Health Care Information for Employers

On July 1, 2007, most Massachusetts residents age 18 and older will be required to have health insurance. The law also places certain responsibilities on employers to ensure that health insurance is accessible to as many individuals as possible.

The new law will affect businesses in different ways depending on their size. In general, businesses with fewer than 11 employees are exempt from most requirements of the law. However, their employees who live in Massachusetts are still required to have health insurance.

The Commonwealth Health Connector was created to help connect individuals, families and businesses (especially those with 50 or fewer employees) to a broad choice of affordable, high quality health insurance plans. The Health Connector’s Commonwealth Choice program is now available to non-group individuals and families. In addition, employers who plan to offer health plans, without an employer contribution, to part-time, temporary and other employees can set up tax-advantaged Section 125 plans and pay enrollee premium contributions to the Health Connector.

Small employers who wish to contribute toward their employees’ group health coverage can purchase health insurance through the Health Connector, or they can purchase through existing channels.

Here are key requirements of the new law that affect employers:

Section 125 Plans

Businesses with 11 or more full-time equivalent employees must offer Section 125 plans to enable their employees, including employees who may not be eligible for the employer's group health plan, to purchase health insurance on a pre-tax basis. Those who do not may be required to pay a surcharge if their employees (or dependents of their employees) make significant use of the state’s Health Safety Net, formerly the Uncompensated Care Pool. This is called the Free Rider Surcharge.

Section 125 plans offer tax benefits for both the employer and the employee. Through a Section 125 plan, the employee is able to pay for health coverage on a pre-tax basis that is not subject to federal or state income taxes or federal FICA withholding taxes. On average, Section 125 plans reduce the cost of health insurance to employees in Massachusetts by 41 percent. Private employers also save 7.65 percent in FICA taxes. The Health Connector will offer more detailed information on Section 125 plans and help employers offer a choice of health plans under Section 125.

Fair Share Contribution

Health Insurance Responsibility Disclosure (HIRD) Forms

Employer HIRD Report. Employers with 11 or more full-time-equivalent employees must file the Employer HIRD report. This report indicates whether or not the employer offers a Section 125 Plan and/or health benefits to its employees. The employer HIRD report must be filed annually with the state by each November 15. The employer HIRD information must be submitted electronically to the Massachusetts Division of Unemployment Assistance via the Employer Fair Share Contributions Online Reporting and Payment System.

Employee HIRD Form. Employers with 11 or more full-time-equivalent employees must collect an Employee HIRD form from employees who either decline to use a Section 125 Plan to pay for their health coverage, or decline to enroll in employer-sponsored health insurance. The employee forms are to be collected by the employer and maintained for a period of three years. The employee HIRD form is available from the Massachusetts Division of Health Care Finance and Policy.

Non Discrimination Provision

Another provision requires insurance carriers to sell licensed health insurance products only to employers who offer insurance to all full-time employees and who do not require higher premium contributions from lower wage, full-time employees than they do from higher wage, full-time employees.

For more information, including an Employer Handbook and answers to frequently asked questions, please visit the Health Connector’s website at www.MAhealthconnector.org. Employers may also e-mail questions to the Health Connector’s Public Information Unit at Connector@state.ma.us.

The Health Connector will offer a broad range of quality plans from which you and your employees may choose, and we can relieve you of much of the administrative burden of purchasing employee health insurance. We look forward to working with you to serve your health insurance needs and those of your employees.

Update: The Health Connector sent a letter to employers in November explaining the requirements of the health care reform law that pertain to employers, including the "Minimum Creditable Coverage" standards. 

Health Care: Frequently Asked Questions for Employers