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Massachusetts eases compliance with health reform law


BOSTON--Massachusetts regulators last week finalized rules to make it easier for employers and employees to comply with the state's landmark health care reform law.

The final rules largely incorporate regulations proposed in March by the Commonwealth Health Insurance Connector Authority, the state agency in charge of implementing key portions of the 2006 law. The central goal of the law is to ensure near-universal health care coverage for state residents within a few years.

For example, the final rule delays the deadline until Jan. 1, 2009, for most state residents to be enrolled in health care plans that meet state design requirements, known as minimum creditable coverage criteria. Individuals not enrolled in such plans face financial penalties.

Earlier, board officials said the delay was needed to give employers more time to analyze the coverage requirements and make any necessary changes to their plans to prevent employees from being hit with tax penalties.

The Connector board also finalized design requirements for a plan to be considered to be offering minimum coverage. Among other things, such plans can't have annual deductibles greater than $2,000 for individual coverage or $4,000 for family coverage. The annual out-of-pocket expenses, including deductibles, for in-network services can't exceed $5,000 for individual coverage and $10,000 for family coverage.

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

The board, though, did change an earlier proposed rule that largely affects Section 125 plans that employers must offer to employees. The plans must be offered starting July 1 and will allow employees to avoid penalties for not having coverage. Additionally, if an employer does not offer such a plan and employees then receive free care in a hospital, the employer can get stuck with picking up part of the tab. In a Section 125 plan, employees pay for health care premiums with pretax contributions.

The board initially proposed a maximum two-month waiting period after which new employees could enroll in the plans. Under the final rules, if an employer pays a portion of the premium, the waiting period for coverage can be identical to the waiting period set for other company-provided coverage. If the employer does not contribute toward the premium, the maximum waiting period would continue to be two months.

Benefit experts welcome the change, saying there was no logical reason for requiring what could have been a different waiting period for the Section 125 plans compared with the other health care plans that employers offer to their employees.

"It is a sensible change. Employers have given some thought to how long waiting periods should be and obviously there should be consistency," said Andy Anderson, of counsel at Morgan, Lewis & Bockius L.L.P. in Chicago.

Numerous other issues, though, remain to be decided, including the format of forms employers must file on employee enrollment in their health care plans, said Rich Stover, a principal with Buck Consultants L.L.C. in Secaucus, N.J.

What is minimum creditable coverage?

By Jan. 1, 2009, Massachusetts residents would have to be enrolled, unless qualifying for an exemption, in health plans with these features to avoid financial penalties

  • No annual benefit limits on core covered services.

  • Annual deductibles for in-network covered services not to exceed $2,000 for individual coverage or $4,000 for family coverage.

  • Annual out-of-pocket limit cannot exceed $5,000 for individuals and $10,000 for families.

  • Deductible for prescription drug coverage, if separate from the health plan, cannot exceed $250 for individual coverage and $500 for family coverage.

    Source: Commonwealth Health Insurance Connector Authority