This applies to all employers with employees who reside in Massachusetts.
In April of 2006, Massachusetts enacted comprehensive health care reform legislation known as the Massachusetts Health Care Reform Act (the “Act”). The purpose of the Act is to ensure that every Massachusetts resident has adequate health coverage by requiring state residents to obtain health coverage that satisfies minimum guidelines, and by imposing various health care funding and reporting requirements on Massachusetts employers.
WHAT THIS MEANS TO YOU AS AN EMPLOYER
Employers or sponsors of employment-sponsored health plans (“Plan Sponsors”) must fulfill the following two reporting requirements under the Act by January 31, 2008 if they provide health care coverage to adult residents of Massachusetts:
- Each employee residing in Massachusetts must be provided with a Form MA 1099-HC (the “Individual Mandate”)
- An electronic report must be provided to the Commissioner of the Massachusetts Department of Revenue (“DOR”) verifying that the Form MA 1099-HC was sent to all participants who reside in Massachusetts.
The deadline for fulfilling these two reporting requirements each year is January 31st, with the first reports due on January 31, 2008. Click here for a copy of the Form MA 1099-HC.
THE INDIVIDUAL MANDATE
In order to fulfill the Individual Mandate requirement, you must forward a completed Form MA 1099-HC to all plan participants (including COBRA beneficiaries and retired participants) with coverage in effect as of December 31, 2007 who has a mailing address in Massachusetts.
The statements should include:
- Name of the Insurance Company
- Federal Tax ID for the Insurance Company
- Name of the Participant
- Participant’s Date of Birth
- Participant’s Member ID
- Mailing address for the Participant (on file with the insurance company)
- Name(s) of Participant’s Dependent(s) (if applicable)
- Date(s) of Birth of Participant’s Dependent(s) (if applicable)
- Member ID(s) of Dependent(s)
- Effective Date of Insurance Coverage of
- Participant and Dependent(s) (if applicable)
- Through Date of Insurance Coverage of Participant and Dependent(s) (if applicable)
REPORT TO THE DOR COMMISSIONER
As noted above, the report to the DOR Commissioner must be provided electronically click here to view the Instructions for Electronic Filing Form 1099-HC.
IMPLICATIONS FOR PLAN SPONSORS
Plan Sponsors or insurance carriers that fail to provide a Form MA 1099-HC to Massachusetts residents or to file a report with the DOR Commissioner are subject to penalties of $50 per individual, not to exceed a total of $50,000 per year per violator. While penalties can be abated for reasonable cause, inadvertent oversight does not meet the reasonable cause standard. In addition, failure to provide a Massachusetts resident with a Form MA 1099-HC may result in the resident incurring state income tax penalties.
ERISA PREEMPTION
Whether the Act or any specific requirements of the Act are preempted by the Employee Retirement Income Security Act of 1974 (“ERISA”) have yet to be addressed. It is possible that we may see a challenge to certain requirements under the Act based on ERISA preemption grounds.
WHAT DO I DO NEXT?
If you have any additional questions regarding the information within this eAlert, and/or require assistance in becoming compliant, please call Corporate Synergies at 1.866.CSG.1719 or click here to contact us today.
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