Cal-Peculiarities: How California Employment Law is Different - 2024 Edition

©2024 Seyfarth Shaw LLP  www.seyfarth.com 2024 Cal-Peculiarities | 325 Employers of QSP-covered employees must choose to either provide them with no-cost family health insurance (including coverage for their dependents) or pay $10.30 per hour (up to $412 per week) on behalf of the employee to the City Option Program.47 To comply with the family health insurance requirement, benefits must include: (1) at least one plan that is offered at no cost to the covered employee, provides a level of coverage that is designed to provide benefits that are actuarially equivalent to at least 90% of the full actuarial value of the benefits provided under the Plan, and includes all benefits listed in California’s Essential Health Benefit Benchmark Plan; and (2) be offered to covered employees within 30 days of their start date. An amendment to the ordinance would: (i) allow employers offering multiple health benefit plans to charge a limited share of premium costs on more expensive plans, and (ii) clarify who must be covered by the family health benefits offered under the ordinance. A covered employee may voluntarily waive an offer of health plan benefits by providing proof of a current health plan coverage, including coverage for their dependents, and completing the Voluntary Waiver Form. Compliance requirements cannot be waived in a collective bargaining agreement. It will be important for unionized employers to carefully consider whether they can unilaterally impose changes to comply with the Ordinance without bargaining with their unions. Employers also may want to consider whether they can avail themselves of any labor law-related preemption arguments with respect to their labor contracts. Originally, employers had to either provide family health insurance by March 21, 2021 or contribute to the City Option Program by April 15, 2021. An amendment to the ordinance delayed the deadline for health insurance coverage to April 1, 2021. The OLSE has the right to charge an employer the amount owed plus annual interest of 10% from the date payment was due and liquidated damages, in addition to any other rights or remedies available under the terms of any employer agreement or applicable law. 8.4.2 Health care mandate Although the individual mandate penalty at the federal level was eliminated by the Tax Cuts and Jobs Act of 2017, California (among other states) enacted similar penalties at the state level. California residents must either have qualifying health insurance coverage, obtain an exemption, or pay an “individual shared responsibility penalty” (generally the higher of either a flat penalty per household member or 2.5% of gross household income) when filing state income taxes.48 For the 2023 tax year, the penalty for not having coverage the entire year is at least $900 per adult and $450 per dependent under age 18 or 2.5% of gross household income, whichever is higher.49 The California Franchise Tax Board has yet to release the flat penalty amount for the 2024 tax year. The employer’s responsibility is to report employee health insurance information to the California Franchise Tax Board, unless the insurance carrier does it. Currently, federal forms 1095-B (Health Coverage), 1095-C (Employer-Provided Health Insurance Offer and Coverage), and Form 3895 (California Health Insurance Marketplace Statement) are accepted as forms of proof.50 8.5 Explanation Of Benefits 8.5.1 Discontinuation of medical coverage Before discontinuing medical, surgical, or hospital coverage, California employers must give all covered employees at least 15 days advance written notice.51 This notice requirement does not, however, apply to welfare plans that are subject to ERISA.

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