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The Massachusetts Health Care Reform Law requires all Massachusetts residents to have health insurance, effective July 1, 2007. The Reform is expected to expand coverage to 90 to 95 percent of the state's 550,000 uninsured in the next three years.

2010 DOI Rate Review
Health Care Access "Technical Corrections" Bill
Health Care Reform Regulations Impacting Employers
What Health Care Reform Means for Employers
Key Dates
The Connector
Reform Impact on Student Recertification Process
Market Reforms
Funding
Minimum Creditable Coverage

Health Care Access "Technical Corrections" Bill

The Health Care Access "technical corrections" bill was signed by Governor Deval Patrick on November 29, 2007, and is now Chapter 205 of the Acts of 2007. The Governor made no substantive changes to the version passed by the Legislature, but did add an emergency letter making changes to the bill effective immediately, unless specified otherwise. Key provisions in the new law include:

  • Health Disparities Council membership: Health care reform made the Special Commission on Health Care Disparities into a permanent council within EOHHS. A seat was added for Blue Cross Blue Shield of Massachusetts per our request. (The Massachusetts Hospital Association and Harvard School of Public Health were also added per their requests.) The Council is charged with making recommendations regarding the reduction and elimination of racial and ethnic disparities in health care and health outcomes within Massachusetts. In addition to the various diseases or illnesses that disparately impact racial and ethnic groups, the Council will also address diversity in the health care workforce (e.g., doctors, nurses, and physician assistants), and will make recommendations on methods to increase diversity in the health care workforce. The Council also expects to make recommendations on other matters impacting and relevant to health disparities, including the environment and housing.

  • For the purpose of clarification, the bill replaces the words "following loss of dependent status under the Internal Revenue Code" with "after the end of the calendar year in which such persons last qualified as dependents under 26 USC 106" (effective January 1, 2008).

  • Extends Young Adult Plan eligibility to 18 year olds (now includes ages 18 to 26); previously it had been limited to those between ages 19 and 26. This went into effect on November 29, 2007.

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Health Care Reform Regulations Impacting Employers
Review a PowerPoint deck that outlines how several key Health Care Reform Mandates impact employers. This deck goes through some of the details of employer regulations, who must comply and what the penalties are.

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What Health Care Reform Means for Employers?
The health care reform law:

  • requires employers with 11 or more full-time employees to offer health coverage, or be subject to an annual fee of $295 per employee

  • expands Medicaid eligibility

  • offers a subsidy program to help low-income people purchase insurance

  • puts forth reforms for the non-group and small-group markets

  • increases much-needed Medicaid reimbursement levels for providers

Efforts to clarify the employer's responsibility are ongoing. Administrative regulations have been disseminated to implement the requirement that employers with 11 or more employees offer "fair and reasonable" coverage or pay a fair share assessment up to $295 per employee per year. The law also requires employers with 11 or more employees to offer access to the pre-tax purchase of coverage or be assessed a "free rider" surcharge if employees or their dependents incur at least $50,000 in free care services.

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Key Dates

  • January 1, 2007: Health care reform includes a provision that provides coverage for dependents up to age 26, or for two years after the end of the calendar year in which such persons last qualified as dependents under 26 USC 106, whichever occurs first. Blue Cross Blue Shield of Massachusetts implemented this provision on January 1.

  • May 1–July 31, 2007: Open enrollment period for individual and small group plans.

  • July 1, 2007: The Connector begins offering health benefit plans for:
    • Individuals (provided they have not been offered subsidized health insurance by an employer with over 50 employees)
    • Small groups with 1-50 employees
    • All Massachusetts residents are required to have health insurance.
    • The state merges non-group and small-group health insurance markets. Rating provisions become effective at this time to coincide with the date of the merged market.
    • Young Adult Plans become effective.


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The Connector
In order to link small businesses and individuals with health insurance products, the law provides for the creation of a central mechanism called the "Connector." Individuals and businesses with 50 or fewer employees are eligible to purchase insurance through the Connector.

The Connector has established rules for subsidized insurance plans (for low-income enrollees up to 300 percent of poverty that do not qualify for Medicaid), and coverage for those earning less than 100 percent of poverty became effective on October 1, 2006. The Connector will soon be developing guidelines for low-cost products offered to those above 300 percent of poverty.

