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June 21, 2007
Massachusetts Health Insurance Mandate Effective Soon

The deadline for all Massachusetts residents age 18 and over to have health insurance is July 1. In addition, all employers with 11 or more full-time employees in Massachusetts must make a "fair and reasonable" contribution toward an employee health plan by that date.

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By July 1, employers must also adopt and maintain a Section 125 Plan for employees to pay their health insurance premiums on a pre-tax basis.

If employers fail to make a "fair and reasonable" contribution toward an employee health plan, they must pay a state assessment of up to $295 per employee, per year.  A fee called the "free rider surcharge" will be imposed on employers that do not provide health insurance and whose employees use free care.

The state uses two tests to determine whether contributions to an employee health plan are "fair and reasonable."

  • Primary Test: At least 25 percent of full-time employees are enrolled in the employer's health insurance plan and the employer is making a financial contribution to that plan.
  • Secondary Test: The employer offers to pay at least 33 percent 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.
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