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Massachusetts Finalizes Repeal of State-Specific Health Care Reform “Pay or Play” Rules

Deval Patrick; Massachusetts Employee Benefits; Massachusetts Employer Insurance; Massachusetts Health InsuranceTo avoid duplication with the Affordable Care Act (ACA), Massachusetts officially repealed the state’s own employer health care coverage rules on June 12th, 2014.

Initially established in 2006, Massachusetts employers faced “pay or play” rules under the state’s Health Care Reform Act. Under the Fair Share Contribution rule, certain employers faced a penalty of up to $295 per full-time equivalent employee if they did not make a “fair and reasonable”  contribution toward their employees’ health coverage.

While this requirement was repealed in 2013, the full regulations regarding this Act have now been repealed to eliminate any potential confusion.

As implementation of the “Pay or Play” rules under the Affordable Care Act moves forward, employers will now need to be sure that their plan meets the requirements of federal regulations.

Section 125 Plan Regulations Repealed

Regulations that required employers to provide access to Section 125 plans to employees who work at least 64 hours a month were also repealed.

A Section 125 plan allows employees to pay for their health coverage with pre-tax dollars.  Under the Act, individuals who were ineligible for employer-sponsored group health plan coverage must have been offered access to individual market coverage using pre-tax contributions under the employer’s Section 125 plan. Employers that violated the state’s Section 125 plan requirement were subject to a “free rider” surcharge if their employees (or their employees’ dependents) obtained state-funded medical care.

However, because the Section 125 plan requirement is inconsistent with the ACA’s reforms, Governor Deval Patrick’s administration pursued its repeal.


Additional Compliance Resources

I hope that you find this overview helpful as you seek to understand and meet your company’s compliance requirements under the Affordable Care Act.

If you have any questions, please contact our team at 781-759-1222.

In addition, please check out our Health Care Reform Resource Library to access compliance checklists, bulletins, and more.

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Posted in: Benefits and Insurance, Human Resources, Legislation

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