In 2006, the Commonwealth of Massachusetts enacted a universal health care coverage law.  This law consists of an individual mandate which requires all Massachusetts residents aged 18 and over to obtain and maintain health coverage, or lose their personal tax exemption.

The law also imposes four employer mandates; they are:

1. A fair share contribution requirement;
2. An annual disclosure requirement (“HIRD”) relating to health insurance provided or offered to employees, as well as documentation showing employee election or declination of coverage;
3. A requirement to establish and maintain a cafeteria plan; and
4. A free rider surcharge applicable to employers who fail to establish a cafeteria plan. 

With regard to the fair share contribution mandate, the law requires certain employers to either pay a fair and reasonable premium contribution toward health coverage for their employees in the Commonwealth, or pay the Commonwealth a fair and reasonable amount.  Senate Bill 2400, enacted in the Commonwealth’s 2012 Legislative Session, modifies the applicability of this employer mandate such that, beginning July 1, 2013, the law will  apply to employers employing 21 or more full-time employees (previously, 11 or more full-time employees). 

Further, for purposes of calculating the fair share assessment, employees who have qualifying health  insurance coverage from a spouse, parent, veteran’s plan, Medicare, or a plan due to disability or retirement need not be counted for purposes of determining whether an employer is a contributing employer.  This provision also becomes effective July 1, 2013.

The information contained in this Benefit Beat is not intended to be legal, accounting, or other professional advice, nor are these comments directed to specific situations.

As required by U.S. Treasury rules, we inform you that, unless expressly stated otherwise, any U.S. federal tax advice contained in this Benefit Beat is not intended or written to be used, and cannot be used, by any person for the purpose of avoiding any penalties that may be imposed by the Internal Revenue Service.