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Massachusetts Small & Large Group Health Insurance /
MA Health Insurance
Comprehensive employee benefits programs are of critical importance to both employers and employees, often spelling the difference between attracting and losing top-notch employees. With the PEO’s buying power these benefits are purchased at discount prices and that savings is passed on to you and your employees.
Massachusetts Health Statistics
- Population of more than 6 million people
- 6th in the 2008 America’s Health Rankings
- Offers both private market and public health insurance
- Federally subsidized health coverage to uninsurable residents who meet certain requirements
- 7.9% of the residents are uninsured
Massachusetts Small Group Health Insurance
Massachusetts small group health insurance rates are community based, with adjustments allowed for age, industry, group size, geography, family composition, participation percentage. Discounted rates are available to groups that participate in wellness programs.
Eligible Small Business Definition
1 – 50 Employees (Full-time employee is someone who works 35 hours or more per week)
Requirements of Coverage
- A certain percentage of employees must participate in the health insurance plan. Percentage participation depends on the insurance company.
- Employer might be asked to contribute a minimum amount to the employees premium
Additional Requirements of Coverage for Employers with 11 or more full-time equivalent employees:
- Free Rider Surcharge - You must offer a Section 125 cafeteria plan that meets Commonwealth Connector regulations or pay the Free Rider Surcharge if your employees or their dependents get medical care that is paid by the state's Health Safety Net -for the uninsured.
- Fair Share Contribution - Employees must make a “fair and reasonable” premium contribution toward a health insurance plan for their employees. Employers that do not will pay the state up to $295 per employee, per year. (The amount will be pro-rated for part-time employees.)
What qualifies as a “fair and reasonable” premium contribution? There are 2 tests. An employer must pass at least one.
Primary Test: At least 25% of full-time employees are enrolled in the employer’s health insurance plan and the employer is making a financial contribution to that plan. [NOTE: full-time = at least 35 hours per week.]
Secondary Test: The employer offers to pay at least 33% of the premium cost of a health insurance plan that is offered to all full-time employees. The rule applies for employees who are employed for at least 90 days during the 12-month period. - Health Insurance Responsibility Disclosure - Employers must complete an Employer Health Insurance Responsibility Disclosure (HIRD) Form/Report which must be filed on-line, to report if you offer a Section 125 Plan that complies with Commonwealth Connector regulations;
- Employers must collect an HIRD Employee Form from employees who decline your employer sponsored health insurance and/or your employer sponsored Section 125 Plan.
Requirements of Guaranteed Issue
A business must have between 2 – 50 employees for health insurance to be issued on a guarantee-issue basis. These insurance contracts must also be guarantee-renewable. The policy can however be terminated for non-payment of premium, employer fraud or intentional misrepresentation and for non-compliance with the terms of the health insurance contract.
Preexisting Condition Exclusion Period
For those enrollees who do not have prior creditable coverage, the group health insurance carriers can impose a 6-month look-back/6-month exclusionary period for preexisting conditions.
Massachusetts COBRA and Continuation Coverage
An employer is required to offer an employee and those families currently participating in the health insurance plan who experiences a “qualifying event” the opportunity to continue health insurance coverage for up to 18, 29 or 36 months. An employer can require the beneficiary to pay an additional 2% administrative fee above the premium cost.
Written notice of the employees COBRA rights must be given at the time initial coverage begins under the plan or at the time the health plan becomes subject to the COBRA requirements. A second notice must be provided to a covered employee (or spouse or dependent) when a qualifying event occurs.
Qualified beneficiaries have 60 days from the later of either the date coverage is lost or the date notice is provided to elect continuation coverage.
Massachusetts Large Group Health Insurance
Large group health insurance contracts in Massachusetts do not have to be offered on a guarantee-issue basis. Large group health insurance is medically underwritten at the time of purchase, with rates based on employee participation and prior claims experience.
Eligible Large Business Definition
51 or more Employees
Requirements of Guaranteed Issue
The Large Group Health Insurance policy must be guarantee-renewable. The policy can however be terminated for non-payment of premium, employer fraud or intentional misrepresentation and for non-compliance with the terms of the health insurance contract.
Massachusetts COBRA and Continuation Coverage
A large group health insurance plan must follow the federal COBRA guidelines. The employer is required to offer an employee and those families currently participating in the health insurance plan who experiences a “qualifying event” the opportunity to continue health insurance coverage for 18 months after leaving employment with the company, regardless of the reason for leaving. The participants may be eligible for COBRA up to 36 months in some cases. An employer can require the beneficiary to pay an additional 2% administrative fee above the premium cost.
Written notice of the employees COBRA rights must be given at the time initial coverage begins under the plan or at the time the health plan becomes subject to the COBRA requirements. A second notice must be provided to a covered employee (or spouse or dependent) when a qualifying event occurs.
Qualified beneficiaries have 60 days from the later of either the date coverage is lost or the date notice is provided to elect continuation coverage.
Employers may face an excise tax for each day the qualified beneficiary is affected by the employer’s failure to comply.
Additional Massachusetts Health Insurance Resources
Massachusetts Division of Insurance
617-521-7794 http://www.mass.gov/?pageID=ocaagencylanding&L=4&L0=Home&L1=Government&L2=Our+
Agencies+and+Divisions&L3=Division+of+Insurance&sid=Eoca
Items the Health Insurance Companies Look at for Pricing:
- The age of the employees. If your company employs a lot of older people (late 40’s and above) there is a good chance your health insurance plan will be more expensive than a company who employs a majority of very young workers.
- The area your company is located. If you live in an area such as New York City, the hospitals can be more expensive than in other parts of the country. So, if the cost to the health insurance company is going to be more than they pass that on to you.
- The claims history of your company. If your company has submitted a lot of claims in the recent past the health insurance company could view this as a trend within your company and adjust for expected claims they might have to pay out in the future.
- The overall demographic of your employees. Women in their 20’s and 30’s are more susceptible to maternity and child care costs. Older men are more susceptible to diabetes, heart attacks and cancer.
- The company’s occupation. Certain occupations have shown that the workers are more likely to file claims such as construction workers, industrial workers and nurses.
How Do I Control My Health Insurance Costs?
- Become part of a PEO which has thousands of insured lives to spread the risk and has great buying power. And if your company is a healthy group, you can even get discounts which could drastically lower your costs.
- Join an association which pools employers to create more buying power from the health insurance companies.
- Opt for a health insurance plan with a higher co-pay or bigger deductible. Also, the plans which limit your access to only their network can typically be less expensive.
Types of Health Insurance Coverage
Major medical health insurance plans offered by an employer typically cover a comprehensive array of healthcare needs, including doctor visits, prescription drugs and hospital care. Below are the different types of plans an employer might be offered:
- Indemnity Plans – Indemnity health insurance plans allow you go to the doctor of your choice and pay for services at the time of the visit. These major medical plans have a deductible (the amount you pay out of your own pocket before the insurance company begins paying for expenses). After your covered expenses exceed the deductible amount, your health insurance will pay a percentage, usually 70 – 80 percent, of reasonable and customary expenses incurred. To receive payment for medical expenses, you may have to fill out forms and send them to your insurer. Sometimes your doctor's office will do this for you. These plans usually provide the most flexibility in choosing where to receive care.
- Managed Care Coverage - Unlike an indemnity plan, managed care is a health insurance plan like an HMO, PPO, or POS, that encourages insured individuals to use certain providers. A managed care plan requires or creates incentives for an insured person to use providers that are owned, managed, or under contract with the insurer. These incentives may be financial incentives or additional benefits. Managed health care plans differ widely in their details, however, all will seek to steer a patient toward a pre-approved network of doctors and facilities, as well as limit coverage of any treatment sought outside the network.
- Health Maintenance Organization (HMO) Plans – With a health maintenance organization (HMO), you pay a fixed monthly fee called a premium. These major medical plans require the insured person to receive care from a provider in their network in order to have the claim covered. The insured typically has to choose a primary care physician (PCP) from a list of network providers. Your PCP is typically responsible for your managing your health care as well as for making referrals to specialists and approving further medical treatment. If treatment is received outside of the network then it is usually not covered.
- Preferred Provider Organization (PPO) Plans – These health care plans operate like an HMO in that you pay a fixed monthly premium. The insurance company has selected hospitals and doctors to furnish services to you. However, under a PPO insurance plan, a primary care physician is not required. As a result, seeing a specialist does not require a referral. You may seek care outside the PPO’s network, but you will probably have to pay a higher deductible or co-payment.
- Point of Service (POS) Plans – These major medical plans attempt to combine the lower cost of the HMO with the freedom of the PPO. Just like an HMO you are required to choose a primary care provider (PCP) who will manage your care. Your PCP can refer you to health care providers outside of the network. When using a service outside of the network the health insurance company will typically pay 70 – 80 percent of the reasonable and customer costs.
Health Savings Accounts (HSA) and High Deductible Health Plans (HDHP)
An HSA is tied to a high-deductible health insurance policy, an HDHP is a less expensive health insurance plan that does not pay for the first several thousand dollars or more of healthcare expenses (i.e., the “deductible”) Once you meet the deductible, the health insurance pays for most of your medical expenses for the rest of the year. You may choose your own doctor and level of care. Dollars put into a health savings account can be withdrawn instantly for qualified medical expenses as needed; any dollars remaining can be saved for spending in future years, or invested to accumulate savings for health needs after retirement.