Do You Think Prop 72 Doesn't Affect Your Company?
Think Again!
Proposition 72 is filled with rules that would create confusion and increased costs for employers and workers. Ambiguities and questions will be decided by an un-elected board currently filled with five Gray Davis appointees. Here are some examples of how your company could be affected by Prop 72:
Costs Paid in Advance?
Prop 72 may give bureaucrats the power to require employers that already provide healthcare coverage to pay the new healthcare tax anyway - then apply for a "credit." Confusing and conflicting provisions of the bill create vulnerability that employers might be required to pay the fee and then apply to the state for a credit by proving that existing coverage meets the requirements established by the bureaucrats.
Pay for Workers No Longer on the Job?
Prop 72 appears to base its coverage requirements on how many people a business employs as of a date established by the board. If a worker leaves an employer after that date, the employer could still be required to pay for that worker's coverage! The bureaucrats will decide.
Benefits and Costs to be Determined by State Bureaucrats
Prop 72 gives state bureaucrats the power to determine what is covered by the state plan against which private coverage is measured. Even if you already provide coverage to workers, your benefit plan may not be accepted by the bureaucrats, which will force you to find other coverage or pay the tax to the state to cover your workers through the state plan.
Pay 80% of the Cost for Many Part-Time Workers
Prop 72 requires businesses to pay 80% of the cost of healthcare benefits for employees who work just 100 hours per month. Many businesses either don't cover part-time workers, or pay less than 80% of their coverage.
Pay 80% of the Cost for Dependent Coverage
Prop 72 requires employers with 200 or more workers to pay 80% of the cost of dependent coverage. A recent study by the Kaiser Family Foundation found that only about half of employers with 200 or more workers pay the required 80 percent of premiums.
Pay 80% of the Cost for Employees
Employers must pay 80% of the cost of covering all workers who work 100 hours per month. This includes hourly, salaried and commissioned employees.
Seasonal Employees Must be Covered
Prop 72 mandates that businesses must pay 80% of the costs for coverage for any eligible worker on the job for just three months. Most businesses do not cover seasonal workers.
Employers Responsible for Worker Payments
If for any reason an employee does not pay their 20% share of the cost of coverage, the employer must pay. You would be subject to a penalty of 200% of the payment for workers who, for any reason, do not pay their premiums.
Workers Can't Refuse Coverage
Your employees cannot decide they don't want the coverage mandated by Prop 72, even if they do not want the coverage or simply cannot afford their share of the cost.
Penalties and Lawsuits
Employers face lawsuits and substantial penalties if they are accused of reducing hours or taking other measures to avoid covering employees. They also face a 200% penalty if the premium is not paid to the state for "whatever" reason. There is no provision in the bill for employers to appeal any action taken against them by the state in disputes over payment.
Can't Restructure to Avoid Requirements
A business is prohibited from taking action to avoid the coverage requirements of Prop 72. This includes dividing a business into smaller entities to get under the employment thresholds. The authors of the bill included specific provisions to treat businesses with common ownership and control as a single entity subject to the requirements of Prop 72.
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