Affiliated Chambers of Commerce of Greater Springfield > Membership Benefits > Legislative Advocacy > Mass Health Care Reform (Bulletins 1-8) > Mass Health Care Reform Reader

Health Care Reform #3 - Penalties for Non-compliance



Overview

Health Care is a very important topic. The new health care law is about to be implemented with many aspects of the law becoming effective July 1, 2007. It is very complex, and while the Chamber continues to believe some changes to it are called for, most of the aspects of the law have been agreed to and will become effective soon.

In order to help our members comply with the law, and to make it easier for those members who want to avail themselves, or help their employees take advantage of the new offerings for insurance under the law, we are embarking upon a communications campaign. The following is the second in a series of 8 bulletins that will be issued on a weekly basis to keep you informed about this important piece of legislation.

Health Care Reform #3 – Penalties for Non-compliance

A bulletin from the Affiliated Chambers of Commerce of Greater Springfield, Inc. on the Massachusetts Health Care Reform Law, Ch. 58

Did you know?
Penalties for employers and individuals found to be in non-compliance with this law are in place.
  • Employers must make a “fair and reasonable” contribution to employees health care cost:
Employers with 11 or more full-time equivalent employees in Massachusetts must make a “Fair and Reasonable” contribution to the cost of their full-time employees’ health insurance. Employers have two ways to meet the “Fair and Reasonable” contribution test:
  1. Primary Test: At least 25% of the employers full time employees participate in the group health plan offered by their employer, or:
  2. Secondary Test: The employer offers to contribute at least 33% of the employee-only premium cost of any group health plan offered to full time employees.
Employers that pass either test will not be subjected to the Fair Share Contribution of $295 per full time Massachusetts employee.

Offer a Section 125 Plan:
To make health insurance more affordable to employees, employers with 11 or more full time equivalent employees in Massachusetts are required to have a Section 125 cafeteria plan as of July 1, 2007. A section 125 plan allows employees to pay their portion of the health insurance premiums on a pre-tax basis.
  • Employers offering Section 125 plans will be exempt from the Free Rider Surcharge.
  • Employers not offering a section 125 plan may be subject to the Free Rider Surcharge if your employees or their dependents received “state funded health services” of $50,000 or more.
The Free Rider Surcharge may range from 10% to 100% of the cost of free care provided to your employees and their dependents.

Individual Mandate:
As of July 1, 2007, all residents of Massachusetts age 18 or over are required to have health insurance if an affordable plan based on income is available. This is known as the individual mandate. With some exceptions, individuals who cannot show proof of health insurance coverage will lose their personal State tax exemption for 2007. In 2008 and beyond, an individual without health insurance will be fined for each month without coverage. The fine will be equal to 50% of the least costly insurance available.
  • Employers may wish to remind their employees of this requirement during enrollment periods.
  • Employers may also wish to discuss with their health plan providers the possibility of having a special open enrollment period in June to assist employees in obtaining coverage.
More on the 125 Plan will be written next week. Additional information can be found on several web sites or through your accountant, financial advisor or attorney. Chamber members providing these services can be found at through our Member Directory. Additionally, 125 Plan information can found on www.hne.com the Health New England Web site (general information only); the Employers Association www.eane.org and the Small Business Bureau at www.sbsb.com.

These bulletins are not intended as legal or tax advice. You will be offered resources that you should contact for specific advice on how this law will affect your business. While there are many sources of information available, including those of your attorney, accountant, insurance carrier or benefits advisor, this series will attempt to give you websites to visit.

If I can help you find answers, contact me at ciuffreda@myonlinechamber.com.

Sincerely,
Jeffrey Ciuffreda
Vice President of Government Affairs

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