Russ Sullivan

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State Streamlines Notices to Employees on Health Exchanges

Posted by Russ Sullivan on Aug 29, 2013 10:52:00 AM

Massachusetts employers now have access to a single template that will ensure compliance with all state and federal health-care reform requirements to tell employees about state health-insurance marketplaces.

Health care reformThe Massachusetts Health Connector yesterday released a model employee notice of health insurance marketplaces.  The Massachusetts notice contains the information required by the federal Affordable Care Act (ACA), as well as additional information required of Massachusetts employers.  AIM worked closely with the Connector to reduce the federal and Massachusetts notice requirements into one, simplified employee notice.

So Massachusetts employers who use the Connector notice will be compliant with both federal and Massachusetts health care notice requirements.

The U.S. Department of Labor released its own model employee notices of health care exchanges earlier this year.  The Affordable Care Act (ACA) requires that all employers subject to the Fair Labor Standards Act (generally employers engaged in interstate commerce with at least $500,000 in annual revenue) provide the notice to all existing employees by October 1, 2013 and to all subsequently hired employees within 14 days of their hire date.  There are two separate federal notices – one for employers who provide health insurance and a second for those who do not.

The Massachusetts Health Connector notice differs from the federal notices in several ways:

  • The Connector notice provides information on section 125 plans.  Under Massachusetts health care reform, employers with 11 or more full-time employees were required to offer workers who did not qualify for employer- sponsored health insurance the opportunity to purchase individual insurance through their employer’s section 125 plan.  Although the ACA does not allow the use of a section 125 “cafeteria plan” for individual purchase of insurance policies through a public marketplace like the Massachusetts Health Connector, it does allow employees to use their employer’s section 125 plan to purchase individual policies through a private insurance source.
  • The Connector provides one notice that can be used for all employers whether or not the employer provides health insurance. 

The Connector notice contains all key elements of the federal notice but customizes the language for Massachusetts:

  • Notice to employees of the Massachusetts Health Connector as a “one-stop” shop for finding health insurance plans;
  • Information on the availability of subsidies to qualifying individuals;
  • A statement that the employer’s plan may affect the eligibility of an employee to qualify for certain subsidies;
  • A statement that choosing health insurance through the Massachusetts Health Connector may cause the individual to lose any contribution that his or her employer may make towards the cost of health insurance premiums.
  • A link to www.MAhealthconnector.orgfor more information

The Massachusetts notice also contains a two-page, optional supplement in which employers can provide information on the eligibility requirements for their health plan, confirmation that the plan meets ACA minimum-value requirements, the employee cost for the lowest cost employee only plan of minimum value, and employer information such as employer name, address, EIN, contact, contact phone number and contact email. Employers should to assess whether adding two pages to the notice will outweigh the value of the information provided.

The Connector notice applies to Massachusetts residents only. Massachusetts employers must use the federal notice for their out-of-state employees.  Employers who use the federal notice for their Bay State employees will need to provide an additional notice to employees about section 125 plans using language similar to that contained in the Connector notice.

None of the new notices need to be signed or retained.

You can access the notice, the supplemental notice and additional information at the following link:

Health Care Terms

Topics: Health Care Reform, Health Care Costs, Issues

Health Insurance Reporting Requirements Just Got a Little Easier…

Posted by Russ Sullivan on Jul 24, 2013 9:53:00 AM

HIRD form filins in Massachusetts on hiatus

Effective immediately Massachusetts employers are no longer required to collect and retain signed employee Health Insurance Responsibility Disclosure (HIRD) forms. This comes as a huge relief to many employers who found this practice administratively burdensome.

Since the enactment of Massachusetts Health Care Reform, employers with 11 or more full-time employees have been required to provide this form to employees who decline either employer-sponsored health insurance or the opportunity to purchase health insurance on a pre-tax basis through the employer’s section 125 plan. At AIM’s request, the Governor and legislature have made the employee HIRD form a thing of the past. 

Massachusetts employers should make note of the following changes:

  • Effective July 1, 2013, the Massachusetts Health Connector no longer requires employers to distribute the state employee Health Insurance Responsibility Disclosure form to employees.  Until further notice, Massachusetts employers do not have a state-mandated employee health care notification requirement. 
  • Effective October 1, 2013, Massachusetts employers must comply with the Affordable Care Act’s employee notification requirements. The federal form informs employees of their coverage options including their ability to purchase insurance through the Massachusetts Health Connector and the possibility of subsidies for certain qualifying individuals.  Employers subject to the Fair Labor Standards Act (virtually all employers) need to provide the form to all employees —even when the employer does not offer health insurance and even to employees who do not meet the eligibility requirements of the employer’s health plan.  It is anticipated that the federal notification will be customized to satisfy the state’s requirement that employees be told of their options to purchase health insurance on a pre-tax basis.  However, this notice will not need to be signed, collected and retained. 
  • The employer Health Insurance Responsibility Disclosure filing is on a temporary hiatus for 2013. The state plans to resume the employer reporting on a yearly basis in 2014. Although the Fair Share Contribution is eliminated as of July 1st, employers owing a penalty for the second quarter of 2013 or earlier are still obligated to make the payment.  Fair share contributions accruing on June 30, 2013 are due by August 15, 2013.  
AIM will continue to work with the state on these issues as they are further developed and will keep you informed.

