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Mass Health Care Reform Plan Overview
On April 12, 2006, Governor Mitt Romney signed into law legislation that
would provide nearly universal health care coverage to state residents. Full
implementation of the Massachusetts Health Care Reform Plan is expected by
July 1, 2007, though certain provisions (such as the fair share premium contribution
requirement described below) may take effect sooner. Physicians who have
thought about the changes this law will generate may have looked at it primarily
from the perspective of its affect on practices as health care providers,
but the Health Care Reform Plan will also affect physician practices in their
capacity as employers.
Businesses that have between ten and fifty full time
employees are required to do certain things:
Implement Section 125 Plan
•
You must adopt and maintain a Section 125 plan by July 1, 2007. On the
plus side, this is a cost effective way for employers to offer their
employees
a way to buy health insurance using “pre-tax” money, with
the added benefit of reducing the employer portion of your FICA taxes.
A copy
of the plan document must be filed with the Connector annually.
Fair Share
Assessment
•
Employers must make a “fair and reasonable” premium contribution.
Failure to do so will subject you to the “Employer Fair Share
Contribution” of
up to $295 per employee per year. If you already provide coverage to
as few as 25% of your full-time employees, or contribute at least 33%
of the
individual
premium for full-time employees participating in the group health plan,
you may be exempt from this requirement.
Free Rider Surcharge
• Employers will be considered a non-providing employer if they do not
contribute to a health plan for employees or if they do not provide access to
insurance
and comply with HIRD reporting requirements (see below).
• Access is defined as allowing pre-tax deductions via a Section 125 plan
for all employees and providing information on accessing insurance from
the Connector (see below).
HIRD Form
•
You must file an annual “Employer" Health Insurance
Responsibility Disclosure (HIRD) form with the Division of Health
Care Finance and Policy
annually, and you must obtain from your employees who decline your
offer of coverage, and retain for 3 years, an “Employee" HIRD
form.
The Connector
One of the key features of the new Massachusetts health care law
is the creation of a quasi-government agency – referred
to as the “Connector" – to
facilitate the purchase of health insurance. If you want to offer
an employer sponsored health insurance plan via the Connector,
you have the
following options:
•
The employer selects a “core” health insurance benefit level
known as its “Benchmark” through the Connector. Health plans
have been asked to develop three levels of plans, a “premier” level,
a “value” level and a “minimum creditable” level.
•
Your employees may select plans from different insurers as long
as they stay within your “level”. Note: no employee,
including owners, may select a plan in a higher or lower level
or get the
benefit of a higher
employer contribution.
Non-Discrimination Rules
•
Whether you secure group coverage through the Connector or elsewhere,
you must offer a single level of benefits and premium contributions
to all employees.
• For new group plans, two or more benefit levels
can no longer be
offered (PPO with an HMO, for example.)
• Groups can't pay a different
percentage of the premium for different classes of employees. (can’t
pay family premium for owners but single premium for others; can’t
pay higher percentage of premium for “key employees” than for
others.) It’s
not clear, though, whether groups that had “dual choice” plans
or different contributions in effect prior to January 1,
2007 will be able to keep them intact.
• Self-funded plans are exempt from non-discrimination provisions.
Note
that many of the details of the new law are still being worked out and the
information above may change.
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