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Legal Updates

DHCFP Announces New Fair Share Contribution Regulations

The Massachusetts Division of Health Care Finance and Policy (“DHCFP”) recently adopted revised regulations that:

(1) change the fair and reasonable premium contributions for employers with 51 or more full-time equivalent employees effective January 1, 2009; and

(2) require employers to complete their Fair Share Contribution (“FSC”) on-line filings with the Massachusetts Department of Workforce Development’s Division of Unemployment Assistance (“DUA”) quarterly, rather than annually.

Fair Share Contribution Requirements

Pursuant to DHCFP’s original regulations, employers with 11 or more full-time equivalent employees that failed to pay a “fair and reasonable premium contribution” toward the health insurance costs of their employees were required to pay an annual “fair share contribution” of up to $295 per year per full-time employee.

These regulations exempted employers that either:  (1) had at least 25 percent of their full-time employees enrolled in an employer-sponsored health plan (the so-called “Primary Test”), or (2) offered to pay at least 33 percent of the premium cost toward an individual health plan for full-time employees who were or had been employed at least 90 calendar days (the so-called “Secondary Test”).

Under DHCFP’s recently revised regulations, employers with 50 or fewer full-time equivalent employees continue to be exempt if they pass either the Primary or the Secondary Test.

However, as of January 1, 2009, an employer with 51 or more full-time equivalent employees must either (1) pass both the Primary and the Secondary Tests, or (2) have at least 75 percent of its full-time employees enrolled in its group-sponsored health plan, in order to avoid a fair share contribution.

An employer can determine how many full-time equivalent employees it has by (1) calculating the sum of all payroll hours of employees employed for at least one month by the employer at Massachusetts locations for a calendar quarter, capped at 500 hours per employee, and (2) dividing this sum by 500.

Under the recently revised regulations, a “full-time employee” is an employee who works the lesser of:  (1) 35 or more hours per week; or (2) the number of weekly payroll hours required to be eligible for the employer’s “full-time health plan benefits.”  This definition is used to determine compliance with the law’s nondiscrimination mandates.

DHCFP estimates that the new regulations will generate approximately $30 million in revenue annually to support government-funded health insurance programs, including Commonwealth Care, MassHealth and the Health Safety Net.

Quarterly DUA Filing Under Revised Regulations

Employers must now complete an on-line FSC filing with the DUA quarterly, instead of just annually.  Specifically, pursuant to the revised DHCFP regulations that became effective on October 1, 2008, in conjunction with the DUA’s Fair Share Employer Regulations, employers are now required to determine and pay fair share contributions, if any, four times per year, rather than annually (which was the previous reporting and payment period).

The first quarterly filing (covering the period October 1, 2008 through December 31, 2008) and any fair share contribution payment will be due by February 15, 2009, with subsequent filings due on May 15, August 15 and November 15.

Reminder of Current DUA Filing Requirement For October 1, 2007 Through September 30, 2008

Reminder:  Most Massachusetts employers are required to complete an on-line filing with the DUA by November 15, 2008, to report information relating to (1) the FSC and (2) Health Insurance Responsibility Disclosure (“HIRD”).

This requirement applies to Massachusetts employers with 22,000 or more payroll hours (counting all employees who worked for the employer for at least one month) between October 1, 2007 and September 30, 2008, that were subject to the Massachusetts unemployment and/or workers’ compensation provisions.

This requirement also applies to employers that receive a notice from the DUA to make such a filing, even if they do not have 22,000 or more payroll hours.

To submit an on-line filing, employers should go to the following website:  The DUA also has a website with additional information at


We will continue to keep you advised of developments relative to the FSC filing process.  We are available to assist your organization in complying with the FSC and HIRD requirements and in addressing any questions that you may have about them or the Massachusetts Health Care Law in general.