Time Now for New Massachusetts Filings by Employers
The Massachusetts health care reform law passed last year requires employers who employ 11 or more full-time equivalent employees in the Commonwealth to accomplish certain filings between October 1st and November 15th of each year. The first filing period is upon us.
Who, What and When
An employer with 11 or more full-time equivalent (FTE) Massachusetts employees (defined below) is required to file:
- A Fair Share Contribution (FSC) Report; and
- The Employer Health Insurance Responsibility Disclosure (HIRD) Report. Important note: The Employer HIRD Report should not be confused with the Employee HIRD form process, which is a separate process.
Both the FSC Report and the Employer HIRD Report can be satisfied in one single process. The filings must be done electronically via the Massachusetts Division of Unemployment Assistance (DUA) website. Many employers have received notices from DUA about these filings; however, it is the employer’s responsibility to make certain that it accomplishes the filing requirement. Employers with 11 or more FTE employees must file, without regard to whether they have received the notice.
For purposes of calculating the number of FTE employees, the DUA defines "full-time equivalent" as 2000 payroll hours. The minimum employer threshold for potential liability for the Fair Share Contribution is 22,000 payroll hours (11 x 2000 payroll hours).
All employers who have received the DUA notice must file, even if they have less than 11 FTE employees in Massachusetts. The filing is very simple for employers that have fewer than 11 FTE employees; these employers need only indicate the number of FTE employees.
Due Date. The first annual report is based on the 12-month period of October 1, 2006 to September 30, 2007. This reporting requirement must be satisfied by November 15, 2007.
Type of Data Requested– FSC Report
All employers must report their collective total number of payroll hours for all employees who were employed at least one month during the reporting period. Payroll hours include all paid hours, including vacation, sick leave, FMLA leave, bereavement leave, short and long term disability, holiday hours, as well as hours worked.
Employers who meet the 22,000 Payroll Hour Criterion
An employer who meets the 22,000 payroll hour requirement must provide proof of satisfying either the primary test, or a secondary test. These tests are used in determining whether a fair and reasonable contribution is made toward health benefits.
For purposes of satisfying the primary test (minimum 25% participation by full-time Massachusetts employees in the plan), an employer must submit:
- The yearly average number of full-time employees enrolled in the employer-sponsored health plan, as of the last day of each calendar quarter; and
- The yearly average total number of full-time employees on the employer’s payroll, as of the last day of each calendar quarter.
The secondary test (minimum 33% contribution toward premium for all full-time employees) asks whether the employer offered to pay a portion of the health insurance premium cost for all full-time Massachusetts employees employed at least 90 days during the applicable 12-month base period.
For purposes of both the primary and secondary test, full-time means the lesser of:
- The number of weekly payroll hours to be eligible for full-time health plan benefits; or
- 35 payroll hours per week.
How to Make Payments
If an employer is determined to be liable for a fair share contribution, the payment must be made electronically. The DUA provides for a choice of payment schedules: annual, bi-annual or quarterly. The money collected by the DUA is then deposited into a trust fund to help finance health insurance for income-qualified Massachusetts residents.
Type of Data Requested - Employer HIRD Report
For purposes of the Employer’s Health Insurance Reporting Disclosure requirement, this section asks for:
- Verification that an employer has adopted or maintains a cafeteria plan as of July 1, 2007;
- The percentage of contribution toward premium cost as of 7/1/07 for all part-time and full-time employees in both individual and family plans;
- The total monthly premium for both the lowest and highest cost individual and family health insurance plans; and
- The beginning date of the plan’s next open enrollment period.
Employer’s Full-time Criteria. This report also requires an employer to submit:
- The number of payroll hours per week that it requires an employee to work to be considered full-time; and
- The minimum number of payroll hours per week that an employee must work in order to be considered eligible for full-time health plan benefits under the employer-sponsored plan.
Penalties for Non-Filers
The DUA may send a reminder notice to employers who fail to timely file these reports. If non-filing persists, then DUA may estimate a fair share contribution amount and issue a bill to the employer.