New Bay State Rules Would Excuse Most Cos. from Per-Worker Health Coverage Fee

July 11, 2006 ( - Officials in Massachusetts proposed rules on Monday to implement the state's new universal health care law that would excuse companies from a $295 annual per-worker fee if at least 25% of employees sign up for coverage.

Companies not meeting the 25% criteria would also be exempt from the charge if they fund at least 33% of the cost of employees’ health insurance, state officials said, according to a news report in the Milford (Massachusetts) Daily News.

Less than than 2% of all Massachusetts employers will have to come up with money for the fee, according to the state Division of Health Care Finance and Policy.

State Senator Richard Moore complained that the rules do not match the Legislature’s intent because, under the guidelines, some firms may be exempt from the $295 fee even if they do not contribute money toward the premiums paid by workers. The fee is scheduled to take effect October 1 and would affect businesses with the equivalent of 11 or more full-time employees that do not offer sufficient health coverage (See MA House Overrides Vetoes of Health Care Bill ).

According to the news report, the fee will affect an estimated 8% of companies with at least 11 employees and would raise $26 million, state officials said. The money will be used to pay for a new health insurance program for people with low incomes. 


Moore objected to the latest regulations because they could exempt a company from the fee even if it does not put out money for employee premium costs, as long as 25% of the employees buy company health insurance.

State officials said that scenario is possible but highly unlikely.

“Most firms that offer health insurance do contribute a significant amount toward the premium,” said Amy Lischko, commissioner of the Division of Health Care Finance and Policy. “There could be a case where an employer pays their employees very high wages and doesn’t contribute to their health plans.”

The regulations also define the “free rider surcharge,” a fee levied on companies whose employees receive health care paid for by the state Uncompensated Care Pool.