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Universal care provision moves ahead in Mass.

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Universal care provision moves ahead in Mass.

BOSTON—Moving ahead on the road to implementing Massachusetts' universal health care coverage law, regulators last week proposed new rules to make it easier for employers and employees to comply with the landmark statute.

The most significant proposal approved by the board of the Massachusetts Health Insurance Connector Authority--the state agency charged with implementing key portions of the law--delays by 18 months, until Jan. 1, 2009, the deadline for most state residents to be enrolled in health care plans that meet state design requirements. Individuals not in such plans will face financial penalties.

Board officials say the delay is needed to give employers more time to analyze the coverage requirements and make any necessary changes to prevent employees from being hit with tax penalties.

Benefit experts welcome the delay, saying it would have been difficult, if not impossible, for employers to redesign their plans in such a short period of time.

"There would have been no way for employers to come up with something so quickly," said Cathy Stamm, a consultant with Mercer Human Resource Consulting in Washington.

"This will be very helpful to employers," agreed Rich Stover, a principal with Buck Consultants L.L.C. in Secaucus, N.J.

At the same time, board officials decided against requiring plans to scrap lifetime dollar limits on health care expenses they cover. Such a requirement had been considered earlier by the board's staff.

Scrapping lifetime dollar limits would have been too disruptive, board officials said, noting that more than 350,000 state residents are in plans that impose such limits.

The board, though, did propose other requirements for plans to be considered to be offering minimum coverage. Those requirements include:

  • Barring dollar limits on how much a health plan will pay for covered services on an annual basis. While lifetime limits are common, only a small percentage of employers impose annual dollar caps, according to Mercer.

  • Limiting annual deductibles for in-network covered services to $2,000 for individual coverage or $4,000 for family coverage.

  • Capping the annual out-of-pocket limit, including deductibles, for in-network services at $5,000 for individual coverage and $10,000 for family coverage.

  • If carved out from a health care plan, capping annual deductibles for prescription drug coverage at $250 for individual coverage and $500 for family coverage.

Additionally, high-deductible health insurance plans linked to health savings accounts automatically would be considered minimum creditable coverage.

"Having HSAs automatically being considered acceptable coverage is a big plus, especially for small employers," said Bill Vernon, state director of the National Federation of Independent Business in Boston.

While the overwhelming majority of plans sponsored by midsize and large employers would meet these standards, one other proposed requirement--pending additional clarification--could prove troublesome.

Under that proposal, a health care plan could not impose an annual "per illness" maximum benefit for covered services. Benefit experts are concerned that could be interpreted to mean that employers could not impose a cap--as now is typical--on the annual number of inpatient days and outpatient visits for treatment of mental disorders.

"Pending clarification, this could be a very big issue. Employers have every right to be concerned," said Randy Abbott, a senior consultant with Watson Wyatt Worldwide in Wellesley Hills, Mass.

One issue many employers may not be aware of is a requirement, effective July 1, that they provide access to a so-called Section 125 plan to employees who work at least 64 hours a month. The requirement does not apply to certain seasonal and temporary employees. In a Section 125 plan, employees pay for health care premium with pretax contributions.

That requirement will have its greatest impact on employers with many part-time employees, who generally have no access to a company health plan.

While employers will not have to contribute to the cost of coverage for part-time employees, they do face the administrative burden of communicating the new plan and collecting premiums from employees' pretax contributions.

At the moment, though, "Employers are blissfully ignorant of the requirement," Mr. Abbott said.

For those employers that are aware, meeting the July 1 deadline will be a challenge, said J.D. Piro, an attorney with Hewitt Associates Inc. in Norwalk, Conn.

Employers that do not abide by the requirement will be liable for a portion of costs incurred by uncovered employees who receive free care from health care providers, such as care delivered at hospital emergency rooms.