Employers with 11 or more full time employees in Massachusetts are required to provide a Section 125 plan that allows employees to pay their health insurance premiums using pre-tax wages. This requirement applies whether or not the employer offers health insurance to its employees. In addition, the Section 125 plan must be extended to most part-time and all full-time employees. The regulation governing the Section 125 requirement is managed by the Commonwealth Health Connector Authority.
The Free Rider Surcharge, managed by DHCFP, is a tool intended to promote compliance with the Section 125 plan requirement. Companies without Section 125 plans whose workers access medical care through the state's Health Safety Net may be assessed a penalty between 20% and 100% of the cost of these medical services that exceed $50,000.
- See Employer Surcharge for State-funded Health Costs "Free Rider" regulatory information
- See Massachusetts Health Connector Section 125 Plan Tools & Resources
- Employer Free Rider Surcharge: Policy, Objectives, and Results
This report reviews the key objectives of the Free Rider Surcharge in the context of Massachusetts health reform and provides results for fiscal years 2008 and 2009.
This information is provided by the Division of Health Care Finance and Policy.