HB 331 – Health Reform - Health Insurance Coverage on Utah State Design and Construction Contracts - Darrel Bostwick, Bostwick & Price P.C.
HB 331 effectively mandates employer sponsored health insurance benefits in Utah’s construction and design industries. The new law imposes upon Utah’s contractors, architects and engineers the burden of funding what amounts to a “pilot program” for the eventual implementation of universal health care coverage in Utah. When HB 331 goes into affect on July 1, 2009, all general contractors who contract with any public transit district in the state, as well as the Utah Department of Transportation, the Division of Facilities Construction and Management, the Department of Natural Resources, the Capitol Preservation Board, and the Department of Environmental Quality on projects valued at $1.5 million dollars or more; and all subcontractors who enter into subcontracts valued at more than $750,000 to perform work on projects contracted by those entities, are required to provide all qualifying employees, and their dependants, with certain minimum health care benefits.
At its core, the law requires that any company wishing to be awarded qualifying contracts from the referenced State agencies or public transit districts offer a minimum level of health insurance benefits to all employees, and their dependants, who work at least 30 hours a week and who have been employed for at least 90 days.
All affected employers have two options for meeting the minimum level of insurance permitted. If the plan offered is as good or better than the government funded CHIP program, the employer must pay 50% of the premiums for employees and their dependents. If the employer elects to provide its employees with a federally qualified high deductible health plan (“HDHP”), the employer must: (1) pay at least 75% of the premiums for employees and their dependants; (2) ensure that the plan provides the lowest possible deductible for federally qualified HDHPs; and, (3) ensure the employees yearly maximum out of pocket expenses under the plan will not be more than 3 times the annual deductible.
The law does not provide for any exceptions for the size of the contractor’s business or the nature of its work. All contractors doing work on qualified projects must comply with the law. What’s more, the law does not make any distinction between those who actually perform work on the qualified project, and those who work on other projects, or even those who work in the office or shop. The law applies equally to supervisors, laborers and secretaries by requiring that all qualifying employees must be covered regardless of their position, pay, tenure or experience.
To ensure compliance with the program, the law requires that all contractors must demonstrate their own compliance but are not obligated to ensure compliance of others. And, any failure by a general or subcontractor to comply with the law will be considered an infraction of state law and subject the violator to penalties which may include disqualification from performing work for the State of Utah. ABC will be holding a special meeting June 29th to go over this bill in detail.
Upon further scrutiny the bill, as enacted, is filled with dangerous gray areas. Mark Hunter from Summit Risk Management writes:
"This new law will have significant impact on contractors doing work for a state agency as listed in the law. Not only does it require employers to have health insurance, but they have to pay the premium at a higher level than required by all insurance companies--so even if a contractor currently has a health plan, they may have to pay a higher percentage of the premium after July 1. Also, the new hire waiting period may have to be adjusted to comply with the law (90 days, where some employers may have 6 months or even as much as 365 days NHW period). Finally, the penalty is severe. It includes not only have to pay 50% of what the premium would have otherwise been, but the employer would have to pay 100% of medical expenses that an insurance policy would not have paid. This could have two different interpretations: 1) If an employer does not provide health care that complies with the law, the employer would have to pay all medical expenses that the employee and/or dependents incur - This could be hundreds of thousands, if not millions of dollars the employer would be liable for 2) Even if the employer offers a health care plan, if he/she does not do the contribution part exactly to the law, or the new hire waiting period, etc. the employer would have to pay for medical expenses on anything that the health insurance will NOT pay for - this could be breast augmentation, experimental, deductibles, co-pays, co-insurance, out of network coverage and out of area coverage, the list goes on and on.
There are other problems with the way the law is written, for example: 1) It could require an employer to allow the employees dependents to remain on the health plan through the end of the contracted job, even if the employee is no longer employed (broad interpretation), 2) It could allow for the employee and/or dependents to come onto the plan at anytime, not having to wait for open enrollment or because of a HIPAA qualifying event (marriage, divorce, child birth, etc)-- anytime as long as the employee has been employed 90 days and works 30 hours per week--even if the employee initially declined coverage. So if the employee finds out they have cancer, they can then come onto the plan.
I believe I have figured out some loop holes - but these would take the cooperation of the respective insurance company(s) to fix the problems, I also think this law should be changed, at a very minimum to eliminate some of the poor language used in the law.
Regardless of my opinion, contractors should be very aware of their exposure."
Again we urge you to attend the Seminar June 29th at the ABC offices for more information contact to register. Simply put if you work with any of the above mentioned state entities, or hope to in the future this is a must attend class.
To view the bill text in full