Recent legislation has eased
the requirements for passing the Fair Share Contribution test.
Under the Massachusetts
Health Care Reform Act, employers with the equivalent of 11 or more
full time Massachusetts employees that fail to make a "fair and
reasonable" contribution towards the cost of group health care
coverage must pay a quarterly "Fair Share Contribution" of
$73.75 per full time employee. To be exempt from the payment, a
smaller employer has to pass either the 25% participation test (25%
of its full time employees must be covered by the employer's plan) or
the 33% contribution test (the employer must pay 33% of the cost of
employee-only coverage and offer the coverage within 90 days of the
date of hire). Employers with more than 50 employees must pass both
tests or cover at least 75% of their full time employees.
Under the new legislation,
the Fair Share Contribution rules will only apply to employers that
employ the equivalent of 21 or more full time employees. Also, when
calculating whether 25% or 75% of its full time employees participate
in the employer's plan, the employer may disregard any employee who
has qualifying health insurance coverage from a spouse, parent,
veteran's plan, Medicare or a "plan or plans due to disability
or retirement." This second rule will ease the requirements for
employers that have employees who chose to be covered under another
Unfortunately, the new rules
are not effective until July 1, 2013.
SBCs Not Required for Medicare
The Departments of Labor,
Health and Human Services and the Internal Revenue Service, recently
issued "FAQs About Affordable Care Act Implementation, Part
X." FAQ Part X provides additional clarification on the uniform
explanation of benefits and coverage ("Summary of Benefits and
Coverage" or "SBC") that group health plans (including
grandfathered plans) must provide to plan participants and
beneficiaries pursuant to the Patient Protection and Affordable Care
Under Part X, the agencies
clarify that the SBC disclosure requirements do not apply to
Medicare Advantage Plans that are offered as one of several benefit
packages by a sponsoring employer.
Medicare Advantage Plans,
which operate like an HMO or PPO, are offered by private companies and
are approved by Medicare as another option for Medicare recipients.
Sometimes called "Part C" or "MA Plans," Medicare
Advantage Plans provide all of the Part A (Hospital Insurance) and Part
B (Medical Insurance) coverage offered under original Medicare, plus
some extra coverage, such as vision, hearing, dental, and/or health
and wellness programs. Many also include prescription drug coverage
(Medicare Part D). Medicare pays a fixed, monthly amount to the
companies offering Medicare Advantage Plans. And, while the companies
must follow rules set by Medicare, each Medicare Advantage Plan can
charge different out-of-pocket costs and have different rules for how
services are delivered (such as referrals to specialists).
Because Medicare Advantage
plans are Medicare benefits, the agencies concluded that they are not
health insurance coverage for the purposes of SBCs and Medicare
Advantage organizations are, therefore, not required to provide an
SBC with respect to these benefits.