The state of Pennsylvania is looking for a way to force employers to pay their share of health care costs without running afoul of the Employee Retirement Income Security Act (ERISA).
One plan proposed by Gov. Ed Rendell would require all but the smallest employers to spend at least 4% of their payroll on health coverage or contribute to a state fund the difference between that and what they actually spend.
ERISA prohibits states from imposing their own rules on multistate employers with self-insured plans. Recent attempts by other states to force employers to cover health care costs, a strategy known as “pay or play,” have lost to ERISA challenges.
Rendell is also considering a tax-and-credit approach, which would impose a broad-based employer tax, and then credit employers that spend a prescribed amount on health care.
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