Under health care reform, most Massachusetts residents age 18 and older are 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 law affects businesses in different ways depending on their size. In general, businesses with fewer than 11 full-time equivalent 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 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 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. Visit the Health Connector website for more detailed information on Section 125 plans.
Massachusetts' employers who employ 11 or more full-time equivalent (FTE) employees must file a Fair Share Contribution (FSC) report. Employers with 11 or more FTE employees who do not make a "fair and reasonable contribution" to their employees' health insurance, as defined in Division of Health Care Finance and Policy (DHCFP) regulation (114.5 CMR 16.00), are required to pay a per-employee FSC to the Commonwealth Care Fund, payable to Division of Unemployment Assistance (DUA). Visit DUA's website for more information about the Fair Share Contribution.
Health Insurance Responsibility Disclosure (HIRD) Forms
If you are an employer with a Massachusetts location and employ 11 or more full-time equivalent (FTE) employees, you are required to file an Employer Health Insurance Responsibility Disclosure (Employer HIRD). The disclosure includes information about your compliance with the M.G.L. c. 151F requirement to adopt and maintain a Section 125 Cafeteria Plan. You are also required to collect an Employee Health Insurance Responsibility Disclosure (Employee HIRD) from all employees that decline your offer of employer-sponsored insurance and/or participation in your Section 125 Cafeteria Plan. For more information on where, how, when and what to file, visit the Division of Health Care Finance and Policy's website.
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.