The Intersection of Federal and State Health Care Reforms

    Massachusetts enacted its health reform requiring individuals to purchase health insurance or benefits under a plan that meets certain minimum standards in order for the individual to avoid a tax on the uninsured. Massachusetts also imposes a tax or penalty of sorts on employers of individuals who incur more than a minimum amount of uncompensated care to fund the state's cost of health care that is not reimbursed or paid elsewhere.

    There is a collision between the federal initiatives to move employers toward offering high deductible health plans and health savings accounts and the Massachusetts initiative toward requiring the individuals to purchase minimum levels of health insurance coverage and to indirectly pressure employers to conform their benefit plans to satisfy the minimum level of coverage. The Massachusetts rules do not accommodate a high deductible health plan as defined in federal tax law.

    There is a collision for employers operating in Massachusetts with high deductible health plans. If the employer's employees covered by the high deductible health plan do not pay for their care that is subject to the high deductible, then that care is uncompensated care for Massachusetts law purposes. Such care which is not paid for by the employee can fall in the very broad definition of uncompensated care in Massachusetts resulting in a surcharge on the employer if the limits on uncompensated care for either the individual employee or their employees as a whole in Massachusetts are exceeded.

    Employers have a deadline to file their cafeteria plan documents with the "Connector" in Massachusetts by July 1, 2007; however, the form which must be filed with the cafeteria plan document and how all this is to occur has yet to be disclosed.

    There are many questions related to the Massachusetts legislation and its impact on employers and their plans that are still unanswered, including the most important one ...ERISA preemption.

Greta E. Cowart