Masshealth Changes Come With a Hefty Price Tag For Employers [UPDATE]

February 12, 2018 Robert Sheen Affordable Care Act, Health Care Coverage

While healthcare continues to be talked about by the federal government, some state governments are taking steps of their own to shore up the Affordable Care Act (ACA) impact on healthcare services at the state level.

Some states, such as Maryland, are considering state legislation that would create a statewide individual mandate similar to the ACA’s (which is scheduled to be repealed starting in 2019 as part of the new federal tax law passed by Congress in December).

In Massachusetts, the state is taking action to address a budget shortfall for the Commonwealth’s Medicaid (MassHealth) and Children’s Health Insurance Program (CHIP). Signed by Governor Charlie Baker in August of 2017, “An Act Further Regulating Employer Contributions To Health Care” went into effect in January. It is expected to raise $200 million to increase funding for MassHealth, the state’s initiative to provide healthcare to lower income families and individuals (both under Medicaid), children (under CHIP) and the disabled. The program provides healthcare to 1.9 million residents at an annual cost of about $16 billion.

The new law is recognition of the increasing enrollment in MassHealth by workers who either do not receive health insurance from employers or who are offered employer healthcare insurance that is not as generous as options offered through MassHealth. It applies to employers with five or more employees who are non-disabled and either obtain health insurance from MassHealth (excluding the premium assistance program) or receive subsidized coverage through the Massachusetts ConnectorCare program. It remains in effect until the end of 2019

The law temporarily changes the existing employer medical assistance contribution, creates a temporary supplemental contribution and modifies the unemployment insurance rate schedule. The employer medical assistance contribution (employer medical assistance contribution EMAC) to MassHealth will increase from $55 to $77 per employee. A new $750 fine will be assessed on employers for each non-disabled worker receiving health benefits through MassHealth or the Massachusetts Health Connector. An employer is subject to the EMAC Supplement for a quarter if one or more of its employees making a minimum of $500 per quarter received health insurance coverage either through the MassHealth agency or through ConnectorCare for a continuous period of at least fifty-six days (8 weeks).

Governor Baker, as part of the bill, had asked for a series of changes to MassHealth eligibility rules to reduce costs by $150 million in order to reduce the financial burden on employers, but the changes were not adopted by the state legislature. He signed the bill anyway at the urging of lawmakers concerned with the state healthcare program’s sustainability. “They’re acutely aware of the fact that if we can’t come up with a way to manage this program effectively and continue to cover people here in the Commonwealth, it will crowd out opportunities to invest in education, in transportation and other areas that are important,” the Governor was quoted in an article on MassLive.com.

Some in the state’s business community are not enthusiastic about the new bill. “Yet again Beacon Hill has found a way to penalize the business community,” Chris Carlozzi, Massachusetts director of the National Federation of Independent Businesses, was quoted in the Greenfield Recorder. “It’s incredibly disappointing to learn that all substantive reforms have fallen by the wayside and a tax on job creators in Massachusetts will remain.”

For more information on the new Massachusetts law, click here.

The new Massachusetts law is one sign among many of the growing complexity of healthcare laws as more states react to the federal government’s continuing debate over the ACA and the cost of healthcare in the U.S.

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