In April of 2006, the Commonwealth of Massachusetts enacted a comprehensive health care reform act, the Act Providing Access to Affordable, Quality, Accountable Health Care (the "Act"). The following is a brief summary of certain Act provisions, recent updates and upcoming deadlines.
- Individual Mandate. Effective July 1, 2007, all Massachusetts residents age 18 or older are required to have health insurance providing "creditable coverage." Individuals who do not comply will be subject to the loss of personal tax exemptions in 2007, and, in future years, a penalty based on the lowest monthly insurance premiums available for creditable coverage.
- Fair Share Contribution. The Fair Share Contribution is a per-employee annual fee (maximum $295) that an employer with 11 or more full-time equivalent employees must pay if it does not make a "fair and reasonable" contribution to the health insurance of its employees. The employer is considered to have made a fair and reasonable contribution if either i) there is at least 25% participation by full-time employees in the employer-sponsored group health plan (the "primary" or "take-up rate" test), or ii) the employer offers to contribute at least 33% of the premium costs of its health plan to all full-time employees (the "secondary" or "offer rate" test).
- Cafeteria Plan. An employer with 11 or more employees is subject to a penalty (the "Free Rider Surcharge"), equal to a portion of the Commonwealth's cost to provide health benefits to uninsured employees, where the employer fails to maintain a Section 125 plan (a "cafeteria plan"). The cafeteria plan must, at a minimum, offer employees access to one or more medical care coverage options that the employees may pay for on a pre-tax basis. The requirement to provide a cafeteria plan does not mean an employer must i) provide access to its own group health plan, or ii) contribute to the cost of coverage. Those employees who are ineligible for the employer's group health plan may, in most cases, purchase coverage in one of the Commonwealth Choice plans available through the Commonwealth Connector. Employers should be aware that eligibility requirements for participation in the cafeteria plan under the Act may be more liberal than the requirements for participation in the Employer's current cafeteria plan and health insurance.
- Health Insurance Responsibility Disclosure. Each employee of an employer with 11 or more full-time equivalent employees that i) declines to enroll in employer-sponsored insurance, or ii) declines to use the employer's Section 125 plan, must complete an employee HIRD form. A copy of an employee HIRD form is available at: http://www.mass.gov/Eeohhs2/docs/dhcfp/g/regs/employee_hird.pdf.
The Commonwealth will track compliance with Act requirements by the filing of employer HIRD information, including whether the employer maintains a cafeteria plan, and whether the employer contributes to the premium costs of a group health plan for its employees. In order to ease the additional reporting requirement placed on employers, there will be no separate employer HIRD form filing. Instead, the employer HIRD information will be submitted with the annual Fair Share Contribution filing, no later than November 15.
- September 5, 2007. Administrative Bulletin 03-07 amended the cafeteria plan filing requirement. An Employer must file its cafeteria plan document only upon request.
- September 14, 2007. An Administrative Bulletin amended the Primary Test calculation for the Employer Fair Share Contribution Requirement.
- September 30, 2007. Employers should have collected Employee HIRD forms, which must be maintained for three years.
- October 1 - November 15, 2007. Fair Share Contribution/HIRD reporting and payment (if applicable). The filing of Fair Share/HIRD information is done electronically at: https://fsc.detma.org.