What Your Employees Should Know About
the Massachusetts Health Care Reform Act

What is the Massachusetts Health Care Reform Act?

In 2006, the Commonwealth of Massachusetts enacted comprehensive health care reform legislation known as the Act Providing Access to Affordable, Quality, Accountable Health Care (the Act). The Act is designed to ensure that every Massachusetts resident has adequate health coverage by requiring Massachusetts residents to obtain health coverage that satisfies minimum guidelines and by imposing various requirements on Massachusetts employers. 

Compliance with the Act will present administrative challenges—many provisions become effective July 1, 2007, and the state has not yet finalized its regulatory guidance.

What are My Responsibilities Under This Law?

The heart of the Act is the individual mandate, which, effective July 1, 2007, requires that every Massachusetts resident obtain and maintain health coverage that satisfies minimum creditable coverage requirements.

The individual mandate is the law in Massachusetts. It says that Massachusetts residents age 18 and older must have health insurance by July 1, 2007. By January 1, 2009, the health insurance must have certain basic benefits.

Individuals can satisfy the mandate by obtaining coverage through their employers or a public instrumentality created by the Act named the Commonwealth Health Insurance Connector (the Connector). 

Should I Purchase Health Care from My Employer or the Connector?

Individuals may purchase health insurance coverage through the Connector only if they are not eligible for coverage under their employer’s health plan.  Individuals are exempt from the individual mandate if they object on religious grounds, if the individual has a hardship, or the Connector determines that affordable coverage is not available.

The purchased employer coverage must be “creditable” and, in the first two years of this regulation, all employer-provided coverage will be deemed creditable.

What are the Penalties for Failure to Purchase Such Coverage?

If you don’t have health insurance by Dec. 31, 2007, you will lose your personal income tax exemption for 2007. That exemption gives you a Massachusetts tax savings of approximately $219.

In 2008, the cost of the penalty goes up.  The fine will equal half of the cost of the lowest-priced Health Connector-certified plan for each month that you don’t have coverage

Waivers will be available for those who cannot afford a plan that meets the rules. 

Can I Obtain Coverage If I Have Previously Waived My Employer’s Plan?

Employers will be allowing a special “open enrollment period” for individuals who had previously declined coverage. This is a special offering and will be provided only once in order to satisfy the requirements of the regulations.

How Will the State Know That I have the Required Coverage?

Each year, by the end of January, your employer will provide you with a notice entitled the Annual Health Insurance Coverage Statement. This document will contain the following information:

This information will be used to complete a new section of your 2007 state income tax form, verifying coverage in compliance with the requirements.

What Will Happen If I Decline My Employer-Based Coverage?

If you decline enrollment in your employer’s plan (or if you decline to participate in your company’s Section 125 Pre-Tax benefit), you will be asked to complete an Employee Health Insurance Responsibility Disclosure (HIRD) form. On this form – provided through your employer – you will be asked to indicate whether you have an alternate source of coverage. This HIRD information will be reported by your employer to the State each year.

Are There Other Changes I Should Be Aware Of?

One additional change that may impact your dependents’ benefits is the extension of the dependent age to either age 26 or two year after the plan’s defined exhaustionof dependent definition date, whichever comes earlier. If this may affect you, please contact your employer for further details.

Where Can I Get Additional Information About These Requirements?

The Commonwealth of Massachusetts has developed a comprehensive website, www.mahealthconnector.org, to answer all of your questions about this process. They can also be reached via telephone at 1-877-MA-ENROLL (1-877-623-6765).

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