Mass Health Care Reform Act Educational Series – FAQs (Issue 5)

The Commonwealth Connector has launched their new, updated website with comprehensive information about HCR including a section on FAQs posed by employers. Telamon took it one step further and asked the Connector some questions of our own regarding eligibility, billing and payment plans. We hope you find the following Q&A helpful as you navigate through the requirements of the new law.

1. How does the state account for “per diem” employees when calculating minimum/eligible hours worked?

There are no specific guidelines in the regulations on how to determine whether or not a “per diem” employee meets the definition of full-time for purposes of the Fair Share Contribution (35 hours/week) and Section 125 (64 hours/month) requirements. Employers should demonstrate good faith compliance in developing eligibility standards for all employees who don’t consistently work the number of hours specified in the regulations.

2. How is eligibility defined for the full-time employee who is eligible for group plan but cannot afford group plan (making less than 300% of poverty level)?

Regardless of employer size, an individual is not eligible to participate in Commonwealth Care if their (or a family member's) current employer offered them health insurance coverage within the last six months AND the employer offers to contribute to the annual premium cost (20% for family and 33% for an individual).

3. What is the aggregate timeframe for an employer to determine if they should classify themselves as under 50 eligible employees vs. over 50 eligible employees, if the employer’s enrollment varies month to month?

A small employer, as defined in M.G.L. Chapter 176J, is deemed to have 50 or fewer eligible employees if, on at least 50% of the employer’s working days during the preceding year, the employer employed from 1 to not more than 50 eligible employees, the majority of whom worked in Massachusetts. For purposes of M.G.L. Chapter 176J, an eligible employee is generally defined as an employee who works 30 or more hours during a normal work week and is hired to work for a period of not less than 5 months. 

4. Are the Individual Mandate, Section 125 eligibility and Fair Share assessment requirements based on where an employee works or where an employee lives?

The MA individual mandate to have insurance by July 1, 2007 applies to anyone who lives in MA. The MA mandate that requires employers to open their Section 125 plan to employees allows all employees who work in MA to participate in that Section 125 plan. So an employee living in NH or CT, but working in MA, would not be mandated to secure MA insurance but would be allowed to secure their own individual insurance in their state and run it through their MA employer’s Section 125 plan.

5. If an employee currently purchases an individual Commonwealth Choice plan through their employer’s Section 125 plan but comes up short with payment because their paycheck isn’t enough to cover the health deduction, how does the employee “revert” to a direct, non-125 plan without experiencing a gap in coverage?

The employer is not responsible for any shortfall amount or for coordinating payment of any shortfall amount. How this will be handled by the Health Connector depends on whether the shortfall comes prior to or during the time an employee is enrolled.  Prior to an employee's Commonwealth Choice effective date: Commonwealth Choice coverage begins on the first day of the calendar month following the date the employee

a) applies for enrollment with the Health Connector, and b) pays the first month's premium. So, in this example above, the employee will not become covered under Commonwealth Choice until the first day of the month after the full first month's premium has been paid. 

Once an employee's Commonwealth Choice coverage is effective: Once an individual is enrolled inCommonwealth Choice, if the payroll deduction amount submitted by the employer to the Health Connector is not sufficient to cover the premium amount due, the Health Connector will contact the employee directly and notify them of the amount they must pay in order to maintain coverage. Direct payment by the employee will be on an after-tax basis. Payment in full must be received by the Health Connector before the due date (the 10th of the calendar month prior to the month for which coverage is to be provided). For example, premiums for October coverage are due to the Health Connector by September 10th. If the full premium payment is not received by the Health Connector within 60 days following the beginning of the month for which payment was due, coverage will be cancelled as of the last day of coverage for which the full premium amount was received. In other words, if there is a shortfall and the full premium amount due for October coverage is not received by November 30th, coverage will be cancelled as of October 1st. 

Under your example, the employee could experience a "gap" in health insurance coverage:

1) if payment is not received in full by the Health Connector (either through the Section 125 plan payroll deduction amounts submitted by the employer or on an after-tax basis submitted directly from the employee) prior to the coverage effective date.

2) once an individual is enrolled in Commonwealth Choice, if payment is not received in full by the Health Connector within 60 days following the beginning of the month for which payment was due. 

Please note that in the above examples, the employer would not "terminate" the employee from the Section 125 plan. Instead, their Commonwealth Choice health insurance coverage may be cancelled if they do not submit their premium payment to the Health Connector - either through payroll deductions or direct - on a timely basis.

This question points to the need for a smooth implementation, and the Health Connector is committed to working with clients to ensure a timely and effective account set-up and enrollment process.

Commonwealth Choice coverage is always effective on the first day of the month, and billing is done in advance. For the first month of coverage, premiums are due prior to the employee's requested effective date. For example, if an employee wishes to enroll on August 1st, the full premium amount must be received by the Health Connector prior to that date. Once an employee is enrolled, premiums are due to the Health Connector by the 10th of the calendar month prior to the coverage month. So for October coverage, the full premium amount must be received by the Health Connector by September 10th.

7. An employer should not/cannot cancel the employee from the group Section 125 plan until the employee is past the 60 day leeway period for late payment?

There are specific rules under Section 125 about terminating an employee from the Section 125 plan. Termination from the health insurance plan does not equate to termination under the Section 125 plan.

8. If an employee reverts to self pay directly to the Connector post tax, how will the employer know it is OK to take them off the group Section 125 pre tax bill?

The Health Connector will notify the employer via the billing process.

9. What if an employer doesn't take payroll deductions for the covered month, until the covered month? For example, premium is due September 10th for coverage of October, but the employer pays employees for October on 10/15 and 10/30 and takes deductions from those paychecks for October.

The employer never fronts the money. Since Commonwealth Choice is a pre-paid plan, the full first month's premium would need to be paid in full before coverage can become effective. For example, for coverage to be effective October 1st, the payroll deduction and premium payment processes will need to result in a) the full amount being payroll deducted from the employee, and b) the full premium paid by the employer to the Health Connector prior to October 1st. The way the payroll cycle works, payments to the Health Connector would need to begin on August 24th in order to have the full month collected and paid by October 1st.

There is a wealth of information online regarding HCR, and for your benefit. On the Telamon Website you will find back issue of this newsletter along with links to some other online resources where you can learn more about the law, stay on top of key deadlines, and keep yourself informed.

• Boston’s NPR news station 90.9 WBUR maintains a blog on their site entitled CommonHealth: The goal of this community blog is to create a broad conversation about the new health care law and includes daily posts from a group of contributors, stories produced by WBUR and links to other sites or information related to the law.
  
  
• Health Care for All (HCFA), an organization of health care consumers dedicated to creating a health care system that is responsive to the needs of all people, maintains a section on HCR; or check out their blog entitled A Healthy Blog
  
  
• The Greater Boston Chamber of Commerce follows health care reform in their Policy & Research section of their site, including links to recent actions and advancements
  
  
• Associated Industries of Massachusetts (AIM) offers interactive Health Care Reform Workshops that will provide you with the latest information, insight, and practical tools to ensure your organization's compliance with this new law.