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Reform Impact on Student Recertification Process
The Health care reform law requires that insured plans provide dependent coverage to persons up to age 26, or for two years past the loss of dependent status under the Internal Revenue Code, whichever comes first. Blue Cross Blue Shield of Massachusetts began implementing this mandatory coverage requirement on January 1, 2007.

Some important highlights of how Blue Cross Blue Shield of Massachusetts have implemented this change are as follows:

  • While this requirement applies only to medical plans, we are applying these dependent coverage changes to both medical and dental plans for consistency. Premium dental accounts with 51+ subscribers may opt out of this coverage for January 1, 2007.

  • Blue Cross Blue Shield of Massachusetts has suspended our student recertification process until further notice. We will not automatically cancel members that were certified as students through October 31, 2006, during the 2005–2006 student certification process.

  • Blue Cross Blue Shield of Massachusetts will also apply this dependent coverage to self-insured, municipal medical business. Employers may opt out of this change by submitting a written request to their Account Executive.

  • Blue Cross Blue Shield of Massachusetts will continue to cover full-time students as we have in the past.

  • In 2007, we will begin sending an annual notification to our subscribers who have dependents age 18 to 26. This notification will outline eligibility requirements and will direct subscribers to work with their employer regarding renewal of eligible dependents or cancellation of dependents who are no longer eligible.

  • Members who have lost coverage due to age previously, but who now qualify under the new law, may re-enroll as of January 1, 2007. The normal enrollment process applies as though this were a qualifying event. In addition, subscribers with dependents not previously eligible, but who now qualify, can enroll those dependents effective January 1, 2007 as well.

For more information on changes to dependent coverage and the Health Care Reform Law please download the following:

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Market Reforms
One area of the law affecting employers is market reform, which addresses market size and product options.

  • Market Size: Effective July 1, 2007, the small-group (employers with 1 to 50 employees) and non-group or individual markets will be merged into one pool.

  • Product Options: To support the development of lower-cost products, the bill allows for network flexibility and a moratorium on all new mandated benefits through January 2008, and permits lower-cost products for 19- to 26-year-olds, a segment of the population that historically has opted not to buy insurance, often due to cost.

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Funding
Another area impacting employers is funding. Since Massachusetts already pays at least $1.1 billion to provide health care for the uninsured, the additional funding requirements are expected to be modest. The bill will redirect the existing funds that currently pay for the cost of care, which is often accessed in the emergency room by people who lack insurance. In the future, these funds will subsidize the cost of insurance, which will enable people to access care in more appropriate settings and establish relationships with primary care providers. The additional sources of funding are:

  • Fair Share Assessment: Employers with 11 or more employees that do not offer coverage will be assessed up to $295 per employee, per year.

  • Free Rider Surcharge: Employers with 11 or more employees that do not offer access to pre-tax purchase of coverage will be assessed a surcharge if their employees access "free care" worth more than $50,000.

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Minimum Creditable Coverage

Under the Massachusetts Health Care reform Act, Massachusetts residents 18 or older must carry health insurance that meets specific standards called Minimum Creditable Coverage (MCC).

What is MCC?
MCC establishes the lowest health plan benefit threshold an individual must have in order to meet the requirement for Massachusetts residents to have health insurance. Regulations defining minimum creditable coverage have been set by the Commonwealth Health Insurance Connector Authority Board and certain new MCC standards will become effective January 1, 2009.

To whom does MCC apply?
MCC applies to Massachusetts residents who are 18 years or older.

What happens if a plan does not meet the MCC January 1, 2009 standards?
If a plan does not meet the January 1, 2009 MCC standards individuals may likely face a tax penalty for the year 2009.

How is MCC compliance being reported and monitored?
Beginning with the Massachusetts state 2007 tax filing, residents who are 18 years or older must complete the Massachusetts tax return Schedule HC with the information provided in the "MA 1099-HC". For the 2008 tax year, Blue Cross Blue Shield of Massachusetts will issue the MA 1099-HC to all Blue Cross Blue Shield of Massachusetts subscribers residing in Massachusetts by 1/31/09.

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