Regulation 114.5 CMR 16.00: Determination of Employer Fair Share Contribution

The state Division of Health Care Finance and Policy (DHCFP) adopted 114.5 CMR 16.00: Determination of Employer Fair Share Contribution, which becomes effective on October 1, 2006.

This regulation describes how the Division of Health Care Finance and Policy (“Division”) will determine whether employers with 11 or more employees are exempt from paying the “fair share contribution” (also known as the surcharge). Employers are exempt from the surcharge if they make a “fair and reasonable” premium contribution.

The regulation establishes two tests for deciding whether an employer meets the fair and reasonable premium contribution requirement:

Primary test: An employer with at least 25% of fulltime employees who are enrolled in the employer’s group health plan is exempt from the fair share contribution or surcharge. All fulltime employees employed in MA are included in the calculation of the 25%, even if the employee is not a MA resident.
Secondary test: If an employer does not meet the 25% test, but the employer offers to pay at least 33% of the premium of any group health plan it offers to its full time employees that were employed at least 90 days between October 1, 2006 and September 30, 2007, then the employer is exempt from the fair share contribution. The group health plan can be a self-insured plan.

Independent contractors, seasonal employees, and temporary employees, as defined in the regulation, are not full time employees and are not included in calculating the % of enrolled employees.

The annual “fair share contribution” or surcharge is the lower of $295 per employee or the sum of the “fair share employer contribution” and the “per employee cost of unreimbursed physician care.”

The Division, with the Department of Labor, will calculate the annual fair share contribution. The formula is based on the private sector liability for the uncompensated care pool (“UCP”) and calculates the portion of the private sector liability that can be attributed to employers that do not meet the “fair and reasonable” premium contribution. The Division will also calculate how many UCP funds were actually used by non-elderly, uninsured Massachusetts residents, then come up with the per employee cost of uncompensated care. The sum of these two calculations is the annual “fair share contribution.”