In this volatile financial landscape, it is important to be well informed about the laws governing medical health coverage and insurance carriers in the country.
Key provisions of The Massachusetts Mandated Health Insurance Law include subsidized health insurance for residents earning less than 150% of the Federal Poverty Level and low-cost insurance for all other residents who are not eligible for insurance through their employers.
Under this law, every resident, if 18 or older, and as long as it is considered affordable for the individual, should be covered under a health plan that meets Minimum Creditable Coverage (MCC) standards.
MCC in Massachusetts is the minimum level of benefits covered in an insurance plan to avoid tax penalties. These standards ensure coverage of key health benefits, including preventive healthcare. The state of Massachusetts believes that this will provide its residents with crucial financial aid in case of severe financial loss as a result of injury or illness. Following MCC standards also keeps insurance costs down across stakeholders.
Qualified Plans
There are regulations that define important benefits that an insurance plan should have before it is considered MCC compliant. These benefits include a broad range of services and are applicable to all members covered by the plan.
- Medical/surgical care, including preventive and primary care
- Maternity and newborn care, including pre and postnatal care
- Prescription drugs
- Emergency services
- Hospitalization
- Mental health and substance abuse services
- Radiation therapy and chemotherapy
- Ambulatory services, including outpatient, day surgery, and related anesthesia
- Diagnostic imaging and screening procedures, including x-rays
Some plans automatically meet the MCC standards. Medicare, Medicaid, Veterans’ Administration coverage, a federally-qualified high deductible health plan (HDHP), and Student Health Insurance Program (SHIP) coverage are such plans.
Apart from the services listed, there are also some requirements for the plan to be considered qualified for MCC standards. For plans with up-front deductibles or co-sharing of insurance services, the annual maximum limit on out-of-pocket spending should not be more than the annual limit set by the IRS for high deductible health plans.
In 2020, the out-of-pocket costs were limited to $8,150 for an individual plan and $16,300 for a family plan. The plan should also have no caps on total benefits for a particular illness or for a single year.
There are some indicators as to whether a plan follows the MCC guidelines or not. Be cautious of short-term plans, association health plans, and discount plans while searching for potential health coverage.
All Massachusetts health insurance carriers must clearly mention if their plan meets the MCC requirements. At present, most health plans sold in the state of Massachusetts meet the required guidelines.
Symbols that indicate if a plan is MCC compliant should be marked prominently on official documents, such as the first page of the insurance policy, certificate, or schedule of benefits for the insured. The health insurance carrier is also supposed to send an annual letter to its consumers informing them if their coverage continues to fall under MCC guidelines.
Safety of Personal Data
Federal regulations governing the Internal Revenue Service (IRS) state that the insurance company which will provide the minimum health coverage must submit the Social Security numbers (SSNs) of all its clients to the IRS.
Know that both state and federal law require that your personal information be kept confidential and cannot be shared or misused. The companies cannot ask questions about your medical history, which includes any pre-existing conditions or prescriptions you might be taking.
The Health Information Portability and Accountability Act (HIPAA) provides protection for the privacy of personal information while ensuring it is also available, as needed.
Form 1099-HC
Form 1099-HC is for Massachusetts residents to help complete their income tax returns. You will know if your plan meets the MCC guidelines if you receive a Form MA 1099-HC from your insurer that will indicate how many months you were enrolled for coverage in a given tax year. This proof of medical coverage needs to be submitted with the state tax return. The form should be available for download on your insurance provider’s website.
Penalty
Individuals who violate this Massachusetts state law have to pay a penalty through their tax returns. In 2020, penalties were at $135 a month or $1,620 a year for an individual. The penalties vary depending upon your income, age, and family size.
Penalties add up for each month without coverage, but there is a grace period that allows lapses in coverage of three or fewer consecutive months. Premiums left unpaid for more than 30 days risk having their policies canceled.
There is no penalty for people with incomes at or below 150% of the federal poverty level because there is no premium and therefore no penalty. They wouldn’t need a Form MA-1099-HC either.
Although the Federal law also has a similar requirement of mandatory coverage that meets minimum standards, it is important to note that the penalty for violation of the federal law has been discontinued. The penalty for violating Massachusetts state law is still in effect.
There is also a provision to appeal against the penalty if you are unable to get insurance due to a hardship or other circumstances such as income changes, homelessness, eviction, foreclosure, domestic violence, or the death of a spouse or a family member.
If you have questions about your coverage, contact your insurance carrier or your employer’s benefits coordinator. You should consult your tax accountant for additional assistance and information about how these regulations apply to you. For information on penalties, contact the Department of Revenue (DOR), and for information about health insurance in general, contact the Division of Insurance (DOI).
If you don’t have the time or would prefer some professional help, contact us at Henderson Insurance and we’ll help you navigate all the compliance issues. Call or visit our website for more info: 617-842-3170 | www.hendersoninsuranceus.com