Healthcare Mandate Poses Heavy Burden

Emma Shirey Uncategorized

But there is a path to compliance.

During the 2019 legislative session, lawmakers overwhelmingly approved a bill that requires contractors to provide health care coverage for any employee working on a State project of $1 million dollars and above.  Later the Board of Public Works (BPW) and the Maryland Department of Transportation (MDOT) developed regulations to enforce the mandate, COMAR 21.11.16, which requires all contractors to provide health care coverage for any employee working on the State job site.

The regulations apply to all bids issued by the MDOT and The Department of General Services.   Compliance forms will be included in the bid documents. Excluded are those contractors with fewer than 30 employees To comply, the employer must contribute at a minimum of 50 percent of the employee’s premium OR, meet the second option of 5% of the total company payroll below the Social Security level as a premium contribution for healthcare.  Each bidder must complete the affidavit and the healthcare questionnaire and submit it with their bid. Any new employee added to the job site after the bids have been accepted must comply with the regulations.  All subs regardless of their position (ie 1st, 2nd, 3rd tier etc.) must comply.

The problems with this regulation are almost too many to mention but here are some of the most glaring:

·       Just because the employer has health insurance does not mean the company satisfies the regulation requirement.   An example would be an employer with 40 employees all offered healthcare and only 10 take coverage.   In order for the employer to be in compliance only those employees who have elected coverage will be allowed on the job site.

·       An employer cannot force an employee to contribute to a program.

·       All subcontractors regardless of their position must comply, including 2nd, 3rd tier, and beyond.

·       This data is supposed to be provided when you submit your bid, a completely impractical and unreasonable mandate.

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ABC COMPLIANCE SOLUTION

According to Gabriel Gnal with BPW, to meet the regulatory requirements a general contractor should submit the health care coverage only for those subs with which they that he normally works or envisions completing the project with as well as the MWBEs required to be named at the time of the bid.

But as for the requirement to provide coverage, there is a path forward to comply. Since this regulation will fall under the prevailing wage regulation in Maryland there will be more than enough fringe dollars, regardless of classification, to pay 100% of the contribution. 

To meet the compliance requirements we suggest the employer implement and Special Reimbursement Account program offered by ABC  for all field employees regardless of their coverage status.  This program is a form of HRA and has been approved by congress effective January 1, 2021.  The employer would contribute $1  per hour out of the fringe and it would be put into a VISA card for health care expenses for the employee.  He would own the balance on the card and could use it for any healthcare expense.  This meets the regulations and does not require the employer to redesign or remarket their current healthcare program.  All expenses are paid out of the fringe account.

The SRA program is qualified as a credible health care program and meets all the regulatory requirements.

It is very important that when an employer is completing the healthcare questionnaire they indicate all employees are covered and the employer contribution is 100%.   All contributions from the fringe are employer contributions and all employees are covered.  No offering or approval of the employee is required.

The only cost to the employer is a $250 one-time setup fee to establish the program and do the required filings.  Plan documents will be provided to all employees as required.

Call Dick Asher to find out how to sign up your employees today!