Massachusetts Promulgates New "Fair Share Contribution" Regulations
In an effort to increase access to health insurance, in 2006 Massachusetts enacted the Health Care Reform Act. Among other things, the Act required employers of at least 11 full-time equivalent employees in Massachusetts to make a "fair and reasonable contribution" to the health insurance premiums of its employees, else pay the Commonwealth a $295 surcharge for each employee plus the uninsured medical costs of such employees. Until now, an employer was deemed to have made a "fair and reasonable contribution" if either (1) at least 25% of its employees participated in the group health plan or (2) it offered to contribute at least 33% of the premium cost of its health plan for individual coverage.
Under recently promulgated regulations, and effective as of January 1, 2009, employers with more than 50 full-time equivalent employees in Massachusetts now will not be deemed to have made a "fair and reasonable contribution" unless either (1) at least 25% of its employees participate and the employer offers to contribute at least 33% of the premium cost or (2) at least 75% of its employees participate in the group health plan. Under this new definition, some larger employers will need to expand their health insurance offerings or pay the surcharge.
In addition to "fair and reasonable contributions," the Act continues to require employers to offer a Section 125 plan allowing employees to pay for health insurance premiums on a pre-tax basis, else be liable for a "free rider surcharge" if any of its employees use certain state-funded health services.
