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GIMS
Benefits Newsletter - MAY 2007
Message
from Mark
 We are very sincere in accepting the
responsibility as “Your Right Arm” for Benefit
Solutions. In the past six months we have been sent you numerous
newsletters and alerts relating to the changes in health care reform.
Well, the final sprint is here. For businesses with 10 or more*
employees, open enrollment for all of your employees who were not
offered or previously declined health insurance coverage is May 1 -
June 30 with an effective date of July 1, 2007.
You must offer health plan coverage to all full-time, active employees
working 35 hours + per week (on average) and expect to be employed in
excess of 16 weeks. If the employee refuses your health plan
– great! You still need them to sign a health plan waiver
form AND the new HIRD (Health Insurance Responsibility Disclosure)
waiver form (yet to be released from the Commonwealth of MA). You must
also have in effect a Premium Pre-Tax Section 125 plan. It must be
offered to all employees including part-timers who pay for their own
personal health plans.
Finally, you must be sure that your health plan contributions are in
compliance with the New Health Care Reform (HCR) regulations. Nearly
all of our clients already are in compliance- resulting in no problem
with the Employer Fair Share Regulations. Please read the newsletter to
expand on these comments.
It is very important you are in compliance and that your employees who
have waived coverage previously, be able to get on for July 1. The
Commonwealth has implemented significant penalties for non-compliance.
As always, we are available as a trusted resource to assist you since
we are ‘Your Right Arm’ for your employee benefit
solutions!
Are You In Compliance? For full details and to ensure you are in compliance:
1) Check out Reform Review (our newsletter summary) below,
2) Download the latest employer handbooks on our website Health Care Reform section, and
3) Contact us at (413) 205-1261.
Reform
Review
 Effective
July 1, 2007
Free
Rider Surcharge
A surcharge on employers who do not comply with the requirement to
establish a qualified Section 125 plan and is assessed for
"state-funded health services" that are incurred by employees and/or
their dependents.
An employer may be subject to the Free Rider Surcharge if he/she meets all these criteria:
1) The employer has more than 10 employees*, AND...
2) Employees or their dependents received "state-funded health services" AND...
3) These employees were not offered a qualified Section 125, AND...
4) These "state-funded health services" are at least $50,000 in one hospital fiscal year. |
Section
125 Plans
Required for employers with 11 or more full-time equivalent employees
who work 35 or more hours per week (fully insured and self-insured groups). Employers must establish a
Section 125 Plan in accordance with
regulations to be promulgated by the Connector. The plan must
be
filed
with the Commonwealth Connector. Employers do not need to make a
contribution to the Section 125 plan but must arrange for the payroll
deduction. Employers that comply with the Section 125 mandate
will not
be liable under the "free rider" surcharge.
Employer
- Health
Insurance Responsibility Disclosure
Required by all Employers (fully and self-insured accounts)
with 11 or more employees are required to annually report to the state
compliance with Section 125 mandate.
Employee
- Health
Insurance Responsibility Disclosure
Required by all Employers (fully and self-insured accounts) with 11 or
more employees are required to collect signed statements from employees
who decline health plan coverage OR Section 125 participation. The employer must retain the form for 3 years and
provide it to the state upon request.
Equitable
Coverage
Required by all employers with fully insured
accounts. Employers must make available
to any full-time employee any fully-insured insurance product that they
offer to any other full-time employee. Employers are
prohibited from
making a lower premium contribution to a lower-wage full-time employee
than they do for a higher-wage full-time employee for the same
product. Employers may have different contribution
policies for
workers covered by collective bargaining agreements.
Individual
Responsibility
Requires individuals to obtain and maintain health insurance coverage
beginning July 1, 2007. In 2007, the penalty for non-compliance is the
loss of the individual's Massachusetts State Income tax exemption for
tax year 2007. In subsequent years, the penalty for
non-compliance will be equal to 50% of the monthly premium of an
“affordable product” as defined by regulation. The
Connector Board will develop affordability standards.
An individual can obtain an exemption from the mandate if affordable
coverage is not available. Uninsured individuals, who are deemed to be
able to afford insurance, will have extensive appeal rights.
Effective January 1, 2007
Dependent
Coverage
Required by all employers with fully insured accounts. Employers must
cover dependents until the day before their 26th
birthday or to 2 years after loss of dependent status, under the IRS
code, whichever comes first.
Effective
October 1, 2006
Fair
Share Contribution
Employers
who do not make a “fair and reasonable
contribution” to health coverage will be assessed
an amount not to exceed $295/employee/year. An employer is subject to
pay the Fair Share Contribution if he/she meets BOTH these criteria:
1) The employer has 11 or more FTEs (35 hrs or more p/week) who are employed at Massachusetts locations AND...
2) The employer does not make a "fair and reasonable" premium contribution towards health insurance for his/her employees.
An employer makes a "fair and reasonable" premium contribution if EITHER:
- There is a least 25% participation by full-time employees in the employer's group health plan, OR...
- The employer offers to contribute at least 33%
of the premium cost of its health plan to all full-time employees
employed more than 90 days during the period from October 1, 2006 to
September 30, 2007.
Under
the regulations, part-time, seasonal, independent contractors, and temporary workers are not
counted when determining the 25% enrollment test or the 33%
contribution test.
However, part-time workers are counted in
determining whether an employer has 11+ FTEs. For example, an
employee
who works half the hours of a full-time employee would be considered
0.5 FTE. Moreover, if an employer does not make a fair and
reasonable
contribution to health coverage for its full time employees, the
employer will be required to pay the assessment on both its part-time
and full-time workers. The assessment will be pro-rated based
on the
actual number of hours worked. (Applies to fully and self-insured
accounts).
Get
more info...
*An employer has more than 10
employees if - the sum of total payroll hours for all employees for the
period from October 1 through September 30 divided by 1,820 is greater
than 10. Payroll hours include regular, vacation, sick, Federal Medical
Leave of Absence, short term disability, long term disability, overtime
and holiday payroll hours.
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