Massachusetts Health Care Reform Employee Communication and FAQs
05/09/2007
Commonwealth Health Insurance Connector Authority Overview
Commonwealth Choice is a health insurance program that is administered through the Connector. Coverage under Commonwealth Choice will be through a variety of high quality, affordable, private health insurance plans. The Connector will help individuals and small group employers choose, purchase, and enroll in a health plan that works for them. A health plan includes a group of providers, hospitals, and other professionals who work together. Once enrolled, individuals will become a member of the health plan they select. The Connector will offer four levels of coverage including Premier, Value, Basic, and Young Adult. These four levels are designed to meet the needs of different individuals and families. To enroll in a Commonwealth Choice health plan, members and/or employers must pay a monthly premium. The premium the employers and/or members pay will depend on the health plan and benefit package they choose, and must be paid every month, even if no services are used. Commonwealth Choice members must pay a fee (co-payment) each time they use some Commonwealth Choice benefits. In addition, there may be a deductible (an amount that the member must pay out of pocket for services before the health plan begins paying.) This amount will vary by health plan and there will be different family and individual out-of-pocket maximum amounts. On May 1st the Connector will begin enrolling eligible individuals and Commonwealth Choice coverage will be effective stating on July 1, 2007. Individual Mandate
By July 1, 2007 all residents of Massachusetts age 18 and over are required to have health insurance. Individuals who cannot show proof of health insurance coverage by December 31, 2007, will lose their personal income tax exemption when filing their 2007 income taxes. The 2006 personal exemption is $3,850 for an individual, which translates into a tax savings of approximately $204 for an individual (5.3 percent of $3,850). In 2008, failure to meet the requirement will result in a fine for each month the individual does not have coverage. The fine will equal 50 percent of the least costly, available insurance premium that meets the standard for creditable coverage. New requirements for employers - All Massachusetts employers with more than 10 employees (full or part-time) employed in Massachusetts must adopt and maintain a Section 125 plan by July 1, 2007. This is a cost-effective way for employers to offer their employees a pre-tax way to buy insurance. Employers with more than 10 employees who fail to offer a Section 125 payroll deduction option to all their employees may be assessed a Free Rider Surcharge if their employees or dependents significantly utilize the state’s UCP (also known as the “free care pool”) or the Health Safety Net Trust Fund. Employers with 10 or fewer employees are not required to establish Section 125 plans, but they may if they choose.
- Employers with 11 or more full-time equivalent employees employed in Massachusetts must make a “fair and reasonable premium contribution” toward health insurance for employees. If they fail to do this, they will be subject to the Fair Share Contribution of no more than $295 per employee per year.
- All Massachusetts employers with 11 or more employees must file an annual Health Insurance Responsibility Disclosure (HIRD) Form with the Division of Health Care Finance and Policy. The form is available on the Commonwealth Connector website. These employers must require their employees to sign an annual HIRD if the employee does not elect Health Insurance or elects not to use the employer’s Section 125 plan sign.
Frequently Asked Questions What is Commonwealth Care?
Commonwealth Care is a health insurance program for low-income residents of Massachusetts. It is administered through the Connector. Coverage under Commonwealth Care is through a choice of private health insurance plans. The Connector helps eligible individuals choose and enroll in a health plan that works for them. Once enrolled, individuals will become a member of the health plan they select. For additional information Commonwealth Care, including guidance on determining eligibility and applying as well as an extensive list of FAQ’s, please call 1-877-MA-ENROLL or visit www.macommonwealthcare.com.
What is Commonwealth Choice?
Administered through the Connector, Commonwealth Choice is a health insurance program for Massachusetts residents and small employers. Individuals will be able to choose from a variety of private health insurance options and small employers will either contribute to and make available health insurance plans to their employees or allow for pre-tax premium deductions for health insurance through the Connector. The Connector will assist eligible individuals and employers choose and enroll in a health plan that works for them. Once enrolled, individuals will become a member of the health plan they select. Enrollment in Commonwealth Choice will begin on May 1, 2007 for effective coverage beginning July 1, 2007.
What is the difference between Commonwealth Care and Commonwealth Choice?
