PROPOSAL WOULD PILE ON NEW EMPLOYER MANDATES AND PENALTIES TO REQUIREMENTS OF THE AFFORDABLE CARE ACT
AB 880 will force larger employers to pay an estimated additional penalty of $6,000 to $15,000 to the state for any employee who works eight hours or more a week and qualifies for and chooses to enroll in the MediCal program. The state penalty is in addition to the penalty required by the federal Affordable Care Act (ACA). The additional penalty will go toward funding Medi-Cal program, with 10 percent used to fund state bureaucracy.
The California Restaurant Association has joined the Alliance for a Health California effort, along with the California Retailers Association, Western Growers, Nisei Farmers League, Latin Business Association, UniteAg, California Chamber of Commerce, California Trucking Association, California Grocers Association, California Manufacturers and Technology Association, California Business Properties Association, California Lodging Industry Association and the Orange County Hispanic Chamber of Commerce, among others.
“Restaurant industry leaders are doing everything possible to ensure they are prepared to comply with the requirements of the ACA, and AB 880 is incredibly discouraging,” CRA President + CEO Jot Condie. “With so many unanswered questions about costs, regulations and logistics that still exist about the ACA, it’s an extremely intimidating time to be a business owner. And factoring in another layer of potentially devastating penalties on an industry that operates on razor-thin margins could put compliance beyond the grasp of many employers.”
By its nature, the way restaurants manage staffing makes them vulnerable to this proposal, as it would effectively target businesses that have variable-hour employees, by assuming alterations in employee hours are made as a tactic to avoid providing health care.
As written, AB 880 would even penalize employers that offer health care insurance if their workers opt to refuse the benefit and enroll in Medi-Cal instead.
Other key components of AB 880 include:
- Penalizes companies, non-profits and other organizations (with 500 employees or more) that have employees including part-time, temporary or seasonal employees enrolled in Medi-Cal. The penalty is 110 percent of the average cost of health care including both the employer and employee share of the premium.
- No penalty exemptions for the use of temporary or seasonal employees, which is common in industries such as tourism, trucking, agriculture, manufacturing and construction and many other vital industries.
- Harms businesses’ ability to manage its workforce by penalizing companies, non-profits and other organizations an additional penalty of 200 percent of the average cost of health care if they discharge, demote or suspend an employee who is using a public health benefit. Yet there is no provision that allows an employer to know whether the employee is using a public health benefit and to determine whether the employer’s actions were linked to reducing health care costs.