Massachusetts has repealed both the Fair Share Contribution (FSC) provisions and the employee Health Insurance Responsibility Disclosure (HIRD) form collection requirement that were part of the Commonwealth’s 2006 health care reform efforts. The repeal was included in the state’s 2014 fiscal year budget bill, and is effective as of July 1, 2013, despite the delayed implementation of the employer mandate provisions of the federal Affordable Care Act (ACA) until January 2015.
Since 2006, the Massachusetts FSC provisions have generally required that employers with at least 11 full-time equivalent employees working in the state either pay an annualized assessment of $295 per employee to the state or meet certain requirements in offering group health insurance to full-time employees. Those provisions have been repealed.
Once the employer mandate provisions of the ACA begin to be applied in January 2015, employers with at least 50 full-time employees that either:
- do not offer “minimum essential coverage” to at least 95 percent of their full-time employees, or
- do not offer affordable coverage that provides minimum value
will be required to pay substantial penalties or “assessable payments.” For example, an employer that fails to offer “minimum essential coverage” to at least 95 percent of its full-time employees will be subject to an assessment of $2,000 per full-time employee, per year, although the penalty is determined monthly.
The good news for employers subject to the Massachusetts FSC is that, until January 2015, there will be an 18-month period during which they will not be subject to either state or federal penalties if they do not offer employees health insurance. Massachusetts Governor Deval Patrick reportedly believes that during this interim period employers in the state will not take advantage of the hiatus to stop offering employees health insurance, but if they did, that the legislature would take action to reinstate provisions to counteract that trend.
The recent Massachusetts legislation also repeals the employee HIRD form collection requirement. This has required employers to collect a signed form from employees each time they decline an opportunity to enroll in the employer’s health insurance or participate in the employer’s cafeteria plan allowing pre-tax premium contributions. Instead, employers with at least 11 full-time equivalent employees will be required to notify all employees of the opportunity for eligible employees to enroll in the employer’s health insurance and pre-tax premium contribution plans, as well as the employer’s compliance with certain health care reform provisions. The legislation charges the state Health Connector agency with prescribing the particulars relating to this requirement.
In lieu of the FSC provisions, the state has instituted a new assessment, called the Employer Medical Assistance Contribution. This will be imposed on all employers with more than five employees beginning January 1, 2014. The assessment generally will be equal to 0.36 percent of wages, up to the taxable wage base under the Massachusetts unemployment insurance contribution law, currently, $14,000. This equates to an annualized fee of about $50 per employee.
The Department of Unemployment Assistance, which has been responsible for enforcing the FSC provisions, has posted an advisory summarizing certain consequences of the repeal and reiterating that it is responsible for maintaining its FSC operations “until all liabilities through June 30, 2013 are accounted for.” Thus, employers who were notified by the DUA that they are required to submit FSC filings should do so through the last effective filing period, which ended on June 30, 2013. The filing is due by August 15, 2013. In addition, the DUA’s regular enforcement activities (including audits and appeal hearings) will continue in connection with FSC filing periods occurring prior to the repeal.
Other provisions of the Massachusetts 2006 health care reform law have not been repealed. These include the individual mandate (which requires Massachusetts residents to maintain health insurance coverage meeting certain requirements) and the requirement that employers offer a wide range of employees the opportunity to participate in a cafeteria plan allowing them to make premium payments on a pre-tax basis. In addition, employers should continue preparing to comply with the requirements of the federal health care reform law.