By Jenifer M. Pinkham, Esquire
This year, the legislature passed a new law that was widely publicized entitled, "An act providing access to affordable, quality, accountable health care." There are five provisions that impact employers, each of the provision will be discussed in turn, however, many of the details will not be known until the Executive Office of Health and Human Services promulgates regulations to define and implement certain provisions of the law. As the regulations are promulgated and more information becomes known, we will provide additional information in an upcoming newsletter.
This provision applies to all non-governmental employers with more than ten (10) full time employees who are not "contributing employers." A Contributing Employer is an employer that makes (i) a "fair and reasonable premium contribution" (ii) to a "group health plan." If an employer does not make a fair and reasonable contribution to a group health plan, then it must pay a fair share contribution of up to $295 per employee. At this point, "fair and reasonable contribution" is not defined within the law, however, the regulations will define it. The effective date for this provision is October 2006, although, it may be impossible for the government to have all of the details ironed out by that date.
This surcharge will be imposed on employers who do not provide or arrange for health insurance for their employees and whose employees use free care. Imposition of the surcharge will be triggered if an employee receives free care more than three times or a company has five or more instances of employees receiving free care in one year. The surcharge will range from 10% to 100% of the state's costs of services provided to the employees with the first $50,000 exempted. The regulations will define this surcharge in more detail. This surcharge is only applicable to a "non-providing employer" which is an employer that fails to "contribute to or arrange for the purchase of health insurance. The surcharge will only apply to employers with ten (10) or more employees. This could be extremely costs for employers. For example, if a restaurant employees more than ten employees and fails to contribute to or arrange for health insurance, and one of its employees is rushed to the emergency room for the third time in one year, and that employee incurs a charge of $250,000. The employer may be liable for up to $200,000.
The new law mandates that every employer establish a Section 125 Plans or "cafeteria plans" which allows an employer to offer health insurance and other programs such as day care funding to employees on a pre-tax basis. Employers with 10 or more employees are required to offer this pre-tax benefit to employees. This provision takes effect October 1, 2007.
The Department of Health Care Finance and Policy will be creating a form entitled "Health Insurance Responsibility Disclosure Form." Every employer will be required to fill out the form and the form will tell the government whether or not the employer has arranged and/or provided health insurance and whether or not the employee has accepted the coverage and if the employee has other coverage.
If group health coverage is provided to full time employees, then all full time employees who live in Massachusetts must be included and each employee must receive the exact same contribution from the employer despite their position, tenure or salary.
This is a very complex new law that has a significant impact on businesses. We will keep you updated as it takes effect and more information becomes available.