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John McMorrow 

John McMorrow


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August 16, 2013
Commonwealth Repeals Fair Share Contribution and Health Insurance Responsibility Disclosure Requirements; Enacts New Employer Medical Assistance Contribution and Notice Requirement

While many employers continue to prepare for the requirements of the Federal Affordable Care Act, they should also be aware of some recent changes to the Massachusetts Health Care Reform law. Last month, the Massachusetts legislature repealed the Fair Share Contribution (FSC) provision of the law effective July 1, 2013.  Under this law, Massachusetts employers with 11 or more full-time equivalent employees were required to either offer group health insurance to their full-time employees or pay a penalty of up to $295 per employee per year.


The legislature also repealed the requirement that employers collect Health Insurance Responsibility Disclosure (HIRD) forms from employees who declined to enroll or participate in health insurance or cafeteria plans offered by their respective employers, effective July 1, 2013.


While the Commonwealth has repealed the FSC and HIRD requirements, the Department of Unemployment Assistance (DUA) will continue to enforce those FSC and HIRD obligations that were in effect until June 30, 2013.  As a result, employers who are required to submit any filings for the periods ending on or before June 30, 2013, must still do so as the DUA is expected to continue to audit employer compliance with these obligations.  


Although the legislature repealed the FSC and HIRD requirements, it established two new employer requirements.  First, employers with 11 or more full-time equivalent employees (FTEs) must notify all employees on a form to be prescribed by the Massachusetts Health Connector of the employer's compliance with certain components of the law, and the opportunity for eligible employees to enroll in the employer's sponsored group health insurance plan and the employer's Section 125 plan. Second, the legislature has enacted a new Employer Medical Assistance Contribution (EMAC).  This new assessment takes effect on January 1, 2014, and will require employers with more than 5 employees to pay up to 0.36% of employees' wages up to the "taxable base wage" set under the Commonwealth's unemployment insurance law, which is currently $14,000 per employee.  The 0.36% EMAC amounts to approximately a $50.00 annual assessment per employee.


Massachusetts Law Still Requires Employers to Provide Employees with a Section 125 Plan Option to Pay for Health Coverage on a Pre-Tax Basis 
The requirement that employers with 11 or more FTEs adopt and maintain a Section 125 plan to avoid the risk of the so-called Free Rider Surcharge is still in effect. Employers that do not maintain a Section 125 plan and offer their employees the opportunity to pay the premium cost of health care coverage on a pre-tax dollar basis may be subject to the Free Rider Surcharge if their employees or their employees' dependents access medical care through the Commonwealth's Health Safety Net.

The Massachusetts Health Connector recently mailed a letter to Massachusetts employers stating that on January 1, 2014, the Health Connector's Voluntary Plan (VP) program will be discontinued because of a change in federal tax law. Section 125 of the Internal Revenue Code was amended by the Affordable Care Act (ACA) to provide that employees may NOT purchase individual market coverage on a pre-tax basis through a government exchange such as the Connector on or after January 1, 2014.


Even though this change in the law prevents the Connector from operating its VP program, Massachusetts law still requires employers to provide employees (including those who are not eligible for employer-provided health coverage) with a Section 125 plan option to pay for health coverage on a pre-tax basis. Any employer who fails to offer a Section 125 plan option risks being assessed a Free Rider Surcharge. So, employers should now be looking to replace the health coverages that are now offered through the Connector's VP program -- either directly through an insurance carrier or through a private network/intermediary.


All employers must amend their Section 125 Plan document in light of this development


Please contact John McMorrow at 508.929.1612 for further information.



Labor, Employment & Employee Benefits Group

Mirick O'Connell

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Worcester, MA  01608

t 508.791.8500

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Westborough, MA  01581

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Mirick O'Connell is a full-service law firm with offices in Worcester, Westborough and Boston, Massachusetts.  The Firm's principal practice groups include Business; Creditors' Rights, Bankruptcy and Reorganization; Elder Law; Family Law and Divorce; Intellectual Property; Labor, Employment and Employee Benefits; Land Use and Environmental Law; Litigation; Personal Injury; Public and Municipal Law; and Trusts and Estates.
This client alert is intended to inform you of developments in the law and to provide information of general interest.  It is not intended to constitute legal advice regarding a client's specific legal issues and should not be relied upon as such.  This client alert may be considered advertising under the rules of the Massachusetts Supreme Judicial Court.