Bookmark and Share
 

Legal Updates

Another Piece Of The Health Care Law Compliance Puzzle: New Guidance From The DUA On Employer FSC/HIRD Filing

The Massachusetts Department of Workforce Development, Division of Unemployment Assistance (“DUA”) has issued further guidance regarding the Employer Fair Share Contribution/ Health Insurance Responsibility Disclosure filing process.  All Massachusetts employers with 22,000 or more payroll hours (counting all employees who worked for the employer for at least one month) for the relevant period of October 1, 2006 through September 30, 2007, are required to complete an on-line filing with the DUA to report information relating to: (1) the Fair Share Contribution and (2) Health Insurance Responsibility Disclosure (“HIRD”).

WHEN TO FILE

A covered employer must complete the on-line filing with the DUA between October 1, 2007 and November 15, 2007.

WHERE TO FILE

To submit an on-line filing, employers should go to the following website: https://fsc.detma.org.  The DUA also has a website with additional information at www.mass.gov/fairshare.

HOW TO FILE

In order to use the DUA’s on-line filing system, employers must use their regular DUA number.  Employers will be given a re-entry number so that they can enter and exit the system as often as needed to complete all of the required questions.  After responding to all of the questions and certifying that all responses are true and accurate, employers will be given a confirmation number.

WHAT TO FILE

The following is an overview of the information that employers will be asked to submit during the on-line filing process:

Fair Share Contribution Information

  • Total Number of Payroll Hours to Determine Number of Full-time Equivalent Employees.  This information will be used to determine whether an employer is subject to the Fair Share Requirement.  For this calculation, employers will be asked to enter the total number of payroll hours from October 1, 2006 through September 30, 2007 for all employees who were on the payroll for at least one month.  However, the number of payroll hours for each employee will be capped at 2000 hours. Payroll hours include overtime, vacation, holidays, bereavement leave, sick leave, etc.
  • Does your Company Meet the Primary Test for a Fair and Reasonable Contribution to Employees’ Health Insurance?  The Department of Health Care Finance and Policy (“DHCFP”) has changed the calculation used in the Primary Test.  The goal of the test is to determine the percentage of full-time employees enrolled in a group health plan paid at least in part by an employer (the “take-up rate”).   The DUA has indicated that an on-line worksheet will be available to guide employers through the calculation during the filing process.

The calculation to determine the take-up rate is as follows:

a.         Identify and record the number of full-time employees enrolled in the employer’s health plan on December 31, 2006, March 31, 2007, June 30, 2007, and September 30, 2007 (record zero if no employees on the payroll).

b.         Identify and record the number of full-time employees on the employer’s payroll on December 31, 2006, March 31, 2007, June 30, 2007 and September 30, 2007 (record zero if no employees on the payroll).

c.        Calculate the average number of full-time employees enrolled in the employer’s health plan by totaling the values recorded in Section a above and dividing by the number of non-zero quarters in Section b.

d.         Calculate the average number of full-time employees on the employer’s payroll by totaling the values recorded in Section b and dividing by the number of non-zero quarters in Section b.

e.         Calculate the average annual employee participation rate or take-up rate by dividing the result of Section c (average enrolled full-time employees) by the result of Section d (average total full-time employees).

For purposes of this calculation, “full-time employees” are defined as the lower of:

i.          The number of weekly payroll hours to be eligible for “full time health plan benefits,” or the equivalent level of employer contribution to the employer’s health plan that is offered to full-time employees; or

ii.         35 payroll hours per week.

  • Does your Company Meet the Secondary Test for a Fair and Reasonable Contribution to Employees’ Health Insurance?  Employers must report as to whether on or before July 1, 2007, they offered to pay at least 33% of the cost of a health insurance premium under a group health plan for all full-time employees who were employed at least 90 days during the period from October 1, 2006 through September 30, 2007.
  • The total number of employees with at least one calendar month of service during the applicable 12-month base period.

Health Insurance Responsibility Disclosure (HIRD)

  • Did your Company adopt and/or maintain a Section 125 Cafeteria Plan in accordance with the Connector regulations as of July 1, 2007?
  • Did your Company contribute to the premium cost of group health insurance for your employees as of July 1, 2007?
  • List the percentage of the contribution of your Company to the premium cost for health insurance premium.
  • What was the total monthly premium for both the lowest and the highest-cost health insurance plans offered by your business as of July 1, 2007?
  • Indicate the month in which your next group health insurance plan open enrollment period will begin.

 HOW TO MAKE A FAIR SHARE CONTRIBUTION PAYMENT

DUA will use an Automated Clearing House (ACH) Debit method to collect the Fair Share Contribution (FSC) payments by automatically debiting the employer’s account on the due date.  During the filing process, employers liable for the FSC will be required to provide banking information, including bank routing number and bank account number.  According to the DUA, all data transmissions of banking information are encrypted and will be maintained in a secure environment.

Employers liable for the FSC will have the following choice of payment methods: (1) a single annual payment on November 15; (2) a semi-annual payment schedule with payments due on November 15 and May 15; or (3) a quarterly payment schedule with payments due on November 15, February 15, May 15 and August 15.  The DUA will send the employer a reminder of the upcoming debit date and amount approximately two weeks before the DUA debits the employer’s account on each pre-scheduled due date.

***

We will continue to keep you advised of all continuing developments relative to the FSC/HIRD filing process and the Massachusetts Health Care Law generally.

We are available to assist your organization with implementing a Section 125 Plan, complying with the FSC and HIRD requirements, and addressing any questions that you may have regarding the above or the Massachusetts Health Care Law in general.