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GIMS e-Alert - JULY 2007
Carriers
Must Provide “Health Care 1099s” to All
Subscribers for 2007
As part of Health Care Reform, Massachusetts residents age 18 and above
will need to prove that they are complying with the legal requirement
to have creditable health insurance coverage by completing a new tax
form that will be included with the 2007 tax return provided by the
Department of Revenue (DOR). In order to complete this form,
individuals will be required to transcribe data contained in a 1099-HC
statement that the DOR has mandated carriers and/or employers issue to
subscribers/employees no later than January 31, 2008 for subscribers
enrolled as of December 31, 2007.
This 1099-HC mandate applies to all companies regardless of size, and
includes both self and fully insured accounts. Carriers are required to
issue the 1099-HC for all insured subscribers in both group and direct
pay plans, while self-insured accounts are required to issue
the statements to their employees or arrange for the carrier to provide
the service.
Carriers are required to provide the DOR with the file containing the
1099-HC data sent to subscribers and it should also be noted that the
1099-HC forms will include covered dependent information as required by
the DOR mandate.
Many of your employees who decline your group health insurance now
will need to know how their decision will affect them under the new
law, especially at tax time. Below we have provided some FAQs to
assist in the education process.
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GET MORE INFO, ASSISTANCE, and FORMS...
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**NEW**EMPLOYEE HIRD FORM: Each employee of an employer with 11 or more full time equivalent
employees (35 hrs/wk) that declines to enroll in his/her
employer-sponsored insurance or declines to use his/her employer's
Section 125 Plan must complete an Employee Health Insurance
Responsibility Disclosure (HIRD) form. The employer must provide a copy of the signed Employee HIRD Form to the employee and retain a copy for three years.
INDIVIDUAL MANDATE FAQs
What is
the individual mandate?
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.
What
benefits will I need?
Until January 1, 2009, any health insurance plan that is offered by an
employer or that can be legally sold in Massachusetts meets the
individual mandate. On January 1, 2009, the standards go
up. To meet the rules by 2009, you will need a plan that:
| ---Covers
prescription drugs; |
| ---Covers
regular doctor visits and check-ups before any deductible; |
| ---Caps
the deductible at $2,000 for an individual or $4,000 for a family each
year; |
| ---Caps
out-of-pocket spending for health services at $5,000 for an
individual or $10,000 for a family each year if you have a deductible
or co-insurance; |
| ---Does
not cap total benefits for a sickness or for each year; and |
| ---Does
not cap spending toward a day in the hospital. |
In addition, any high-deductible health insurance plan that allows you
to have a federal Health Savings Account also qualifies.
Are
there exceptions?
Yes. If your religion does not allow you to heave health insurance, you
can file a sworn statement with your Massachusetts income tax return.
If you cannot afford health insurance that meets the standards, you can
ask the Health Connector for a waiver.
What
happens if I do not meet the mandate?
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.
(Currently, lowest costs plans available can average approx. $140.00 to
$200.00+ depending on age, family size, plan type chosen, zip code, and
industry code).
Waivers will be available for those who cannot afford a plan that meets
the rules.
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