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The Wagner Law Group Description 

The Wagner Law Group, A Professional Corporation, is a nationally recognized ERISA & employee benefits, estate planning, employment, labor & human resources practice. 


Established in 1996, The Wagner Law Group has 20 attorneys engaged exclusively in employee benefits, estate planning and employment law. Six of our attorneys are AV rated by Martindale-Hubbell as having very high to preeminent legal abilities and ethical standards. The firm is among the largest ERISA boutiques in the country. Our practice is national in scope, with clients in more than 40 states and several foreign countries.






Contact Info

The Wagner Law Group


  Integrity | Excellence


Massachusetts Office 

Tel: (617) 357-5200 

Fax: (617) 357-5250 

99 Summer Street 

13th Floor

Boston, MA 02110

Florida Office 

Tel: (561) 293-3590
Fax: (561) 293-3591
7108 Fairway Drive
Suite 125
Palm Beach Gardens, FL 33418


San Francisco Office

Tel: (415) 625-0002

Fax: (415) 358-8300

315 Montgomery Street

Suite 904

San Francisco, CA 94104







July 17, 2014


 State and Federal Law Alert




Massachusetts Repeals Employer Health Care Coverage Mandate




The Massachusetts Health Connector's board of directors has acted to formally repeal the regulations that required employers to either offer health care coverage to employees or pay a fine.


Despite this repeal, the requirement that Massachusetts residents obtain qualified health care coverage or pay a fine remains in effect. However, an individual who is liable for both state and federal penalties can offset the state penalty by the amount of the federal penalty, and if the federal penalty is greater than the state penalty, no payment will be due to the state.


Background. In 2006, the Massachusetts legislature enacted the Massachusetts Health Care Act (the "Act"). The Act served as the model for the Patient Protection and Affordable Care Act ("PPACA"). Beginning in 2013, and in the wake of guidance issued under PPACA, the Connector's board of directors began to repeal certain portions of the state's health care legislation to avoid duplication with PPACA's employer mandate rules. In particular, the board has repealed the Act's fair share contribution and Section 125 plan requirements.  


Fair Share Contribution. The Act required employers to either make a fair and reasonable contribution towards their employees' health coverage or pay a penalty (of up to $295 per full-time equivalent employee). In July of 2013, the Massachusetts legislature repealed the "fair share contribution" requirement for employers, effective June 30, 2013. Because this action left the regulations regarding the coverage mandate meaningless, the board decided to also repeal the regulations to avoid confusion about their legal effect.


Section 125 Plans. Under the Act, employers with 11 or more full-time equivalent employees were required to sponsor Section 125 plans to allow employees ineligible for employer provided coverage to pay for individual market coverage using pre-tax contributions made to the Section 125 plan. Employers that violated Section 125 plan requirement were assessed a "free rider" surcharge if employees or their dependents received state-funded medical care.


Interestingly, the legislation that repealed the Act did not eliminate the Section 125 plan requirement. However, subsequent guidance issued by IRS provides that, effective for 2014, PPACA prohibits the use of Section 125 plan pre-tax contributions to purchase individual market coverage. As a result, in March 2014, the Massachusetts legislature repealed both the Section 125 plan requirement and free rider surcharge.


The Connector issued a transition policy for the Section 125 plan requirement (Health Connector Administrative Bulletin 03-13) which provided that: 


  • Employers that permit non-benefit eligible employees to use Section 125 plans to purchase individual market coverage with pre-tax funds may leave the plans in place until the end of the 2013 plan year.


  • For plan years starting in 2014, employers can no longer offer Section 125 plans that allow employees to purchase individual market coverage using pre-tax funds. Employers may, however, continue to offer employees Section 125 plans to purchase group health coverage and other benefits. 




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Pursuant to Internal Revenue Service Circular 230, we hereby inform you that any advice set forth herein with respect to US federal tax issues is not intended or written by The Wagner Law Group to be used and cannot be used, by you or any taxpayer, for the purpose of avoiding penalties that may be imposed on you or any other person under the Internal Revenue Code.


This Newsletter is provided for information purposes by The Wagner Law Group to clients and others who may be interested in the subject matter, and may not be relied upon as specific legal advice.  This material is not to be construed as legal advice or legal opinions on specific facts. Under the Rules of the Supreme Judicial Court of Massachusetts, this material may be considered advertising.