The Massachusetts Health
Connector has sent a letter to employers stating that, due to PPACA
requirements, it will be terminating all Voluntary Plans at the end
Under the Massachusetts
Health Care Reform Act, employers doing business in Massachusetts
with 11 or more full-time equivalent employees must adopt and
maintain a premium conversion plan that allows all its employees
(with certain exceptions, such as employees who work fewer than 64
hours per month) to pay their share of health care premiums with
pre-tax dollars. Most full-time employees would use a premium
conversion plan to pay employee contributions for their employer's
regular group health plan coverage. However, those employees who do
not meet the eligibility requirements for their employer's regular
plan must also have the right to pay for health care coverage through
a premium conversion plan.
To facilitate this coverage
for these other employees, employers could establish a Voluntary Plan
through the Connector by setting up an account with the Connector,
signing a Terms and Conditions Agreement and describing the plan to
eligible employees. These employees could then use the employer's
Voluntary Plan and premium conversion plan to select coverage from
the Connector and make their required payments on a pre-tax basis.
However, under PPACA,
payments to an Insurance Exchange may not be made on a pre-tax basis.
The Connector is Massachusetts' Insurance Exchange and, therefore, as
of January 1, 2014, it generally cannot accept pre-tax contributions.
The Connector's letter
reminds employers that they are still required under Massachusetts
law to provide a pre-tax payment option to their employees, or face
potential penalties. The letter suggests employers "get health
coverage outside the Connector." This could include coverage
through a private health exchange, individual insurance or a separate
group health plan for employees who are not eligible for the
employer's regular plan.
Needless to say, the current
rules seem to put the state at odds with the federal government and
will make it quite difficult for employers to comply with both state
and federal laws. However, the Connector has announced it plans to
issue further "clarifications" in the near future.
Hopefully, these clarifications will include a practical solution for
We will keep you informed of