In 2006 Massachusetts became the first state to enact comprehensive healthcare reform legislation. Requirements included an individual mandate, employer fair share contribution, and a health insurance responsibility disclosure (HIRD) form.
In 2013, in response to passage and implementation of the Affordable Care Act (ACA), Massachusetts repealed all of these requirements except the individual mandate. In 2017, however, Massachusetts reinstituted much of what it had repealed and added new employer assessments. The summary below provides a high-level overview of existing employer healthcare obligations in Massachusetts.
Massachusetts Individual Mandate - Minimum Creditable Coverage Requirement
Massachusetts residents who are 18 and older must have health coverage that meets specific standards or they will be subject to a tax penalty. Plans that qualify are called Minimum Creditable Coverage (MCC). MCC standards include:
- Coverage for a comprehensive set of services (e.g. doctors' visits, hospital admissions, day surgery, emergency services, mental health and substance abuse, and prescription drug coverage).
- Doctor visits for preventive care, without a deductible.
- A cap on annual deductibles of $2,000 for an individual and $4,000 for a family.
- For plans with up-front deductibles or co-insurance on core services, an annual maximum on out-of-pocket spending of no more than the annual limit set by the IRS for high deductible health plans. In 2018, out-of-pocket costs are limited to $6,650 for an individual plan and $13,300 for a family plan.
- No caps on total benefits for a particular illness or for a single year.
- No policy that covers only a fixed dollar amount per day or stay in the hospital, with the patient responsible for all other charges.
- For policies that have a separate prescription drug deductible, it cannot exceed $250 for an individual or $500 for a family.
Employers are not required to offer health plans that meet MCC standards but most structure
their health plans to meet MCC standards so that their Massachusetts resident employees do not
face a tax penalty. Employers with plans that do not meet all MCC requirements can apply for MCC
certification through the state. That certification process evaluates HRA and HSA funding that
offsets higher deductibles. Plans that meet all MCC requirements do not need state certification,
but can self-certify compliance.
Form MA 1099-HC
Employers that provide benefits to Massachusetts residents (or their vendors) must distribute Form MA 1099-HC to employees who reside in Massachusetts by January 31 of each year. Form 1099-HC discloses whether or not employer coverage qualifies as MCC to satisfy the state's individual mandate, which is important for individual tax filings. This information is also reported to the state Department of Revenue (DOR). For insured plans sitused in Massachusetts, insurance carriers will prepare and distribute the forms. For self-funded plans and insured plans sitused outside of Massachusetts, the responsibility lies with the employer. Most employers with self-funded plans rely on their vendors to determine MCC status, distribute the forms, and file the DOR report. Not all vendors provide this service, however, and impacted employers should confirm their vendor will provide this service or make other arrangements to comply. This state requirement is in addition to reporting required by the ACA (Form 1095-C).
Interaction with Federal Healthcare Reform
While the state and federal law have some similarities, there are notable distinctions. Since the enactment of the ACA, Massachusetts has retained its individual mandate. Massachusetts structured its mandate so that residents would not be double penalized (under both federal and state law), but the ACA's federal individual mandate penalty was repealed by the 2017 tax Cuts and Jobs Act.
Also under the ACA, an Applicable Large Employer must offer affordable Minimum Essential Coverage (MEC) to substantially all of its full-time employees or risk penalties. MEC is different than Massachusetts MCC in that MCC identifies very specific benefit and coverage levels. MEC, on the other hand, can be almost any non-excepted benefit employer plan and can be very minimal coverage. MEC can also include individual exchange plans, Medicare, Medicaid & CHIP. Plans that meet Massachusetts MCC requirements will also meet federal MEC requirements but not all MEC plans constitute MCC. Note, however, that most employers offer coverage that is more comprehensive than a simple MEC plan and many employer plans will meet the MCC requirement.
