Since 2007, Massachusetts (MA) has required most residents over the age of 18 who can afford health insurance to have “minimum creditable coverage” (“MCC”) for the entire year or face a potential tax penalty (“Individual Mandate”). Though the Individual Mandate does not require employers to provide residents with MCC, employers who do provide MCC to MA residents must provide a Form 1099-HC to covered individuals and annually report to the Department of Revenue by January 31st following the end of the plan year (unless their carrier or third-party administrator completes the distribution and reporting on their behalf).
To meet MCC, a plan must offer certain “core services” and limit cost-sharing to maximums prescribed under the Individual Mandate. The limits for cost-sharing are adjusted annually and, recently, MA released the 2022 limits on deductibles and maximum out-of-pocket limits for MCC.
2022 MCC Standards
If a plan imposes deductibles for in-network covered services and/or a separate deductible for prescription drug coverage to meet MCC, the deductibles cannot exceed a certain maximum amount. The maximum deductibles for 2022, as compared to 2021, are outlined below:
|Individual Coverage Separate Prescription||$350||$330|
|Family Coverage Separate Prescription||$700||$660|
To meet MCC, a plan that imposes any deductibles, co-payments, or co-insurance for in-network coverage “core services” cannot exceed the out-of-pocket maximum (OOPM). The OOPM for 2022, as compared to 2021, is outlined below:
It is important to note that the MA MCC OOPM usually mirrors the ACA OOPM. However, this year, a different methodology was used to calculate the ACA OOPM. Therefore, the 2022 ACA OOPM, which is $8,700 for individual coverage and $17,400 for family coverage, is different than the MA MCC OOPM.
Distribution and Reporting Requirements
Employers who provide MCC to MA residents must provide a Form MA 1099-HC to residents, which indicate whether coverage meets MCC requirements, and must annually report this information to the MA Department of Revenue by January 31st following the end of the plan year.
- Carriers subject to MA insurance law and for most plans written out of MA, carriers must determine and disclose whether the plan meets MCC, provide plan participants with a Form MA-1099, and complete the required reporting.
- For fully insured plans written out of a different state, employers are responsible for fulfilling the distribution and reporting requirements if their carrier is unwilling complete these requirements on their behalf. Employers and/or must electronically file the reporting to the Department of Revenue through MassTaxConnect.
- For level funded and self-insured plans, employers usually work with their third-party administrator (TPA) to determine MCC status and to complete the distribution and reporting requirements. Most TPAs ask employers to attest that their plans meet MCC before the distribution and reporting is due. It is important to note that employers will be responsible for completing these requirements if their TPA does not do so.
Employers who are required to provide a Form MA 1099-HC but fail to do so can be subject to a penalty of $50 per individual, up to a maximum of $50,000.
Employers who provide coverage to MA residents should do the following:
- Determine whether coverage offered to Massachusetts residents meets MCC. If coverage does not meet MCC, determine whether you want to make changes to meet MCC (note: employer is not required to offer MCC coverage under the Individual Mandate, though MA residents will face a potential tax penalty for failure to maintain MCC coverage).
- If coverage offered meets MCC, determine whether your carrier (if fully insured) or third-party administrator (if level funded/self-insured) will distribute 1099-HC forms to residents and report to the Department of Revenue on their behalf.
- If your carrier/TPA is not performing these requirements, employers must complete the distribution and reporting by January 31st following the end of the plan year.