Focus on Employers

Health Insurance Choices For Individuals and Small Business

Commonwealth Care

Commonwealth Care is a government-subsidized insurance program for low-income individuals who earn up to 300% of the federal poverty level. This program was created by a new state agency called the Connector. (For more information on eligibility, visit the Connector's website.) Coverage under Commonwealth Care is through a choice of plans that are provided by Massachusetts' four Medicaid Managed Care organizations.

Insurance Partnership

Insurance Partnership helps small businesses pay for their health insurance plans. If the employer has 50 or fewer full-time employees, the plan offers comprehensive health insurance and contributes at least 50% to the cost of that insurance. The employer then may be eligible for IP subsidies that can range up to $1,000 per employee per year, depending on the type of plan. (For more information, visit the IP's website.)

Employer Responsibility Under the New Law

Requirements vary depending on the size of your business. Businesses with 10 or fewer full-time employees are not subject to the requirements of the law. But if you employ more than 10 people full-time in Massachusetts locations, you are responsible for offering some contribution to your employees' health care, while your employees share an equal responsibility to make a health care choice. In going forward, these are the vital terms you need to know:

  • A “fair and reasonable” premium contribution means that at least 25% of full-time employees participate in the employee-sponsored health plan or the employer must offer to contribute at least 33% of the premium cost of the health plan. If the employer does not make this “fair and reasonable” premium contribution to the health insurance of employees, they must pay the Fair Share Contribution fee, which will be no more than $295 per employee per year.
  • A Section 125 Plan is a health plan that meets the Connector's regulations and allows employees to pay for health coverage on a pre-tax basis. It is not subject to state or federal income taxes, which also benefits employers through lower payroll-related taxes. Regardless of whether the employer offers other health insurance, employers with more than 10 full-time employees must adopt and maintain a Section 125 Plan. Although this is not a requirement, businesses with fewer than 10 employees should also consider the benefits of adopting such plans.
  • The Free Rider Surcharge can be assessed on those who employ more than 10 people and who do not share in their health insurance responsibility. If the employer fails to set up a Section 125 Plan and if employees and/or dependents have received an excessive amount ($50,000) of “state-funded health services,” employers will be billed this surcharge, with the amount determined by employer size and amount of free care received.
  • The Health Insurance Responsibility Disclosure forms must be completed by all employers and employees, where there are more than 10 employees. The Employer HIRD Form details employment information and what kind of subsidized health insurance is offered, including the Section 125 plan. The Employee HIRD Form also asks employees whether they have accepted or declined the employer-sponsored plan, and if the latter, what alternative coverage has been chosen. The employer must collect all HIRD forms and retain each one for three years.
  • The individual mandate ensures that individuals share in the responsibility. It requires that all Massachusetts residents age 18 and up must have health insurance coverage by July 1, 2007, whether they choose their own coverage or accept employer-sponsored coverage. Employers are not responsible for enforcement of the individual mandate. If a resident goes uninsured, he or she will lose the personal income tax exemption for 2007 and will incur fines in 2008. More information on the individual mandate is located here.

Ensuring a Healthy Workplace: Health Care Reform and Your Business

The responsibility for the implementation of health care reform will be shared by employees, employers, state agencies and health plans, keeping the burden from falling too heavily on any one group.

Currently the number of uninsured and underinsured residents directly affects your business: They often delay needed care for financial reasons, so they bring illness to work. When these uninsured residents do seek medical help, bad debt from non-payment results in a cost shift onto those already paying for health insurance, which causes higher insurance premiums for everyone. Also, individuals and small businesses have been at a particular disadvantage since they don't have the leverage that large businesses have in negotiating health insurance. The premise of the new law is to solve these issues, and if everybody does their part, we all benefit from its success.

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