He said he will specifically be reviewing how many companies have not been able to meet the thresholds after one year with the regulations.
“We are aware that there are industries that have had some degree of difficulty, some of the temporary employment agencies and some restaurants that are having trouble achieving that 25 percent take up threshold,” he said. “However, we do understand that overall, it’s far from the case that not everyone can comply.”
For some companies, the fines have gotten so extreme that health insurance benefit packages have been cut.
Edward Callender, president and founder of S&S Staffing in Worcester, stopped offering health insurance to his temporary employees this year because he couldn’t afford the insurance on top of the expected $100,000 in assessments he will be paying this year.
Numbers Game
At some times Callender is technically employing thousands of part-time workers. But, because the state measures the number of full-time equivalent employees, based on the number of payroll hours, they are covered under the regulation. Getting 25 percent of what are many times low-wage temporary workers to sign on to health insurance plans is “impossible,” he says
“It’s just not realistic, and it never will be for staffing agencies,” he said.
Jo-An Gladstone, founder and president of Select Staff in Framingham, said she too has been faced with assessments for not meeting the 25 percent threshold. And she said the regulations are not only difficult to comply with, they are difficult to understand.
Furthermore, she said when the employees cannot get access to the employer-sponsored program, they are not eligible for the state-subsidized Commonwealth Care insurance.
“The law has good intentions, but they passed a law then decided how they were going to regulate it,” Gladstone said. “Now it’s creating problems.”
State Sen. Michael Moore is chair of the Joint Committee on Community Development and Small Business on Beacon Hill and, along with Polito and other area legislators, has called for reforms on Beacon Hill.
“We need some discretion with this enforcement,” Moore said. “Some businesses are getting hit really hard and if a company is making a good faith effort to provide health insurance, that should count for something.”
Moore said if no changes in regulations are made by the state agencies after the first of the year he will consider filing legislation with other lawmakers.
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