Legislative Alert: Employer Penalty for Employees Enrolled in Oregon Health Plan

The Oregon House of Representatives recently introduced House Bill 4105 which would require employers to pay a monetary penalty if an employee enrolls in the Oregon Health Plan (OHP). The OHP extends Medicare to more people than the federal law requires; this is a legacy of a former governor trying to be innovative in delivering better health care to more of those in need. The OHP is a significant portion of the Oregon’s budget—a budget that has serious holes primarily due to underfunded pension obligations. This has led our legislators to find ways to plug that funding gap.

The proposed law would work in this manner: if an employer has 50 or more employees and an employee is using the OHP plan, a penalty of 90% of the cost of a Bronze Plan (exact amount to be determined by a state agency at a later date) is levied which the employer pays to the state.

Employers can offer company health plans but would not be able to stop employees from waiving coverage and obtaining coverage in the OHP, which still leaves the employer open to getting fined. There are mechanisms in which an employer can try to mitigate this exposure. These mechanisms are very similar to the Affordable Care Act (ACA) in which employers are currently levied taxes for employees that are not covered in a health plan or do not meet affordability requirements. The primary difference with HB 4015 and the ACA is the proposed law not only doubles up on penalties, but has even tougher standards.

Currently, this bill appears to have stalled. But if the past is any guide—and due to the number of legislators who support the bill—we will probably be revisiting this proposal in a future session.

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