Health Care Reform:
HNE Extends Optional Special Open Enrollment

As of July 1, 2007, Massachusetts residents are required to have health insurance coverage. Individuals who fail to obtain coverage by December 31, 2007 will face tax penalties – specifically, they will lose their MA individual tax exemption. To help your employees meet this coverage requirement, HNE amended its plan to allow your company, at your discretion, to offer a limited special enrollment period between May 1, 2007 and June 30, 2007.

We are now offering another special enrollment period for coverage effective dates from October 1, 2007 through December 1, 2007. Employees who declined coverage during their group’s regular open enrollment will be allowed to elect HNE coverage.

Remember, if you have a Section 125 Cafeteria Plan for your employees (which enables your employees to pay for their health premiums with pre-tax dollars), there is one additional consideration: federal regulations do not permit employees in Section 125 plans to enroll outside of the group’s open enrollment unless there is a change in the employee’s status, which is not the case here.

Therefore, if you have a Section 125 Plan, employees who enroll during this special enrollment period must enroll outside of the Section 125 Plan. In other words, they must pay for their health premiums with after tax dollars until the time of your next open enrollment period.

You do not need to take any special action to take advantage of this special enrollment; if you submit an enrollment application for an employee eligible for this special enrollment, please write “special open enrollment” in the Reason Section on the Enrollment Form.

MA 1099-HC: We’ll do it for You

Beginning in January 2008, employers will be required to provide a coverage statement to each employee who is a Massachusetts resident and who received employer provided health coverage in the prior calendar year. The statement must include the name of the carrier or the employer, the name of the insured individual and all insured dependents, identification of the insurance policy, dates of coverage, and any other information required by law. Employees will submit this form with their own Massachusetts income tax return to show that they meet the individual coverage requirement under the MA Healthcare Reform Law.

How Can We Help?^SM

When we looked at this requirement, it just made sense for us to assume this responsibility for your employees who are covered by HNE. After all, we have all this information readily available. We are working with the Commonwealth Connector and the MA Department of Revenue as they finalize the form and the filing procedure. We’ll provide you with additional details as they become available. In the meantime, we hope that this gives you one less thing to worry about.

On June 29, the Commonwealth Connector announced that it was postponing the deadline for those section 125 cafeteria plan documents due to be filed on or before July 1, 2007. The new deadline is October 1, 2007. Administrative Information Bulletin 02-07 announcing this change is available on the Commonwealth Connector Website, www.mahealthconnector.org. Thinking about filing early? Hold off for now, the Connector won’t accept any section 125 cafeteria plan documents prior to September 1, 2007.

The bulletin also:

• Revises the definition of employee to include individuals employed at a Massachusetts location, whether or not the individual is a Massachusetts resident. Individuals employed for less than one month are excluded for purposes of counting the number of employees.
  
  
• Provides guidance with regard to defining excludable, part-time employees. As an employer, you may exclude specified employee classes from your section 125 cafeteria plan. One such class is part-time employees who work, on average, fewer than 64 hours per month. In doing so, you are required to make a good faith effort to identify and document excluded part-time employees. The following guidance guideline is given:
  
  
  • For existing employees, determine the average number of hours per month that the employee worked for the 180 days before the first day of any open or special enrollment period. This includes eligibility subject to a waiting period. Average hours = gross payroll hours during the 180 day period - 6.
    
    
  • For new employees (those whose first day of employment is on or after July 1, 2007, AND the effective date of the employer’s section 125 cafeteria plan), determine the average number of hours per month that the employee will be scheduled or expected to work during the first 180 days of employment.
    
    
• Describes the wait staff tip exclusion. As an employer, you can exclude wait staff, service employees or bartenders who earn, on average, less than $400 in monthly payroll wages. Do not include tips when calculating monthly payroll wages.
  
  
• Describes the 64 hour part-time threshold. As an employer, if you exclude employees based on an hours per month classification, you may not exclude part time employees who work on average 64 or more hours per month. You may, however, adopt an hourly threshold that is less than the standard of 64 hours per month.

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

How Can We Help?^SM