Massachusetts Health Insurance Requirements
- Health Care Reform Act -

What is the Massachusetts Health Reform Act?

The Massachusetts Health Reform Act is a state law passed in 2006 that requires all adult Massachusetts residents to have health insurance if they can afford it. Residents without health insurance face a tax penalty.

Massachusetts residents with limited incomes may be eligible for MassHealth or Commonwealth Care. For other residents, the state determines how much you should be able to spend on health insurance each year, based on your income and family size.

Do I have to buy health insurance?

The Massachusetts Health Care Reform Law requires all adult residents age 18 and older to have health insurance. To meet the state's requirements, the insurance must include certain basic benefits known as Minimum Creditable Coverage (MCC). For details, see Minimum Creditable Coverage and MCC Requirements on the Commonwealth Connector web site.

You meet the insurance requirements if you have any of the following health care coverages:

• MassHealth (any coverage type except Limited)
• Commonwealth Care or Commonwealth Choice (any plan)
• Medicare
• Student Health Insurance Plan (SHIP)
• TRICARE or Veterans Administration Health Program
• qualified high deductible health plan (HDHP)
• tribal or Indian Health Service plan
• VISTA, AmeriCorps, National Civilian Community Corps, or Peace Corps coverage
• any individual or group health plan that meets MCC requirements

Most residents without MCC health insurance must pay a penalty. However, people who cannot afford a health plan, or who qualify for an income exemption, religious exemption, or hardship waiver, do not have to pay a penalty.

Can I get an exemption or waiver?

Massachusetts residents who can afford MCC health insurance but do not buy it must pay a tax penalty unless they qualify for an exemption or a waiver.

• If your income is at or below 150% of the Federal Poverty Guidelines, you do not have to pay a penalty.
• If you cannot find an affordable health plan, you do not have to pay a penalty.  The Commonwealth Connector has an online affordability tool to let you see how much you should be able to pay for a health insurance plan based on your income and family size, and if an affordable plan is available for you: Commonwealth Connector Affordability
• You can claim a religious exemption if you have sincerely held religious beliefs that prevent you from buying or having health insurance.
• If you had a financial hardship during the year and filed for a Certificate of Exemption before December 1, you do not have to pay a penalty if you received an exemption. For more information, see Waivers from the Tax Penalties and Filing a Certificate of Exemption on the Commonwealth Connector web site.
• If you owe a penalty, but you faced a hardship during the year that prevented you from buying health insurance despite your income, you can file an appeal when you file your state income taxes. If you have another good reason for not buying health insurance, you can also file an appeal.
  
  Instructions for filing an appeal are given in the 2011 Schedule HC and the 2011 Schedule HC Instructions. The Connector Authority makes the decisions about appeals.

How much is the penalty for no insurance?

Residents without MCC health insurance face monthly penalties. The penalties add up each month without health insurance, and must be paid at tax filing time. Short gaps in coverage (up to three months) are allowed without a tax penalty. 

Penalties are based on ½ the cost of the lowest-priced Commonwealth Choice plan available to you. The penalties vary by age and income, based on percentages of the Federal Poverty Guidelines (FPG). People with incomes at or below 150% of the FPG do not have to pay a penalty if uninsured. 

The 2011 tax year penalties are:

You can use the FPG income and household size categories below to see which penalty would apply to you:

If you owe a penalty, you will calculate the amount when you complete Schedule HC of your state income tax return.

For more information, see:

• Estimate Your 2011 Tax Penalty on the Commonwealth Connector web site
• Penalties for Tax Year 2011 on the Department of Revenue (DOR) web site
• What are the penalties? on the Commonwealth Connector web site

People who cannot find affordable health insurance or who qualify for a religious or hardship exemption or waiver do not have to pay a penalty. See Do I have to buy health insurance? for more information.

How do I avoid a penalty?

You must file Schedule HC, Health Care Information, when you file your state income taxes to avoid the penalty. Residents with MCC health insurance use Schedule HC to show that they have coverage. Residents without health insurance can use Schedule HC to request an income, affordability, religious, or hardship exemption, or to file an appeal.

For information about Schedule HC, or to download a copy of Schedule HC or the Schedule HC Instructions, see:

• Schedule HC and Form 1099-HC

The Department of Revenue also has information about Schedule HC and tax form requirements, including Health Care Reform Information for Individuals and a 2012 Filing Season Video Presentation to help you understand and fill out your tax return.

Do employers have to offer health insurance?

The Health Care Reform Law requires employers with 11 or more full-time employees to offer a group health plan to their employees and pay a fair share of the monthly premiums. Employers who do not obey this law have to pay a Fair Share Contribution of about $295 per employee per year into the Health Safety Net Trust Fund.

In addition, all employers with 11 or more full-time-equivalent employees must set up a Section 125 plan. A Section 125 plan allows employees to buy health insurance with pre-tax dollars through payroll deduction. This saves employees money, because the cost of monthly premiums is subtracted from taxable income, and employees owe less in federal and state income taxes. Employers who do not obey this law can be charged a Free Rider Surcharge if their employees do not buy health insurance and use the Health Safety Net (Free Care) instead.

For more information about employer requirements, see Employers Health Insurance: Get the Right Plan and Employer Requirements.

How does federal health reform affect Massachusetts?

Federal health reform includes the Patient Protection and Affordability Act, signed on March 23, 2010 by President Obama; and the Health Care and Education Reconciliation Act of 2010, that corrected some of the problems in the first law.

As a result of federal health reform, Massachusetts gets extra funding to help pay for current health care programs, as well as some additional benefits:

• Massachusetts will get extra Medicaid funding from the federal government to pay for health coverage for low-income residents
• Massachusetts will get funds from the federal government to help pay for subsidized health insurance for low-income legal immigrants whose health benefits are now funded by the state
• the federal government will give health insurance tax credits to moderate-income residents (up to 400% FPG) to help make health insurance more affordable
• children can stay on their parents' health plans until they turn 26
• seniors with Medicare Part D prescription drug plans will pay less for prescription drugs during the coverage gap known as the donut hole, and the coverage gap will eventually be eliminated:
  • In 2010, seniors who reached the donut hole got a $250 rebate check from Medicare.
  • In 2011, seniors in the donut hole got a 50% discount on prescription drugs.
  • In 2012, seniors in the donut hole get a 50% discount on brand-name prescription drugs, and pay 86% of the cost of generic drugs.
  • By 2020, the donut hole coverage gap will be eliminated.
    

    See HealthReform.gov Seniors for details.

• the federal government will reduce overpayments to Medicare Advantage plans and lower Medicare premiums
• new federal loan repayment and scholarship programs will be offered to physicians and other health providers who offer primary care
• small businesses (fewer than 25 employees) will get federal tax credits for providing health coverage for their employees

For more details, see Health Insurance Reform and Massachusetts from the U.S. Department of Health and Human Services; and Federal Health Reform Fact Sheet from the Boston Public Health Commission.

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Schedule HC and Form 1099-HC information

For information about Schedule HC Massachusetts health care information reporting requirements, follow the link below: