Health Insurance Reform: How It Affects Massachusetts Employers

Health Insurance Reform: How It Affects Massachusetts Employers

By Christopher Liberson

Tip! Free � for � service insurance also known as indemnity insurance this is a traditional type of health insurance that pays the portion of each medical service you get like doctor's visit and hospital stays while you pay the remaining costs. Premiums are higher than the other policies.

First of all, the employer mandate is not absolute. The cost of non-compliance, however, can be steep. You must offer an insurance plan if your payroll includes more than 10 full-time equivalent (FTE) employeeswho do not have insurance through another source. You will be assessed $295 per year per FTE if you do not offer insurance, and you may face an additional surcharge if your uninsured employees use more than $50,000 through the state's free-care health services.

Now that we've covered the risks of non-compliance, here are ways you can use the new law to offer coverage to your workers.

The state establishes a Health Insurance Connector as sort of a clearinghouse for insurance offerings. This new entity approves new insurance plans and provides a link between insurers, employers and individuals. Employers will find plans through the Connector, removing the necessity to deal with individual insurance companies. The Connector can also work to split employer contribution for a worker with two part-time jobs. It should reduce costs both because of the flexible new products and the expanded population in the insurance pool. You can rely on any approved plan.

Tip! Realize that you will be required as an employer to contribute as least 25% of the premiums for the group health insurance. (I never seen an group health carrier ask for less.

Employers will be able to offer a "Section 125" plan, named for its section in the IRS code. That plan gives an immediate benefit to employees by allowing them to deduct their premiums from pre-tax dollars. The employer's contribution is required to be "fair and reasonable," with that amount to be determined by the state. Because those plans will come through the Connector, they should be much more affordable than present policies.

Tip! Understand medical underwriting. Ahhh, here's the best kept secret in purchasing private health insurance.

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