Pay-or-play Worksheet

A Pay-or-play system assesses employers who do not provide health insurance or other health benefits to workers.  There are a number of considerations when designing a Pay-or-play system, which in some cases may run into problems due to federal ERISA rules.

1. Pay-or-play would apply to:
   • All employers?  ___ (yes/no)
   • All employers with more than ___employees.
     For example, in states that have enacted or proposed pay or play systems:  Massachusetts, more than 10 employees; Vermont, more than 4 employees; proposed California legislation, more than 100 employees; in Maryland Fair Share (struck down by District Court), more than 10,000 employees.
2. What will the structure of the assessment be?
   • Flat dollar amount per employee?  $___
     For example: Massachusetts, $295 per full-time employee; Vermont, $365 per full-time employee.
     • Prorated dollar amount for part-time employees?  $___
   • Flat percentage of payroll?___%
     For example: proposed California legislation, 6.5% of payroll.
   • Graduated amount, based on size of employer?
3. Will you include any exemptions or exceptions?
   • Exclude first $ ___ x ___ employees?
   • Cap eligible payroll?
4. What triggers having to pay the tax?
   • Employer does not spend __% payroll on health benefits?
   • Employer does not make a “fair and reasonable” definition?
     For example, an employer is not covering a percentage of employees’ premiums or a percentage of workers in group health plan.
5. Employers providing health benefits receive credit?  _____(yes/no)
   • Is this credit dollar-for-dollar spent on health benefits?
   • Is it a percentage of each dollar spent on health benefits?
     Basing the credit on the amount of employee health benefits protects the state from crediting employers that offer very limited benefits.
6. Include a fallback mechanism?  ___(yes/no)
   If Pay-or-play provision is struck down by the courts because of ERISA, you will still need a way to finance your health expansion.
   • If Pay-or-play goes away, then the credit for all employers goes away also.
   • If Pay-or-play goes away, then all employers pay assessment, without credit.