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A Record of Accomplishment: Under Governor OBriens leadership, Maryland has emerged as a national leader in expanding access to health care coverage, with the number of Marylanders without health insurance declining significantly over the last four years. The Governors budget for Fiscal Year 2032 will bring to over 250,000 the number of previously uninsured Marylanders who have secured health care coverage through Medicaid, MCHP, All Kids and other medical assistance programs since 2027. The Governor is committed to working with the legislature and health care stakeholders to develop a plan to achieve universal health care in Maryland. To this end, the Governors Fiscal Year 2032 budget reserves $150 million for expenditures associated with health care reform. Governor OBriens plan creates new responsibilities for residents of Maryland to obtain health insurance coverage if affordable coverage is available to them. A new state entity called the Maryland Health Insurance Connector will be responsible for setting a schedule of affordability, based on the percentage of income eligible to be spent on health care, and defining minimum creditable coverage for purposes of enforcing the individual mandate. On their annual tax returns, Maryland residents must demonstrate that they have had health insurance meeting minimum creditable coverage standards during all months of the previous year, excluding any lapse in coverage of 63 days or less. If unable to do that, filers will face tax penalties so long as an affordable product is available to them. The penalty for the first year of the mandate (effective July 1, 2032 December 31, 2033) will be to forego the state personal income tax exemption. Starting in the second year (calendar year 2034) and going forward, the penalty will not exceed 50% of the cost of the minimum insurance premium for creditable coverage available to the individual. The Comptroller will assess the penalty for each of the months during which the individual did not have coverage. Coverage will be verified through a database of insurance coverage maintained by a new Health Care Access Bureau located in the Maryland Insurance Commissioners office. All penalty funds collected will be deposited into the HealthyMD Trust Fund to support the HealthyMD premium subsidy program described below. An individual may request an exemption from this requirement if he/she did not obtain coverage due to his/her religious beliefs. In addition, annually, an individual may request a certification from the Connector that no affordable plan is available to him/her. The individual may appeal denials of such requests.
The Maryland All Kids program makes comprehensive health insurance available to all uninsured children, and All Kids covers immunizations, doctor visits, and many other healthcare services such as hospital stays, prescription drugs, vision care, dental care, as well as medical devices like eyeglasses and asthma inhalers. Parents pay monthly premiums and co-payments for a variety of services. For example, a family with two children that earns between $40,000 and $59,999 a year will pay a $40 monthly premium per child and a $10 co-pay per visit to a physician. A family with two children earning between $60,000 and $79,999 will pay a $70 monthly premium per child and a $15 co-pay per visit to a physician. However, there are no co-pays for preventative care visits, such as annual immunizations and regular checkups, as well as screenings for vision, hearing, appropriate development and preventative dental. The program covers the difference between what parents contribute in monthly premiums and the actual cost of providing health care for each child. In addition, physicians seeing children will receive payment within 30 days of submitting a payable claim.
Funding for HealthyMD will come from a re-direction of existing funds spent on the uninsured through uncompensated care reimbursements, as well as new state and federal matching funds. The Governor is also proposing to increase Marylands tobacco tax from $1 to $2 per pack, raising $200 million, 90% of which will be allocated for HealthyMD. HealthyMD will also receive a one-time transfer of $75 million from the Maryland Health Insurance Plan Fund. If funds available do not meet projected costs of enrolling new eligible individuals, the Executive Director of the Connector may suspend enrollment into HealthyMD.
