Massachusetts Health Care Reform

 

The Massachusetts Health Care Reform Act (Act) was enacted in April 2006 to provide nearly universal health care coverage for Massachusetts residents. To carry out this objective, the Act created an individual mandate and employer coverage and reporting requirements, among other things. The Act precedes the federal health care reform law—the Affordable Care Act (ACA)— that was enacted in 2010. This Employment Law Summary provides an overview of Massachusetts’ health care reform law.

 

Individual Mandate

 

The Act requires all Massachusetts residents age 18 and older to have health coverage, if affordable coverage is available. The coverage must meet “minimum creditable coverage” (MCC) standards, which generally means that a plan must cover a broad range of medical services, limit a subscriber’s out-of-pocket costs and impose no limits on certain benefits. Employers and insurers can apply for MCC Certification if they have a comprehensive health plan that does not quite meet all MCC requirements.

 

Residents without MCC may face a tax penalty for each month of noncompliance (but there is a grace period that allows lapses in coverage of three or fewer consecutive months). Penalties can be no more than half of the least expensive monthly premium available through the Massachusetts Health Connector (Connector). However, the penalty does not apply to individuals with incomes less than 150% of the Federal Poverty Level (FPL).

 

The penalty amounts vary by age, income and family size. For example, for 2022, penalties for individuals with incomes greater than 300% FPL are $159 per month, or $1,908 per year.

 

Employer Medical Assistance Contribution

 

In 2014, Massachusetts enacted an Employer Medical Assistance Contribution (EMAC) to fund a state trust for uninsured residents. This fee applies to employers with more than five employees in a calendar year, regardless of whether or not they provide health insurance.

 

These employers must pay contributions on the first $15,000 of each employee's wages paid during the calendar year. The amount of contributions due is derived by multiplying these wages by an assigned rate.

 

Employers are not liable for payment of EMAC in a quarter whenever the average employee count is fewer than six (because wages are exempt for that quarter). Also, employers are exempt when they meet the definition of "newly subject." That is, an employer is not liable for payment of EMAC for up to 3 years after first becoming subject to the unemployment insurance law.

 

Reporting Requirements

 

 

Massachusetts employers with six or more employees must annually submit a health care coverage reporting form, referred to as the Health Insurance Responsibility Disclosure (HIRD). Covered employers must electronically complete the HIRD form by Dec. 15 of each year. This reporting requirement is in addition to the ACA’s reporting requirements under Internal Revenue Code Sections 6055 and 6056. Employers in Massachusetts that are subject to both federal and state reporting must comply with all applicable requirements to avoid penalties.

 

The HIRD form collects employer-level information about employer-sponsored insurance (ESI) offerings. The latest HIRD form is different from the old HIRD form that was repealed in 2014. The old HIRD form consisted of an employer form and an employee form, which required separate forms to be completed and signed by each employee who declined to enroll in ESI or the employer’s Section 125 cafeteria plan. In contrast, the current HIRD form consists of a single employer form, which only needs to be completed once annually and does not contain any personal employee information.

 

The HIRD reporting is administered by MassHealth and the Department of Revenue (DOR) through the MassTaxConnect (MTC) web portal. The MTC is where employer-taxpayers register to file returns and forms and make tax payments. To file the HIRD form, employers log in to their MTC account, select the “Withholding tax account,” and then select the “File health insurance responsibility disclosure” hyperlink. The DOR has issued FAQs that provide more information on the HIRD requirement.

 

 

Employers that sponsor an employer-sponsored health plan must also provide Form 1099-HC by Jan. 31 of each year to each individual who was covered in the previous calendar year. Form 1099-HC serves as proof of health insurance coverage for Massachusetts residents and is intended to help them complete their state tax filings.

 

Most carriers will issue this form on behalf of employers and send a report to the DOR listing all the Forms 1099-HC they issued. However, employers issuing Forms 1099-HC directly to their employees must separately file a report electronically with the DOR. The DOR provides additional information about filing requirements and how to file on its website.

 

Employers that fail to provide Form 1099-HC to covered individuals or to report to the DOR as required may be subject to a penalty of $50 per individual to which the failure relates, up to $50,000 per year per violator. The DOR provides additional information about Form 1099-HC in the form of FAQs on its webpage.