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Policy & Advocacy

MA Governor Proposes $2,000 Employer Mandate to Fund Medicaid Program

As part of a 2018 Budget Proposal, Massachusetts Gov. Charlie Baker (R) seeks to reinstitute a penalty ($2,000 per employee penalty indexed to New England Inflation) for employers who don’t meet requirements for providing health coverage to help pay for Medicaid enrollment growth driven by low-income employees.

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February 01, 2017

As part of a 2018 Budget Proposal, Massachusetts Gov. Charlie Baker (R) seeks to reinstitute a penalty ($2,000 per employee penalty indexed to New England Inflation) for employers who don’t meet requirements for providing health coverage to help pay for Medicaid enrollment growth driven by low-income employees. Employers with 11 or more full-time employees (FTEEs defined as averaging 35+ hours weekly) that don’t spend at least $4,950 per employee annually on health coverage or an amount specified by the department of revenue would be subject to the penalty as follows:

  • $500 quarterly multiplied by the total number of FTEEs if employers don’t offer coverage;
  • $500 quarterly multiplied by the percentage difference in uptake, if less than 80%, multiplied by total number of FTEEs (for example an employer has 70% uptake rate penalty would be $500*(10%)*(# of FTEEs)); or
  • $0 if employers have greater than or equal to 80% uptake rate.

Impact on Employers and Employees

States facing strained budgets due to Medicaid enrollment growth could look to tax employers and employees to offset the costs, thereby increasing employers’ cost and reducing employees’ benefits.
If enacted, employers could be subject to two different employer mandates (ACA and Massachusetts) with different rules, reporting requirements and definitions increasing employers’ administrative burden.
Employers with efficient benefits could face increased costs if they have low uptake from employees. Additionally, employers with low-wage employees would face penalties that could drive up labor costs, reduce employment and decrease employees’ benefits.

Outlook

The Governor’s proposal still needs legislative approval and it’s unclear if the state legislature supports it. If Massachusetts enacts the proposal it could spread to other like-minded states.

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