Core Provisions: The House passed its version of a comprehensive health care reform bill on November 7, 2009 by a party-line vote of 220-215, with all but one Republican member of the House, Anh “Joseph” Cao of Louisiana, voting against the measure.
The bill contains a number of provisions that affect employers. Employers must offer employees and their families health care coverage pursuant to an established employer health care plan or other qualified plan. If the employee accepts the offer of coverage, the employer is obligated to make timely contributions to fund the coverage. As an alternative to directly insuring employees, the bill also establishes a Health Insurance Exchange that will allow small employers with 25 or fewer employers access to various coverage options for their employees from public and private insurers. Within three years of the bill becoming law, employers with 100 or fewer employees would have access to the Health Insurance Exchange, and, over time, the bill would grant larger employers access to the Exchange.
With respect to full-time individual employees, employers must cover a minimum of 72.5 percent of the applicable premium of the lowest cost plan offered by the employer. With respect to family coverage, employers must cover a minimum of 65 percent of the applicable premium of the lowest cost plan offered by the employer. Part-time employees must be covered proportionately based on their average weekly hours compared to the minimum weekly hours of a full-time employee.
While employers are required to offer employees coverage, beginning in the second year following the bill becoming law, if an employee declines the offer but otherwise obtains coverage through the Exchange, the employer is required to make a timely contribution to the Exchange in an amount equal to 8 percent of the average wages paid to the employee during the period of enrollment, but not in excess of the minimum employer coverage requirements discussed above. Small employers are required to contribute lower percentage amounts to the Exchange in these instances, with the smallest employers (those with annual payrolls lower than $500,000) completely exempt from the Exchange contribution requirement.
Employers participating in the health care coverage system created by the bill that fail to comply with the coverage requirements with respect to any covered employee will be taxed $100 per day (per affected employee) until the employer meets its coverage requirements. Employers have the option of declining to participate in the health care coverage system created by the bill, but must pay an excise tax of 8 percent of the annual wages paid to its employees. Small employers that elect not to participate will incur a lower excise tax, with the smallest employers (those with annual payrolls lower than $500,000) completely exempt from the excise tax.
H.R. 3962 differs notably in a number of respects from the health care reform bill approved by the Senate Finance Committee on October 13, 2009. Perhaps most significantly, H.R. 3962 mandates that employers offer coverage to employees or alternatively, if eligible, contribute to the Health Insurance Exchange on behalf of employees. Unlike H.R. 3962, the Senate Finance Committee’s bill contains no direct requirement that employers offer coverage in the near future. The Senate Finance Committee’s bill eventually imposes penalties for failing to offer employees coverage, but does not do so until July 1, 2013. At that time, employers with more than 50 employees that do not offer health insurance coverage would be required to reimburse the government for tax credits and subsidies provided to employees who purchase individual health insurance coverage. As discussed, H.R. 3962 in contrast imposes a direct excise tax on most employers’ payrolls for failure to offer coverage.
Status: Rep. Dingell (D-MI) introduced the bill to the full House on October 29, 2009. The House passed the bill by a vote of 220-215 on November 7, 2009. The bill will now move to the Senate for consideration.