Topics: Massachusetts Health Connector, Section 125 Plan, Affordable care Act, HIRD forms, Fair Share Contribution, Fair Share Assessment, Health Care Reform, AIM, Health Care Costs, Human Resources

Employers with Wellness Incentives May Run Afoul of Federal Reform

Posted by Russ Sullivan on Jun 25, 2013 8:40:00 AM

Many employers have targeted wellness as the cornerstone of their health-care management strategy.  These employers have reasoned that healthier employees mean fewer catastrophic medical conditions and, as a result, lower claims and premiums.

Health care reformIt is no wonder that employers have introduced incentives to increase employee participation in Health Risk Assessments (HRAs), exercise and nutrition programs, smoking cessation and other wellness activities. Employers have even offered a reduction in employee contributions to the cost of health insurance premiums as an inducement for wellness program participation.

But employers who offer such reductions could face a problem under the federal Affordable Care Act (ACA).

The reform law calls for employers to face possible assessments if they do not make affordable coverage available to employees.  Here’s the catch - affordability is determined by the employee’s contribution towards the premium cost of employee-only insurance.  An employer with two employee costs – a lower cost for wellness participants and a higher cost for those who choose not to participate - may find insurance affordable at the reduced cost and unaffordable at the higher cost.

The hope was that the ACA, since it allows employers to discount employee contributions for wellness participation, would allow employers to use the discounted contribution to determine if its health insurance is affordable.  Under recently proposed Internal Revenue Service regulations, the answer is yes and no.

  • The regulations state that an employer must use the cost of self-only insurance to an employee who does not participate in the wellness program when calculating affordability.  
  • The only exception is when the lower cost is attributable to rewards associated with tobacco-related wellness incentives.  For example, if the monthly employee contribution for the employer’s lowest-cost employee only plan of minimum value is $250 for those who smoke and do not participate in a smoking secession program and $200 for those who either don’t smoke or do smoke but participate in a smoking secession program, then affordability will be based on the $200 employee cost.  However, if the lower $200 employee cost is due to an employee’s participation in another wellness program such as weight watchers, then affordability is based on the higher $250 cost.

Employers should consider wellness incentives such as reduced premium contributions for wellness participants, but be aware of the potential impact on your health plan.  The unintended consequence of a poorly structured wellness incentive may lead to the exodus of employees from your plan and an inbox full of assessment notices from the Massachusetts Health Connector.

I invite you to contact me at if you have questions.

Topics: Health Care Reform, Health Care Costs, Issues

Regulators Postpone Key Employer Requirement Under Health Reform

Posted by Russ Sullivan on Jan 25, 2013 12:56:00 PM

The United States Department of Labor (DOL) has delayed the scheduled March 1 implementation of a federal health care reform provision requiring employers to inform workers about health insurance exchanges.

Health Care ReformThe regulation under the Affordable Care Act (ACA) would require “affected employers” to provide a written notice to all current employees, and subsequently to each new employee on date of hire, on three issues:

  1. Inform employees about state insurance exchanges including how to access the exchange and the type of services they provide;
  2. That employees eligible for coverage through their employer may still access services through the exchange with a possible premium tax credit if the employer’s coverage is either unaffordable or not of minimum value; and
  3. That employees accessing insurance through a state exchange may lose the employer’s contribution towards health insurance.

The DOL has decided to postpone the compliance date from March 1 to the “late summer or fall” of 2013.

Federal regulators say they intend to coordinate the employer notification requirement with educational efforts being undertaken by the U.S. Department of Health and Human Services, Internal Revenue Service guidelines on determining the minimum value of employer plans and the open enrollment periods of state exchanges.

Employers have been waiting for further guidance from the DOL on how to comply with this notice requirement.  More specifically, employers have been waiting to see if the DOL would provide a model notice or model language to be included in an employer written notice. 

It is unclear whether regulators will issue such a model notice or, in the alternative, whether they will direct employers to language contained in similar notices for benefits available through state exchanges as contained on their websites. 


Topics: Health Care Reform, Issues

Tax Credit Offers Incentive to Employers for Wellness Programs

Posted by Russ Sullivan on Jan 11, 2013 9:44:00 AM

Massachusetts employers with wellness programs may now qualify for a state tax credit equal to 25 percent of the cost of the plan, to a maximum of $10,000.  Under regulations issued on Wednesday, a credit is available to Massachusetts-based employers with up to 500 employees (the majority must work in Massachusetts).  Out-of-state employers with up to 500 Massachusetts employees may qualify as well.   
Wellness.Exercise.SmallYou must have an existing wellness program that promotes “a healthy workplace environment and healthy workplace habits.” Qualifying programs must be based on “a health-risk assessment of the workforce” and could include features such as nutrition, smoking cessation, disease and accident prevention or other aspects that improve the “physical and mental health and well being” of participants.

