No Veto: Fair Share Repeal Proceeds Despite ACA Delay
07/15/2013 - Seyfarth Shaw LLP
Attorney : Kristin G. McGurn
On July 11, 2013, Governor Patrick reported that he will not block repeal of
the Massachusetts Employer Fair Share Contribution pursuant to M.G.L. c. 149, ˜
188, despite the Obama Administrationfs announcement that implementation of the
large employer mandate under the Affordable Care Act will be delayed for a year,
until January 1, 2015. Since its historic passage in 2006, the Fair Share
Employer Contribution under ˜ 188 required employers with more than ten
Massachusetts workers to make a timely offer of subsidized health insurance to
gfull-timeh employees or pay a $295 penalty per full time equivalent. The
similar ACA employer mandate requires employers with 50 or more employees to
provide affordable coverage within particular timeframes to certain employees in
order to avoid more significant penalties of $2,000 or $3,000. Our discussion
the ACAfs employer mandate can be found in our Health Care Reform Management
Alert Series, issues 45, 48, 58 and 67 and available on our ACA Resource Center highlighted
here. In a surprise announcement by a Treasury department official on July 2,
2013, implementation of the ACA employer mandate was delayed. This announcement
followed by one day the Massachusetts Senatefs passage of the repeal of ˜ 188
Fair Share Employer Contributions, effective immediately, in connection with the
Commonwealthfs 2014 Budget. The Governor signed the Budget Friday, July 12,
2013.
On January 11, 2013, we reported here, that the Patrick Administration sponsored the bill
calling for Fair Share repeal, in part due to the recognition that the ACAfs
similar employer mandates would render employer compliance with the dual schemes
onerous, and potentially result in duplicative penalties. It was anticipated
that the repeal would result in a modest window - between July 2013 and January
2014 - during which the employer mandate to offer health insurance was
eliminated. That period now stretches through January 2015.
As a result of the ACA employer mandate delay, employer shared
responsibility payments will not be assessed for 2014 (but other components of
ACA implementation scheduled to take effect in 2014 are expected to move
forward, see issues 67 and 69). Discussing his decision not to veto despite the ACA
delay, the Governor expressed his belief that in Massachusetts, where there is
near-universal coverage already, employers who have adopted health insurance
programs after half a dozen years of robust regulatory enforcement - in lieu of
paying Fair Share Contributions and as a tool to attract and retain employees -
will maintain these insurance offerings until the federal employer mandatefs new
effective date despite the absence of the preexisting regulatory
requirements. In the face of pressure from certain constituencies that
sought to reinstate Fair Share following the announcement of delay in federal
implementation and enforcement, Governor Patrick confirmed that he stands behind
this revocation of ˜ 188, which served in some ways as a precursor to federal
reform. Discussing the repeal, the Governor pointed out that the Medical
Security Program, which covers individuals receiving unemployment compensation
in Massachusetts, remains in place until January. A per employee surcharge will
remain thereafter, in the form of an gemployer responsibility contributionh to
subsidize health insurance.
Employers should note that the legislation that repealed ˜ 188 makes clear
that the Division of Unemployment Assistance, to which the Fair Share Unit (FSU)
has reported over the years, will retain authority to collect any outstanding
fair share employer contributions established pursuant to ˜ 188 for obligations
arising prior to July 1, 2013. The FSU will remain in place to account for
employer liabilities through June 30, 2013 and collection of these amounts will
be conducted in accordance with previously promulgated regulations. Accordingly,
employers should expect DUA to continue enforcement activity, pursue audits, and
seek to collect liabilities for filing quarters through DUAfs Q3 2013 filing
period.
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