Health Insurance Law in Massachusetts
The health care coverage system in Massachusetts is shaped by a 2006 health care reform enactment titled "An Act Providing Access to Affordable, Quality, Accountable Health Care." The enactment required adults to obtain health insurance if they can afford to do so and established a program to connect individuals and small businesses to available health insurance products. The law also expanded the coverage of the MassHealth Medicaid program and created a subsidized health insurance program for low-income individuals who are not eligible for MassHealth coverage.
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Individual Mandate
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A key provision of the Massachusetts health care coverage system is the "individual mandate," which requires all state residents age 18 or older to obtain health insurance coverage, if affordable insurance is available at their income level. The Commonwealth Health Insurance Connector agency, which was created by the 2006 legislation, issues the affordability standards that are used to determine whether an individual meets this requirement. The individual mandate is enforced with financial penalties for noncompliance. The penalties are assessed by the Department of Revenue, through the state tax system.
Fair Share Contribution
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The Massachusetts health care reform legislation also established a requirement for employers who do not provide health care insurance to their employees to pay a "fair share contribution" toward the cost of providing health insurance to state residents. This requirement applies to employers with 11 or more employees. The contribution is based on a percentage of the cost of free health care provided by the state to employees without health insurance.
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Employer Surcharge
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Massachusetts law also specifies that employers who do not offer health insurance to their employees must pay a "free rider surcharge" if their employees do use free health care. The surcharge is assessed if one employee makes use of free health care three times in a year or if there are five instances in a year of free use of health care by an employer's employees. This surcharge varies from 10 percent to 100 percent of the cost of providing the free health care. The surcharge is not applied to the first $50,000 of the cost of providing free care to the employer's employees.
Cafeteria Plans
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Employers with 11 or more employees are also obligated to make "cafeteria" health plan options available to their employees. This requirement is in addition to the employer's obligation to provide health insurance to its employees. The Internal Revenue Code permits employees who choose these cafeteria plans to purchase the coverage on a pre-tax basis. This results in tax savings for employers and employees.
Commonwealth Health Insurance Connector
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The 2006 enactment established the Commonwealth Health Insurance Connector. This agency connects individuals and small businesses with 50 or fewer employees to private health insurance products. Individuals who are employed may purchase insurance through the connector with pre-tax dollars. The connector permits multiple employers to pay the insurance premium for an employee. Health insurance plans offered through the connector are also portable, allowing an employee to continue existing health care coverage if he changes jobs.
MassHealth
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MassHealth is the Medicaid program offered by the state of Massachusetts. The 2006 enactment expanded MassHealth eligibility for children. Under the previous eligibility requirements, MassHealth coverage was available to children in families whose income did not exceed 200 percent of the federal poverty level. The 2006 legislation raised the eligibility cap to 300 percent of the FPL. The enactment made funding available for outreach initiatives to locate individuals who are eligible for Medicaid coverage but who are not yet enrolled in MassHealth.
Commonwealth Care
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The 2006 health care enactment established the Commonwealth Care subsidized health insurance program. Commonwealth Care offers health care coverage to low-income individuals whose income does not exceed 300 percent of the FPL but who are not eligible to participate in the MassHealth Medicaid program. Commonwealth Care provides a sliding scale of subsidies, based on the individual's income. The insurance coverage offered through Commonwealth Care does not require individuals to pay deductibles.
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