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Health Care Reform Act of 2006

Attention: Agricultural Community

HEALTH CARE REFORM

Sweeping changes in health care insurance have been enacted by the Massachusetts Legislature in an effort to provide universal access to health care in Massachusetts and the changes may affect farmers and their families across the state. The following is a brief review of the changes.

BACKGROUND

On April 12, 2006, Gov. Romney and the Legislature came together and enacted a landmark health care reform Act (chapter 58 of the Acts of 2006). The Health Care Reform Act is designed to reform health care insurance throughout the Commonwealth and bring near universal coverage to residents. It imposes new responsibilities on individuals, employees, employers and the Commonwealth.

The legislation is built on the concept of shared responsibility—between people, business, and government. It requires all persons to purchase health coverage if they can afford it. It requires businesses that do not provide coverage to employees, to help pay for it. It requires the government to provide subsidies to ensure affordability. Full implementation of the plan is expected by July 1, 2007.

The first major element of the legislation is the creation of the Commonwealth Health Insurance Connector Authority (“Connector”). The purpose of this new Connector is to “connect” individuals and small businesses statewide to affordable insurance plans. The Connector will review existing health insurance coverage plans in the marketplace and give certain plans the Connector “seal of approval.” Plans offered through the Connector will not be subject to minimum contribution and participation rules, as is presently the case.

The Connector acts as a clearinghouse where both individuals and workers in businesses with 50 or fewer employees will be able to purchase from insurers personal, health insurance coverage that meets their needs and is portable.

The Health Care Reform Act mandates that statewide health care coverage be the responsibility of three sectors of society:

I. Individual Mandate

Beginning July 1, 2007, all Massachusetts residents 18 years of age and over are required to carry the minimum level of health insurance. Those who can afford health insurance will be required to purchase it. Enforcement will be accomplished through an individual’s state tax return. Financial penalties will be imposed on uninsured individuals up to 50 percent of the cost of a health insurance plan.

To make coverage affordable, the legislation requires persons who are less likely to need care and who are now uninsured to obtain health insurance, thereby generating premiums that help support coverage for uninsured persons currently requiring care. Those who cannot afford coverage will be covered through a combination of employer contributions, parental inclusions (as a dependant) and/or government subsidies. Dependents up to 25 years of age can also opt to remain on parental policies. The Connector will also put forth specially designed, lower-cost coverage plans for 19-26 year-olds. An insurance plan may be purchased through the Connector utilizing pre-tax dollars.

Individuals purchasing coverage through the Connector, such as the self-employed, will have the right to switch coverage during the annual open season without new underwriting—just like those who work for large employers.

II. Business Mandate

Employers are required to contribute to the solution. The new legislation requires that employers "play or pay."

Any Massachusetts business with 50 or fewer employees will be able to designate the Connector as its group health insurance plan. After that, each of its workers will be able to choose the health plan that best suits him or her from among those offered by the Connector. Workers will be able to switch plans during an annual open season and will be able to take their coverage with them as they move from job to job. The Connector is designed so that all premium payments made by both employers and workers will be on a pre-tax basis. And with the Connector in place, the state government will have a single place to send premium subsidies for those who need extra assistance to buy coverage.

Thus, under the new health care reform:

A. Employers with 10 or fewer employees

No requirements for employers of this size.
No need to pay a “Fair Share” fee per employee.
Employers in this range can opt to purchase or make insurance available to employees through the Connector.

B. Employers with 11- 50 employees

Provide health insurance coverage or pay a “Fair Share” fee of up to $295 annually per employee.
The fee is limited to $295 per year per employee and is calculated based on usage of free health care by those employees who are not provided coverage. The fee will be pro-rated for temporary or seasonal employees.
Employers will also be required to offer a Section 125 “cafeteria plan” to their employees, which allows employees not offered health care by their employer to purchase health care through the Connector with pre-tax dollars.
Employers in this size range can purchase or make insurance available to their employees through the Connector.
Employers in this range may also be subject to the free-rider penalty.

C. Employers with 51 or more employees

Same as employers with 11- 50 employees. Except: Employers in this range can purchase or make insurance available through the Connector for part-time or seasonal workers ONLY.

III. Government Mandate

A. Subsidies - Government-funded subsidies will assist low-income individuals with the purchase of health insurance. Through subsidies the total cost of health insurance for individuals with income at or below the federal poverty level is paid. Partial payment of insurance costs for other uninsured, qualified individuals also exists.
B. MassHealth Expansion - The legislation includes an expansion of MassHealth to cover all children in families with incomes of up to 300 percent of the poverty level. Enrollment caps on existing MassHealth programs for adults will also be raised. Adults with incomes less than 100 percent of the federal poverty level ($9,800 for an individual) will also be covered and will not be required to pay any premiums.

Plans offered through the Connector will not have deductibles, and will be offered by managed care organizations that participate in the MassHealth program.

IV. Seasonal/Temporary/Part-Time Employees

The Connector makes it easier for all businesses to offer insurance.

Businesses with 10 or fewer employees not subject to the “Fair Share” fee.
Farms/Businesses with 11 or more employees not providing or contributing to health insurance required to pay the “Fair Share” fee of up to $295 per employee per year.
“Fair Share” fee pro-rated for employers with seasonal, temporary or part-time employees.
Connector allows for multiple employers to pay into one person’s insurance premium and allows for portability.
Individuals who leave a small business that offered coverage through the Connector will be able to maintain the same health plan on their own.
Workers able to switch plans during an annual open season and able to take coverage with them as they move from job to job.
A worker with two part-time jobs able to combine both employers’ contributions to purchase coverage.

CONCLUSION

The application of the new health care insurance reform can be a complex issue. This summary is intended to be a brief introduction. The Department will pass on more information, as the program unfolds. Farm operators are encouraged to seek out further information.

Additional information is available by calling the new Commonwealth Health Insurance Connector Authority customer service center toll-free at 1-877-MA-ENROLL (1-877-623-6765). A representative will be available to speak with you Monday through Friday from 8 a.m. - 5 p.m.

Official website: http://www.mass.gov/connector

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