HIRD and Employer Surcharge Regulations Final

Last week, the Division of Health Care Finance and Policy (DHCFP) adopted emergency regulations to address the Health Insurance Responsibility Disclosure (HIRD) and employer surcharge provisions under health care reform.

Are you a Massachusetts employer with eleven or more full time equivalent employees (FTE)?

If so, under the health care reform law, you are required to offer a Section 125 plan for health insurance payroll deductions. If you do not, you may be assessed the Employer Surcharge for State-funded Health Costs (also called the “free rider surcharge”). The surcharge applies to health care services that your employees or their dependents receive that are paid for by the Uncompensated Care Pool or Health Safety Net Trust Fund.

There are exceptions. You are exempt from the free rider surcharge if:

• You participate in the Insurance Partnership.
• You are signatory to or obligated under a collective bargaining agreement that governs the employment conditions of any employees who are not offered the Section 125 plan.
• You are contributing 100% of all employees’ medical coverage.

We’ve created a diagram to help you figure out whether or not the free rider surcharge will apply to you. (diagram)

Have you HIRD?

Starting July 1, if you have eleven or more FTEs, it’s your responsibility to require any FTEs (whether or not they live in Massachusetts) who do not enroll in or use the employer sponsored health plan to complete a Health Insurance Responsibility Disclosure (HIRD) form.

The time frame for getting the signed HIRD form back from those employees who decline coverage is the earlier of: (a) 30 days after the close of the open enrollment period or (b) September 30 of the reporting year.

Once the form is completed and signed by the employee, you’re required to:

• Provide a copy to the employee
• Keep a copy on file for three years
• Submit information from the HIRD form in the Division of Unemployment Assistance Employer FSC Filing.

What if my 2007-2008 open enrollment period ended before July 1, 2007 and I already had employees sign an acknowledgment that they declined employer sponsored insurance? These employees are not required to sign a HIRD form until the next open enrollment period. You’re required to keep the signed form on file until July 1, 2009.

So, what do you need?

For your convenience, we have provided links to what you’ll need to understand and comply with these regulations.

• An overview of the regulations. The DHCFP provides a high level summary of the regulations for employers.
• Copies of the Regulations.
  Employee Surcharge for State-funded Health Costs (114.5 CMR 17.00)
  Health Insurance Responsibility Disclosure (114.5 CMR 18.00)
• Employee HIRD Form

If you are unable to access this information, please call your HNE Account Executive at 413-787-4000 or 800-842-4464.

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