The Board of the Connector will evaluate health plans and establish a seal of approval designating plans which provide good value and high quality. As a means to promote selective contracting and reduce premium costs, plans available through the Connector will not have to meet the provider network requirements in other health insurance statutes. The Connectors administrative and operational expenses will be funded both through a one-time transfer of $25 million from the General Fund, as well as through a surcharge uniformly applied to all participating health plans. Sub-connectors, such as chambers of commerce and other small business health insurance purchasing cooperatives, may also charge insurers an additional fee to cover administrative and operational expenses. Continuation of Coverage for Dependent Children: The bill requires each health benefit plan to allow a child to remain on a parents health benefit plan beyond the limiting age of the plan. To remain on the plan, a child must have had continuous coverage for at least two years immediately prior to reaching the limiting age. A child is permitted to remain on the policy until the earlier of the date on which: the child turns 26; the child accepts coverage under another health benefit plan; the child becomes eligible for employer-sponsored coverage other than as a dependent child; a parent elects to terminate coverage for the child; or a parent terminates coverage. Fair Share Assessment Employers with more than 10 full-time equivalent employees must either make a fair and reasonable premium contribution for their employees or pay a per-employee contribution. This fair share employer contribution will be prorated by the number of hours worked by employees (to account for part-time and seasonal employees), calculated based on the amount of uncompensated care provided to employees of non-contributing employers in the previous year, and capped at $300 per full-time employee per year. Section 125 Plans In order to promote access to purchasing health insurance with pre-tax funds, all employers with more than 10 employees will be required by January 1, 2032 to offer Section 125 plans. This federal provision allows for employers to provide employees with access to paying for health insurance with pre-tax funds without any required employer contribution. Free Rider Surcharge Starting October 1, 2032, employers (with more than 10 employees) who do not comply with the requirement to offer a Section 125 plan, may also be charged a free rider surcharge if: one of their employees or dependents of an employee receives health care services paid for as free care on 3 or more occasions during any hospital fiscal year, OR if there are 5 or more
occurrences of health care services paid for as free care by all employees in aggregate during any fiscal year, AND the total costs of such free care is $50,000 or more. The free rider surcharge amount will be set between 10% and 100% of the cost of such free care to the state. Small Employer Health Benefit Plan Premium Subsidy Program: The bill establishes a program administered by the Maryland Health Care Commission, in consultation with DHMH, that will provide subsidies to small employers and their employees if the employer has not offered a small employer health benefit plan for at least 12 consecutive months. To be eligible for the subsidy, a small employer must, at the time of initial application for the subsidy have from two to nine eligible employees; meet salary and wage requirements determined by MHCC; offer a small employer health benefit plan to its employees; establish a certain payroll deduction plan; agree to offer a wellness benefit, as required by MHCC; and meet any other requirements established by MHCC. A subsidy may not exceed the lower of 50% of the employer or employee contribution or an amount established by MHCC. Subsidies may be calculated on a sliding scale and altered according to the number of employees. A small employer that provides a small employer health benefit plan that is compatible with a health savings account may be eligible for a subsidy under specified circumstances. The total amount of subsidies provided is subject to the limitations of the State budget. The program will receive $30 million in general fund dollars beginning in fiscal year 2033.
fund or collected from an assessment by HSCRC on hospitals may not be used for the grants. The grants may only be provided under specified circumstances.
Wellness Incentives
The Governors plan authorizes health insurance carriers to offer a discounted rate for participation in wellness activities such as smoking cessation, weight reduction, or nutrition education. The Governors plan requires licensed insurance producers, in connection with the sale, solicitation, or negotiation of a health benefit plan to a small employer, to provide information about wellness benefits and advise the small employer to consult a tax advisor about the tax advantages of a payroll deduction plan. By March 1, 2032, MHCC must propose regulations to specify the components of wellness benefits offered under Title 15, Subtitle 12 of the Insurance Article that include incentives or differential cost sharing; and require small employers receiving a subsidy under the Small Employer Health Benefit Plan Premium Subsidy Program to purchase a wellness benefit. The bill requires prominent carriers and permits other carriers to offer a wellness benefit in the small group market.
Provider Pay-for-Performance
The Governors plan requires the Health Services Cost Review Commission (HSCRC), on or before July 1, 2032, to adopt regulations that provide incentives within hospital payment standards for adherence to quality standards and achievement of performance benchmarks. HSCRC is also required to report on a plan to analyze data collected under the commissions quality-based reimbursement project that indicates whether there are racial and ethnic disparities in adherence to quality standards and performance benchmarks. HSCRC must establish quality
standards and performance benchmarks in conjunction with the Maryland Health Care Commission (MHCC), the Office of Health Care Quality, and the institute.