How will health care reform affect you and your customers?

Why was the health care reform legislation introduced?

This legislation was introduced for a number of reasons:

• to reduce use of free care at hospitals and health care centers
• to improve public health
• to ensure patients have access to quality and cost information to help support them when they need to make decisions about their care
• to retain the state’s Medicaid funding from the federal government.  

What is Fallon Community Health Plan doing about the legislation?

FCHP is in favor of providing access to insurance coverage for all Massachusetts residents. We have affordable health plans available that encourage the use of cost and quality information, and we’ll continue to support our members in our existing plans. 
 

What is the Commonwealth Health Insurance Connector and how will it affect FCHP brokers?

The Commonwealth Health Insurance Connector is a state agency which through a subconnector (SBSB) will enroll small businesses (less than 50 employees) and individuals into health care plans provided by private health insurance companies. FCHP is one of the companies offering plans through the Health Connector. The creation of the Health Connector will not affect you much in that individuals and small groups can still get insurance through a broker/intermediary, through the subconnector or directly through FCHP.

The Insurance Partnership will still be available for small businesses (up to 50 employees) and the self-employed to help pay for health insurance. Eligibility for the program has been expanded to include individuals who earn up to 300% of the FPL. For more information on the Insurance Partnership Program, please visit their Web site at: www.insurancepartnership.org.

What is the employer mandate and who does it impact?

Employers with 11 or more full-time equivalent employees are required to offer cafeteria plan coverage to their employees, either under their own group health plan or through the Commonwealth Health Insurance Connector, and to make a fair and reasonable premium contribution to the health insurance costs of its employees.

Get help setting up a Section 125 cafeteria plan

All Massachusetts employers with 11 or more employees will be required to complete a Fair Share Contribution (FSC) and employer Health Insurance Responsibility Disclosure (HIRD) filing. Individuals that are employed by an employer with 11 or more employees will be asked to sign an employee HIRD form if:

• the employee declined to enroll in an employer sponsored health plan offered and/or
• if that employee declined to participate in the employer’s Section 125 plan.

These forms needed for filing are available on the Division of Health Care Finance and Policy Web site.  More information on the Fair Share Contribution filing can be found at www.mass.gov/fairshare.

• Employers who don't make a “fair and reasonable” premium contribution toward the cost of their employees' health insurance will be subject to a "fair share" assessment, the lower of:
  1. $295 per employee, or
  2. Fair share contribution amount determined annually, plus the per employee cost of services provided by the Uncompensated Care Pool
• Businesses with 10 or fewer full-time employees won't be subject to the "fair share” assessment.
• Independent contractors, temporary, or seasonal employees aren't considered full-time employees.

Employers may also be assessed a “free rider” surcharge if the employer doesn't offer to contribute toward or arrange for the purchase of health insurance on a pre-tax basis (Section 125 plan) and its employees access free care.

• Companies with 11 or more full-time equivalent employees who use more than $50,000 in free care in one year may be liable for between 10% and 100% of hospital costs.
• The free-rider surcharge is triggered when an employee or his or her dependent receives free care more than 3 times a year, or when a company has 5 or more instances of employees or their dependents receiving free care in a year.

How do I determine how many full-time equivalent employees a company employs?

The number of full-time equivalent employees is calculated by dividing:

total payroll hours for the calendar quarter
500

How is a "fair and reasonable contribution" toward employees’ health insurance determined?

The legislation requires that employers with 11 or more full-time equivalent employees make a fair and reasonable premium contribution toward the cost of their employees’ health insurance. If the employer is not making a contribution to their employees’ health insurance, they may be considered liable for making fair share contribution payments to the Commonwealth.

The Division of Health Care Finance and Policy (DHCFP) made changes to how employers comply with the fair share contribution requirements. Below describes new regulations, effective January 1, 2009.

For employers with less than 50 full-time equivalent employees (but more than 11):

To be considered a fair and reasonable contributing employer, one must:

• Have 25% or more of full-time employees enrolled in a group health plan
  OR
• Offer to contribute 33% or more toward the premium cost of any group health plan offered to your employees who have been employed at least 90 days. This includes all full-time employees employed at Massachusetts locations regardless of residency.

For employers with more than 50 employees: 

To be considered a fair and reasonable contributing employer, one must:

• Have 25% or more of full-time employees enrolled in the group health plan and offer to contribute 33% or more toward premium costs of any group health benefit plan offered to employers employed at least 90 days
  OR 
• Have 75% of employees enrolled in the group health plan

In addition to the above, effective October 1, 2009, employers are exempt from a fair share contribution if they are offering a premium reimbursement arrangement, where an employer designates a specific insurance plan for employee enrollment, to all full-time enrollees.

Employers are required to file reports and/or contributions annually or quarterly, based on employer information submitted to the Department of Unemployment Assistance in previous filings.

How do I determine the percentage of employees enrolled in an employer-sponsored group plan?

To meet fair share contribution requirements, an employer must have 25% of employees enrolled in an employer-sponsored group plan. Determine your percentage by dividing:

Total number of enrolled FTEs on the last day of the calendar quarter
Total number of FTEs on payroll on last day of calendar quarter

Who is considered a full-time employee?

A full-time employee (FTE) is someone who works either 35 payroll hours per week or the number of weekly payroll hours that qualifies an employee to be eligible for benefits, whichever is less.

There are a few exceptions that are not considered full-time employees, even if they work 35 or more hours a week. These exceptions don't count toward the calculation of the 25% or 33% requirements discussed above:

• Seasonal employees 
  • Employment not to exceed 16 weeks 
  • Hired by a seasonal employer during the employer’s seasonal period
• Temporary employees 
  • Employment explicitly temporary in nature 
  • Employment not to exceed 12 consecutive weeks during the 12-month period ending on the last day of the reporting quarter
• Independent contractors 
  • Individual provides services not deemed to be employment as defined by Massachusetts General Law

Can employers offer different contribution levels for different employees?

• Employers may not offer higher-paid employees additional insurance plans that are not available to lower-paid employees. Also, employers may not offer high-paid employees a higher percentage of premium contribution than is offered to lower-paid employees.
• Establishing greater contribution levels is permitted for:
  • Increasing lengths of service, as long as it is part of a formal employee benefit plan designed as a reward for longevity
  • Persons who participate in company-sponsored wellness programs.
• Employers may offer different plan options with different contribution levels as long as all options are available to all full-time employees.

What are the expanded dependent age guidelines?

The provisions of national health care reform is the extension of coverage to dependents up to age 26. This mandate goes into effect September 23, 2010. However, at the request of the Department of Health and Human Services, FCHP has decided to implement this provision early, effective June 1, 2010, for our fully insured accounts.The expanded guidelines may not apply to self-insured accounts or the Federal Employees Health Benefits Program.

 The elements of the provision are:

• Dependent childred covered by their parents’ family plan on June 1 can remain on that plan until they reach the age of 26—even if they experience a change in their dependent status.
• Effective June 1, FCHP subscribers will no longer have to verify the status of their dependent children in order to keep them on their family plan.
• Dependent children not covered by their parents’ family plan on June 1 will have to wait until the group’s first open enrollment period, on or after September 23, 2010, to receive this coverage.

Who can I contact if I have more questions?

You can contact FCHP's Corporate Sales Department by phone at 1-800-333-2535 or via email at: brokers@fchp.org.

Updated 12/17/2009