Employer Medical Assistance Contribution (EMAC) and EMAC Supplement
In 2014, Massachusetts introduced an Employer Medical Assistance Contribution (EMAC) tax to fund health benefits for uninsured state residents. Employers with more than five employees in Massachusetts were automatically subject to an EMAC assessment of 0.34% (when enacted) of the Massachusetts wage base for unemployment taxation purposes (approximately $50 per employee per year). This contribution requirement applies whether or not the employer offers health insurance to employees. It is assessed and paid with other unemployment insurance contributions to the Massachusetts' Department of Unemployment Assistance (DUA). The EMAC maximum contribution rate increased from 0.34% in 2017 to 0.51% of the unemployment wage base (approximately $77 per employee per year).
In 2017, legislation also created a new, two-year EMAC Supplement tax for 2018 and 2019. The EMAC Supplement tax is a separate employer assessment of 5% of wages up to the $15,000 unemployment wage base - $750 maximum - that applies for any non-disabled employee (including full-time and part-time) who obtains health coverage through MassHealth (excluding the premium assistance program), or Subsidized health insurance coverage from the Massachusetts ACA marketplace (Massachusetts ConnectorCare). An employee whose employer has offered minimum value, affordable coverage-as those terms are defined under the ACA-are generally not eligible for subsidized coverage through ConnectorCare.
The EMAC Supplement tax only applies for employees, including part-time employees, and not for dependents of an employee. The DUA will determine any employer liability for the EMAC Supplemental tax and will assess the tax by adding it to the DUA statement showing the employer's unemployment insurance liability. Employers who want to appeal the tax can request a hearing with the DUA, but the request for a hearing must be filed within 10 days of the employer's receipt of the determination of the EMAC Supplemental tax.
At the end of the 2018 legislative session, the legislature added an EMAC Supplement hardship waiver. DUA has since promulgated regulations relating to the Supplement hardship waiver process. Key details include:
- Any employer may submit a hardship waiver but special consideration will be given to: employers with variable or limited revenue; employers with less than 50 employees; seasonal and temporary employers; and employers serving the public interest, including those who receive a significant share of revenues from the government.
- To demonstrate a financial hardship, an employer must show that the hardship is due to the EMAC Supplement assessment; that they acted in good faith in all relations with DUA; and that failure to get a waiver approved would result in a termination of business or employees.
- A hardship waiver application only applies to the quarter for which it was filed. A waiver approval also only relieves the employer from EMAC Supplement liability for the quarter in which the waiver was granted.
- Approval will be discretionary and there will be no ability to appeal. The approval may result in a full or partial waiver of liability for an EMAC Supplement assessment for the quarter in which the waiver was filed.
Health Insurance Responsibility Disclosure (HIRD) Form
Massachusetts employers with 6 or more employees must annually submit the HIRD form to MassHealth and the Department of Revenue (DOR) through the MassTax Connect (MTC) web portal. The submission process for 2018 starts November l5 and must be completed by November 30. Thereafter, the HIRD reporting will be due on November 30th of each filing year.
The purpose of the HIRD is to collect employer-level information about employer health coverage offerings to assist MassHealth in administering its Premium Assistance Program. The HIRD form only captures employer-sponsored group health insurance and does not take into account any HRAs, FSAs and HSAs. The HIRD Form collects information including:
- A summary of benefits for all available health plans
- Eligibility criteria for offerings
- Total monthly premiums of all available health plans
- The employer and employee shares of monthly premiums
An individual will be deemed an employee if the employer included them in the quarterly wage report to the Department of Unemployment Assistance (DUA) during the past 12 months. Employers who do not offer health insurance are still required to submit a completed HIRD form.
To submit the HIRD form, an employer will login to their MTC account and select the “File health insurance responsibility disclosure” hyperlink. The instructions on the MTC web page will assist in forgotten passwords/usernames or employers can contact the DOR at 617-466-3940. No penalties or fines will be assessed on completed HIRD forms.
The information contained in this document is neither intended nor implied to be legal or regulatory advice or counsel. It is provided for general informational purposes only and represents a summary based on publicly available sources. We make no representations about and assume no responsibility for the accuracy or completeness of information contained in this document and such information is subject to change without notice.
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