The tax credit is part of the health care cost control law signed by Governor Deval Patrick in August. State officials expect to have an application process in place for the credits by spring, but employers should prepare now to ensure they will be able to take advantage of the benefit.

  • Employers will seek to qualify for the credit by completing an application process detailed in the regulations. The Department of Public Health is working on draft guidance and the application form now.  They expect to have the drafts ready by February 1 and to begin accepting applications in the spring. Every employer who “submits sufficient documentation of its implementation of an eligible wellness program” prior to the annual application deadline (and until the total amount allocated by statute is expended) will receive an annual certification number to be used with its annual tax filing.
  • There is an annual limit to the amount of funds available for wellness program tax credits.  Applications will be approved on a first-come, first-served basis, so employers should be ready to submit their forms as soon state officials begin to accept them.  The commonwealth may also manage the allocation of funds by creating a waitlist and giving priority to employers who received approval in the previous year and to employers with fewer than 100 employees. 

Interested employers with existing wellness programs should review the regulations to ensure that their program meets the requirements for the credit.  Employers considering a program should also review the regulations.  The requirements include evidence-based screening, education and activities aligned with current research and statistics.  Once certain that the program meets the requirements for the tax credit, employer should complete the application process and get to the front of the queue.  
AIM provided guidance in the development of these regulations. We applaud the state's receptiveness to our suggestions to make this tax credit available to employers with up to 500 employees and to establish a one-step certification process.   AIM will keep you informed on the development of the application process.

Topics: Business Center, Health Care Costs, Issues

Receiving a Health Insurance Rebate? Here are Questions to Consider

Posted by Russ Sullivan on Jul 2, 2012 9:05:00 AM

Many Massachusetts employers are receiving a welcome surprise from their health insurance companies this month – a rebate for health care premiums paid in 2011.

Health insurance rebatesThe rebates are being made under a Massachusetts law passed in 2010 that requires health insurance companies to spend a minimum percentage of premium dollars on medical claims, clinical services and activities designed to improve health care quality. When this minimum “Medical Loss Ratio (MLR)” is not met, then the health insurance company must issue a rebate.

Rebates are coming from Fallon Community Health Plan, Harvard Pilgrim Health Care, Nerighborhood Health Plan and Tufts Health Plan.

Here are some important facts for employers whose checks are “in the mail.”

Employers in the merged market (companies with 50 or fewer insurance eligible employees and individual customers)are eligible to receive rebates.

Employers due a rebate will receive a notice from their health insurance carrier.  The carrier has several payment options, including a check or a reduction in future premiums.  The first rebates under the law are in the process of being issued and AIM has fielded a number of calls through its Employer Hotline regarding how the funds should be handled.

Companies that contribute 100 percent of the cost of health insurance premiums for their employees will not have to distribute the rebate to their employees.  However, if employees contributed to the cost of premiums, they are entitled to a percentage share of the rebate equal to the percentage of their contribution to the total premiums paid.

Who is entitled to a rebate – the employees who participated in the plan in 2011 or the current employees?  To what extent must an employer go to track down former employees? 

Your plan document might identify how to distribute any rebates to which employees are entitled.  If not, then company plan administrators should meet with their benefits advisors and insurance carriers to incorporate a process into the plan documents.  Just as the carriers have options for issuing the rebates, employers have options for allocating funds to employees. The plan is permitted to weigh the costs and benefits, and the competing interests, in making its decision.

The allocation method need not reflect the premium activity of the individual participants provided that it is reasonable, fair and objective.  For example, the company need not provide a rebate to each prior year plan participant according to his or her contributions.  Instead, the company can distribute the rebate to current year participants in the plan.

In addition, employers who offer multiple plans might receive a rebate for one plan but not others.  In this case, the rebate should be applied for the benefit of the participants and beneficiaries who are covered by the plan to which the rebate applies, provided it would be prudent and solely in the interest of the plan to do so.

Plan administrators are encouraged to consult with their tax advisors to explore various distribution options and their tax implications.  As a general rule, if the employee contributed to the plan on a pre-tax basis, then the rebate, whether in cash or in the form of a premium reduction, may be taxable.  The opposite would likely hold if the employee contributed to the premiums on a post tax basis.  A rebate could be taxable even if it is given as a reduction in a current year premium.

Look for your rebate and make sure to discuss your options with your broker, your health insurance carrier and your tax and benefits advisors.  Whatever you decide to do, the best practice is to document your decision and communicate with your employees.


Topics: Business Center, Issues, Health Insurance, Human Resources

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