How will health care reform affect you and your customers?

Download our "Get in the know: health care reform and your business" brochure (pdf, 146 KB) 

Why was the health care reform legislation introduced?

This legislation was introduced for a number of reasons:

• to reduce use of free care at hospitals and health care centers
• to improve public health
• to ensure patients have access to quality and cost information to help support them when they need to make decisions about their care
• to retain the state’s Medicaid funding from the federal government.  

What is Fallon Community Health Plan doing about the new legislation?

FCHP is in favor of providing access to insurance coverage for all Massachusetts residents. We have new affordable health plans available that encourage the use of cost and quality information, and we’ll continue to support our members in our existing plans. We're having a special open enrollment to eligible individuals and their dependents throughout the month of December. All applications must be signed and received by December 31.

If you have questions, you can contact FCHP's Corporate Sales Department by phone at 800-333-2535 or via email at: brokers@fchp.org.

What is the Commonwealth Health Insurance Connector and how will it affect FCHP brokers?

The Commonwealth Health Insurance Connector is a new state agency which through a subconnector (SBSB) will enroll small businesses (less than 50 employees) and individuals into health care plans provided by private health insurance companies. FCHP is one of the companies offering plans through the Health Connector. The creation of the Health Connector will not affect you much in that individuals and small groups can still get insurance through a broker/intermediary, through the subconnector or directly through FCHP.

The Insurance Partnership will still be available for small businesses (up to 50 employees) and the self-employed to help pay for health insurance. Eligibility for the program has been expanded to include individuals who earn up to 300% of the FPL. For more information on the Insurance Partnership Program, please visit their Web site at: www.insurancepartnership.org.

What are the expanded dependent age guidelines?

The age of FCHP member dependents has been increased to persons who are under age 26 or for two years following the loss of dependent status (based on IRS guidelines), whichever comes first. The expanded guidelines do not apply to self-insured accounts or the Federal Employees Health Benefits Program.

In order for a dependent to be covered on an FCHP plan, the dependent must be:

• Under 26 years old
• A Massachusetts resident. There are two exceptions:
  • Dependents on PPO plans are covered
  • Full-time students who are attending school outside of Massachusetts but maintain their legal residency in Massachusetts can remain on the plan, but are only covered for selected services (including emergency services) while outside the plan service area.
• Considered a qualified dependent or has been considered a qualified dependent within the past two years—with both scenarios based on FCHP and IRS guidelines

What is the employer mandate and whom does it impact?

Under the new legislation, employers with 11 or more full-time equivalent employees are required to offer cafeteria plan coverage to their employees, either under its own group health plan or through the Health Connector, and to make a fair and reasonable premium contribution to the health insurance costs of its employees.

All Massachusetts employers with more than 10 employees will be required to complete an employer Health Insurance Responsibility Disclosure (HIRD). Individuals that are employed by an employer with more than 10 employees will be asked to sign an employee HIRD form if: the employee declined to enroll in an employer sponsored health plan offered and/or if that employee declined to participate in the employer’s Section 125 plan.  These forms are currently in development and will be used to enforce the individual insurance mandate.

• Employers who don't make a “fair and reasonable” premium contribution toward the cost of their employees' health insurance will be subject to a "fair share" assessment, the lower of:

1. $295 per employee, or
2. Fair share contribution amount determined annually, plus the per employee cost of services provided by the Uncompensated Care Pool

• Businesses with 10 or fewer full-time employees won't be subject to the ”fair share” assessment.
• Independent contractors, temporary, or seasonal employees aren't considered full-time employees.

Employers may also be assessed a “free rider” surcharge if the employer doesn't offer to contribute towards or arrange for the purchase of health insurance on a pre-tax basis (Section 125 plan) and its employees access free care. An employer with 11 or more employees must adopt and maintain a Section 125 plan with access to one or more medical care coverage options.  It's not required that employers contribute, but they must provide access to pre-tax contributions. 

• Companies with 11 or more full-time equivalent employees who use more than $50,000 in free care in one year may be liable for between 10% and 100% of hospital costs.
• The free-rider surcharge is triggered when an employee or his or her dependent receives free care more than 3 times a year, or when a company has 5 or more instances of employees or their dependents receiving free care in a year.
• As of this update, the free-rider surcharge regulations haven't yet been finalized, so this surcharge information is tentative.
   

What is a "fair and reasonable contribution" toward employees’ health insurance?

The legislation requires that employers make a fair and reasonable premium contribution toward the cost of their employees’ health insurance.  The criteria are defined in regulations issued by the state Division of Health Care Finance & Policy and apply to employers with 11 or more full-time equivalent employees.

• How does an employer determine if it has 11 or more full-time equivalent employees?
  Calculate by dividing:
  
• total payroll hours for all employees from 10/1 to 9/30
  2000
  
  
• The effective date of the requirement is October 1, 2006 (whether or not an employer is in compliance is determined in the aggregate over the 12-month period from 10/1/2006 through 9/30/2007).
• To find out if an employer complies with the fair share assessment requirement, it needs to have 11 or more full-time equivalent employees and meet one of the following:
  • Primary test: 25% or more of your full-time employees are enrolled in your group health plan
    Calculate by dividing:
    
    total number of enrolled FTE’s end of each quarter = 25% or greater
    total number of all FTE’s end of each quarter
    
    Total number of enrolled FTE’s end of each quarter
     - Total yearly average of number of enrolled full-time employees on payroll at the end of each quarter
    
    Total number of FTE’s at the end of each quarter
     -  Total yearly average of full-time employees on payroll at the end of each quarter
     - A full-time employee (FTE) is someone who works either 35 payroll hours per week or the number of weekly payroll hours that qualifies an employee to be eligible for benefits, whichever is less.
     - Exclusions are seasonal, temporary, independent contract workers and religious waivers.
    
    OR 
    
  • Secondary test: on or before July 1, your business offered to contribute 33% or more towards the premium cost of any group health plan offered to your employees who have been employed at least 90 days
    • Includes all full-time employees employed at Massachusetts locations regardless of residency
      

Exceptions

The following are not considered full-time employees, even if they work 35 or more hours a week, and don't count towards the calculation of the 25% or 33% requirements discussed above:

• Seasonal employees
  • Employment not to exceed 16 weeks
  • Hired by a seasonal employer during the employer’s seasonal period
• Temporary employees
  • Employment explicitly temporary in nature
  • Employment not to exceed 12 consecutive weeks during period between 10/1 through 9/30
• Independent contractors
  • Individual provides services not deemed to be employment as defined by Massachusetts General Law
    Can employers offer different contribution levels for different employees?

• Employers may not offer higher-paid employees additional insurance plans that are not available to lower-paid employers. Also, employers may not offer high-paid employees a higher percentage of premium contribution than is offered to lower-paid employees.
• Establishing greater contribution levels is permitted for:
  • Increasing lengths of service, as long as it is part of a formal employee benefit plan designed as a reward for longevity.
  • Persons who participate in company-sponsored wellness programs.
• Employers may offer different plan options with different contribution levels as long as all options are available to all full-time employees.

Who can I contact if I have more questions?

You can contact FCHP's Corporate Sales Department by phone at 800-333-2535 or via email at: brokers@fchp.org.

Updated 12/6/2007