New Jersey, Vermont and Massachusetts are among first to take steps to shore up their Medical Care expenditures
In the wake of the demise of the individual mandate last year several states are taking different approaches to stabilize their health insurance markets. While there has been public discussion by at least nine states as reported February in the Wall Street Journal, New Jersey has now taken action, essentially reinstating an individual mandate. New Jersey’s mandate, which mirrors the former federal requirement, includes an annual penalty of 2.5 percent of a household‘s income or a per-person charge — whichever is higher. The mandate is effective on January 1, 2019.
Vermont has proposed a mandate for January 1, 2020; with details to be determined. Massachusetts took steps to shore up the finances of the Commonwealth’s Medicaid program and it’s Health Insurance Program (CHIP). While the approaches are different they both require unawareness by the employer of the details of their healthcare offerings if penalties are to be avoided.
It’s all about the data
The additional layer of compliance which is either required or mandated by these changes means that employers will have to have access to and the ability to present their side of the story to avoid penalties. This is a fact intensive requirement and in many ways is similar to the Form 1095C reporting requirements we are familiar with at the federal level. Setting up a system to track individuals’ coverage, and possibly exact penalties through income taxes or other measures, would be a significant undertaking for states.
We’ve got you covered!
We believe these state initiatives illustrate a shift in the health care battle from Capitol Hill to the states, igniting a surge of activity that could redefine access and coverage for millions of consumers and and recordkeeping and reporting requirements for employers. This is where we can help; we can’t make the regulations go away but we can help you to manage them efficiently and economically.
Our software platform called ACATech was originally built around the Massachusetts program and extended in 2015 to handle the federal ACA reporting requirements. As these new initiatives emerge we will be prepared to help you handle those employees who are working in the affected states. In some cases this may require reporting and in others such as Massachusetts it will require auditing the penalty assessments to determine their applicability and financial correctness.
The financial impact of these changes is uncertain
What is certain is that Organizations that have employees in multiple states will feel these requirements acutely. In some cases local municipalities, such as San Francisco’s Health Care Security Ordinance (HCSO), also require payments and reporting. It is our position to help our clients comply and avoid penalties wherever these requirements appear.
In New Jersey slightly fewer than 200,000 New Jersey residents paid the individual mandate fees in 2015 rather than obtaining health insurance. Those funds will now be directed to the New Jersey Health Insurance Premium Security Fund. In Massachusetts the shortfall is expected to be in the area of $ 200 million and legislators are optimistic that the Employer Medical Assistance Contribution (“EMAC”) will make up this deficit.