UBP blog

10/13/2009

Three changes to Massachusetts Fair Share Contribution (FSC) law employers need to know effective 10/1/09

Effective October 1, 2009, the Massachusetts Division of Health Care Finance and Policy (DHCFP) has approved and adopted an amendment to the state’s Fair Share Contribution (FSC) regulations (114.5 CMR 16.00).

Among the amendments are several technical changes that clarify compliance requirements for businesses subject to the law (Massachusetts employers with 11 or more full-time equivalent employees). Although most of the amendments made are relatively minor, there are three notable revisions that employers should be aware of.

  1. Removal of the majority of time rule: The FSC regulations originally stated that, for the purpose of calculating the percentage of full-time employees enrolled in their health plan, employers would count an employee who worked both full-time and part-time hours during a given quarter as either full-time or part-time based on whether they were full-time or part-time for the majority of the quarter. The new FSC rules delete this confusing provision and now simply require employers to report both the number of full-time employees enrolled in their health plan and on their payroll as of the last day of the quarter under review.
  2. Group Health Plan Documentation Requirement: Under the FSC regulations, employers who offer and contribute to their employees’ group health plan must maintain documentation on it. This documentation must include a written plan description for each plan offered as well as copies of all written communication to employees about plan offerings. This documentation must contain information on benefits eligibility (including the minimum number of hours employees must work in order to be eligible for benefits) and information on premium contributions. Also, the written plan description must give evidence that the group health plan was in place during the quarter under review.
  3. Premium Reimbursement Arrangements are now recognized as group health plans: However, this is only true provided that employers have written documentation designating specific insurance plans for use by employers.

As mentioned earlier, these new FSC regulations are now in effect and employers will need to immediately take all necessary steps to ensure compliance with them.

Employers can find the full text of the newly revised FSC law on the Division of Health Care Finance and Policy (DHCFP) page of www.mass.gov.

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10/09/2009

“What’s fair is fair” may not always be the case

Two years after Massachusetts’ landmark health insurance law became effective in 2006, the state’s 4 Division of Unemployment Assistance auditors began knocking on business’ doors.

Their targets were employers who provided incomplete or inconsistent information to the state in earlier reports on their offering of and contribution to employees’ insurance.

As most of us, if not all of us know, the Commonwealth of Massachusetts requires companies with 11-50 full-time employees to either:

  • Have at least 25% of full-time employees enrolled in the employer’s group health plan

-or –

  • Offer to pay at least 33% of health plan premium costs for full-time employees working 90 days or more. 

Companies with 51 or more full-time employees are required to meet both of the above requirements or have at least 75% of their full-time employees enrolled in their group health plan.

As of late, the Commonwealth has audited 426 companies and found 172 (or 40%) had violated the above requirements and thus owed an additional $5 million to their workers’ health insurance premiums.

But is it really their fault?

The easy answer to this question is “yes”, however, the issue we are dealing with here is a complicated one. Here are a couple of reasons why.

Laws are confusing for employers:

Fair Share Contribution rules are so confusing that employers are having a very difficult time complying with them. 38 of the 172 companies who failed the audit have appealed.

On top of keeping their businesses afloat in a downturn economy, employers need to stay on top of very dynamic Federal and State laws and very often find themselves in way over their heads.

Some industries (and companies) have a harder time complying than others:

Companies in the staffing, restaurant and retail industries are among those struggling the most to comply with this law. Here’s an example how for some businesses it can be difficult, if not nearly impossible, to comply with these rules.

Let’s say you’re the owner of a local restaurant chain with 3 locations in Massachusetts and a total of 55 full-time employees as defined by the Commonwealth. Of these 55 employees, 28 are students and young adults still covered under their parents’ plans and 13 are ages 65+ and covered by Medicare. Of the 14 remaining employees, more than half are married to spouses that have employer-sponsored insurance.

What this all means is that employers such as this restaurant owner could offer to pay anywhere from 33 to 100 percent of employees’ premiums but if just one of the 14 employees not covered under their parents’ plans or Medicare waives coverage, they will not be in compliance with just a bit shy of 24% plan participation.

Consumer advocates are encouraging the state to make exceptions for employers that cannot entice 25% of their workforce to enroll in their plan but the state has yet to follow their advice. What are your thoughts on this?

Should employers be “penalized” for hiring workers that are covered elsewhere?

10/07/2009

Quality Improvement and Market Reform top Employers’ health care wish list

In a recent survey done by HR consultancy firm Mercer, employers selected quality improvement and market reform as their top priorities for our nation’s health care overhaul.

First on the list of priorities was quality improvement. It was listed by 60 percent of respondents as a top priority and includes among other things:

  • Building more credible databases for evaluating provider performance and paying providers for outcomes
  • Adopting health information technology
  • Improving coordination of care for people with complex illnesses
  • Increasing primary care resources, especially in underserved locations

Linda Havlin, a Mercer worldwide partner stated that quality improvement is the number one option employers have for controlling rising health care costs. She suggested that the government can support this cost-control need “by aligning government-sponsored programs with private sector initiatives”.

The second item on employers’ wish list was the enactment of insurance market reforms. Fifty percent of employers cited market reforms such as elimination or pre-existing conditions exclusions and lifetime benefit caps as a high priority.

Two items that didn’t make the “wish list”

Within the healthcare reform proposals, two of the items employers oppose the most are:

  • Limits to the favorable tax-treatments of employer-sponsored health benefits (i.e. the proposed taxes on “Cadillac plans”)
  • Mandates for employers to offer coverage

Mercer’s survey results showed that 59 and 52% of employers respectively do not want these two items included in the final reform.

Massachusetts Senator John Kerry, who recently proposed a “play or pay” mandate for employers to offer health insurance coverage, recently stated his belief that more employers would terminate their offering of health care coverage if it wasn’t mandatory.

 As Massachusetts employers, has the statewide mandate for employers (with 11+ full-time equivalent employees) to offer (and pay at least 33% of) coverage or make a Fair Share Contribution to employees’ health insurance costs, affected your decision to offer insurance?

Also, how do you think lawmakers should define the so-called “Cadillac health plans”?

Should the upper limit for favorable tax treatment be the same in places with the highest costs of living as they are in places with the lowest or should there be no difference?

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