A can of fishhooks

Employers who already struggle with how to pay for employee health insurance now puzzle over how to comply with the minimum-wage amendment passed by Nevada voters.

The law mandates a minimum wage of $5.15 an hour for employers who provide qualified health insurance benefits. The rate is $6.15 an hour for those who do not.

But what is a qualified health plan?

Nevada State Labor Commissioner Michael Tanchek was bombarded with questions about the health insurance mandate at a public hearing a few days ago.

Tanchek's advice: Avoid what he called "coverage that won't pass the laugh test."

But the definition of health coverage is only one of numerous questions employers have about the law.

"The legislature must deal with this," said Tanchek. "I'm the Dutch boy with his finger in the dyke waiting for them to show up."

Until then, employers find themselves in a legal limbo.

At the public hearing, an employer observed, "The law simply says, 'Must make health insurance available.' I think it's a can of fishhooks."

For instance, health plans often have a three-month waiting period prior to enrollment. Participants in the hearing wondered what's to keep employers from extending the waiting period to six months? Or three years? What, they asked, if the insurance company offers a lower rate for a longer waiting period?"

"My nightmare," said Tanchek: "These $39-a-month health insurance policies that cover a whole family."

Those policies cover only up to $10,000 a year, noted one employer, but another asked if a policy qualifies if payouts are capped at $10,000 or $1 million.

Employees who choose to opt out of the insurance plan offered can be paid the lower-tier wage of $5.15 an hour.

But that raises even more questions.

A casino manager asked, "What if an employee opts out of insurance. But then we get a court order saying that employee must insure his children?"

"I have no idea," said Tanchek.

"It happens every day," said the manager.

"The legislature has to jump on this," said Tanchek.

"For my casino that's a $1-million-a-year impact."

"Pick an impact," said Tanchek. "The question is: which impact do you want?"

The law also says employers must offer an insurance policy that cannot cost an employee more than 10 percent of their gross income. And that rule, said Tanchek, applies whether the policy covers just the employee or also all of that person's dependants regardless of how many people that may be.

Other employers wonder whether co-pays and deductibles will figure into the rule that the cost of the health plan can't exceed 10 percent of the worker's income. Another asked what happens if a worker's gross income is grossly lowered by big deductions for a 401(k) plan.

The insurance industry, meanwhile, has its own concerns.

For instance, the law requires health insurance carriers to be approved by the Nevada Department of Insurance. But 70 percent of Nevada employers are covered by self-insurance plans, and there are questions about how the law affects insurers that write coverage in numerous states.

Enforcement of the law is yet another grey area.

One employer asked whether the labor commissioners' office would allow companies to plead that they attended state workshops on the new law but got no guidance.

"I would take that as a valid reason not to take enforcement action," said Tanchek.

The labor commissioner said he hopes to establish broad rules to implement the new law.

"I need ground rules," said Tanchek. "You (employers) need to make those decisions. An insurance company asked me to review their policy and rule on whether it conforms. I don't have the staff to make case-by-case decisions.

"You want to deal with mischief without throwing a barrier in front of people. I'm trying to find that irreducible minimum."