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Governor Backs Unemployment Rate Freeze, Changed Health Contributions

Posted on January 8, 2013

Governor Deval Patrick filed legislation yesterday to freeze unemployment insurance rates for 2013 and reconfigure the contributions employers make under health care reform.

Governor PatrickThe proposal to freeze UI rates at the current Schedule E for a fourth consecutive year would roll back a $500 million increase on Massachusetts employers that took effect January 1. Massachusetts House Speaker Robert DeLeo has already expressed support for the freeze, which would still leave the fund used to pay benefits to unemployed people with a balance of $600 million at the end of 2013.

Governor Patrick said at an afternoon news conference that the four consecutive rate freezes have saved Massachusetts employers approximately $1.7 billion. The governor also suggested that long-term structural reform of the UI system, long sought by Associated Industries of Massachusetts, could take place during the current legislative session.

“There is an interest we share with the legislative leadership in comprehensive UI reform and I think it will happen,” he said.

Richard C. Lord, President and Chief Executive Officer of AIM, said the governor’s support of a rate freeze and structural UI reform will strengthen the Massachusetts economy.

“AIM has been at the forefront of efforts to ease the burden of unemployment insurance taxes on the Massachusetts job market, so we are gratified by the legislation filed by Governor Patrick,” Lord said.

“Approval of a freeze will provide $500 million to employers to invest in the people and equipment that will create economic stability in a still-uncertain global recovery.”

The proposed health-care funding changes include the elimination of two key employer contribution requirements – the Fair Share contribution created under the 2006 Massachusetts Health Care Reform law and the Medical Security Program under which employers contribute money to provide low-income unemployed people with health insurance. Administration officials say both programs will be unnecessary under federal health care reform.

The Medical Security Program surcharge will be replaced by an “employer responsibility contribution” of $50 per employee per year to subsidize unemployed people obtaining health insurance either though MassHealth or the Commonwealth Health Insurance Connector. Administration and Finance Secretary Glen Shor said the new fee will end up being less than the $67.20 per employee that companies paid into the Medical Security Fund during 2012.

AIM supports the move to eliminate the Fair Share and Medical Security assessments, but needs to study details of the new levy.

The Fair Share contribution will end on June 30. The provision mandates that employers with 11 or more full-time equivalent employees make a “fair and reasonable” contribution toward the health-care costs of employees or pay an assessment of up to $295 per employee per year.