Commonwealth Care is a subsidized insurance program for uninsured individuals who must meet income eligibility requirements. It is currently available to those who qualify. Commonwealth Choice is a non-subsidized insurance program for Massachusetts residents and small employers. It is currently under development.
How do I know if I am eligible for Commonwealth Care or Commonwealth Choice?
Commonwealth Care has specific eligibility requirements. Broadly, these are: Your family’s income before taxes is at or below 300% of the federal poverty level; you are uninsured; you are a U.S. citizen/national, qualified alien, or alien with special status; and you are age 19 or older (*eligible persons under age 19 receive MassHealth benefits through MassHealth). Please call 1-877-MA-ENROLL or visit www.macommonwealthcare.com for additional information on eligibility for Commonwealth Care. Commonwealth Choice is not a subsidized health insurance program, but a program for individuals and small businesses to purchase health insurance on their own. If you are an individual, please visit www.mass.gov/connector for additional information. If you are a small business, please review the FAQs for Employers on this site for additional information.
What is the individual mandate?
The individual mandate is a requirement that all Massachusetts residents over the age of 18 obtain and maintain health insurance that meets minimum coverage requirements beginning July 1, 2007.
Are there exceptions to the individual mandate?
An individual may file a sworn affidavit with his income tax return stating that he/she did not have creditable coverage during the 12 months of the taxable year for which the return was filed because of sincerely held religious beliefs. Additionally, an individual may be exempt from the mandate on the basis that he/she is unable to afford health insurance that meets minimum creditable coverage. Guidance affordability and what constitutes minimum creditable coverage will be forthcoming.
If an individual does not comply with the individual mandate, what consequences will he/she face?
Individuals who cannot show proof of health insurance coverage by December 31, 2007, will lose their personal income tax exemption when filing their 2007 income taxes. The 2006 personal exemption is $3,850 for an individual, which translates into a tax savings of approximately $204 for an individual (5.3 percent of $3,850). Failure to meet the requirement in 2008 will result in a fine for each month the individual does not have coverage. The fine will equal 50 percent of the least costly, available insurance premium that meets the standard for creditable coverage.
Who will oversee enforcement of the individual mandate?
The Department of Revenue will enforce the individual mandate through the tax collection process.
Does the statute define a dependent?
The statute (the health care reform law) does not explicitly define “dependent.” It does; however, refer to a “dependent under the Internal Revenue Code.” A simplified summary of the definition of dependent in Internal Revenue Code (the official definition is many pages long) is: either a "qualifying child" or a "qualifying relative." Generally, a "qualifying child" is: (a) a child (including stepchild, adopted child, or eligible foster child), or a sibling (or stepsibling) of the taxpayer, or a descendant of either; (b) has resided in the principal abode of the taxpayer for more than half of the relevant calendar year; (c) has not attained age 19 (or is a student who has not attained age 24 as of the end of the year); and (d) has not provided more than half of his or her support for that year. A child who does not satisfy the qualifying child definition may be a "qualifying relative." Generally, a "qualifying relative" is an individual who: (a) is a child (including stepchild, adopted child, or eligible foster child), a sibling (including stepsiblings), the taxpayer's father or mother or an ancestor of either of them, a stepparent, a niece or nephew, an aunt or uncle, certain in-laws of the taxpayer, or an individual, other than a spouse, who resides in the principal abode of the taxpayer and is a member of the household; (b) has gross income in the relevant calendar year not exceeding the exemption amount ($3,200 for 2005); (c) receives more than half of his or her support for the year from the taxpayer; and (d) is not a qualifying child of any other taxpayer for the calendar year. For information on the new dependent coverage requirement implemented under the health care reform law, please review the following bulletin provided by the state Division of Insurance: http://www.mass.gov/Eoca/docs/doi/Bulletins/bulletins_07_01.pdf. Will people who retire before they are eligible for Medicare be eligible for Connector products?
Yes. Such a person could enroll in Commonwealth Care, so long as he/she meets normal eligibility requirements (i.e. Income is below 300% FPL). Such a person could also purchase a Commonwealth Choice product as an individual through the Connector.
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