Compliance Checklist for
Employer Sponsored Plans

Employers who sponsor health insurance in Massachusetts must comply with both federal and state laws. Failure to meet these requirements can result in significant financial penalties. 

Massachusetts-specific compliance issues

Health Insurance Responsibility Disclosure (HIRD) form

• Failure to file: Employers with six or more Massachusetts-based employees in the last 12 months must annually submit a HIRD form electronically through the MassTaxConnect web portal.

• Missed deadlines: The HIRD form must be filed between November 15 and December 15 each year. Late filing can lead to penalties.

• Inaccurate reporting: The form requires detailed information about health plans offered, including premiums, deductibles, and whether the plan meets Minimum Creditable Coverage (MCC) standards. Incorrect information can trigger compliance issues.

• Filing for each FEIN: Employers with multiple Federal Employer Identification Numbers (FEINs) must file a separate HIRD form for each one. 

Minimum Creditable Coverage (MCC) reporting (Form MA 1099-HC) 

• Failure to furnish form to employees: You or the insurance carrier must furnish Form MA 1099-HC to Massachusetts resident employees who had MCC during the prior year. The deadline is typically January 31. Penalties can be $50 per individual. The carrier provides this form in most cases

• Failure to report to the state: Employers must also electronically submit the MA 1099-HC information to the Massachusetts Department of Revenue (DOR) via MassTaxConnect by January 31.

• Incorrectly determining MCC status: Many health plans offered in Massachusetts meet MCC standards. For fully insured plans, the carrier usually handles reporting. For self-insured plans, the employer is responsible for ensuring the plan meets MCC and reporting correctly.

• Offering non-MCC plans: While not illegal, if you offer a plan that does not meet MCC, you must still provide the 1099-HC indicating the non-compliant coverage. Employees enrolled in such plans may be subject to a state tax penalty. 

Other Massachusetts mandates

• Mini-COBRA: Employers with 2 to 19 employees are subject to a state law requiring continued health coverage for terminated employees and their dependents for up to 18 months.

• Section 125 cafeteria plan: Employers with 11 or more full-time equivalent employees must offer a Section 125 plan, which allows employees to pay for health insurance premiums on a pre-tax basis. 

Federal compliance issues

Affordable Care Act (ACA)

• Employer Shared Responsibility Mandate: Applicable Large Employers (ALEs)—those with 50 or more full-time equivalent employees—must offer affordable health coverage that provides minimum value to at least 95% of full-time employees and their dependents. Failure to do so can result in large penalties.

• ACA Reporting (Forms 1094-C and 1095-C): ALEs must accurately file annual reports with the IRS and furnish statements to employees to document compliance with the ACA.

• Incorrect eligibility determinations: For ACA and other federal laws, employers must accurately track employee hours to determine benefit eligibility. Failing to track variable-hour employees correctly is a common mistake. 

Employee Retirement Income Security Act (ERISA)

• Failure to create plan documents: Private-sector employers offering health and welfare benefits must have formal, written plan documents and maintain them.

• Failure to distribute Summary Plan Descriptions (SPDs): Employers must provide an SPD to all plan participants, explaining plan features and participant rights. Not doing so can lead to significant penalties.

• Inadequate fiduciary oversight: ERISA requires those managing and controlling plan assets to act in the best interest of plan participants.

• Failure to distribute employee notices: Employers are required to provide various notices to employees regarding their health benefits. 

• Here are the notices that Massachusetts employers must provide to employees regarding their health benefits, including both state-specific and applicable federal mandates. 

• Massachusetts-specific notices

• Paid Family and Medical Leave (PFML) notices 

• Workplace poster: All employers must display a poster from the Department of Family and Medical Leave (DFML) explaining PFML benefits. The poster must be available in English and any language spoken by five or more employees.

• Initial written notice: Within 30 days of a new hire's start date, employers must provide a written notice with an acknowledgment form explaining PFML benefits, contribution rates, and other details.

• Annual notice: If PFML contribution rates change, employers must provide updated information to all employees at least 30 days before the new rate takes effect.

• PFML notices based on employer size:

• Employers with 25 or more employees must use a specific notice for their workforce.

• Employers with fewer than 25 employees must use a different notice. 

• Mini-COBRA notices

• Notice of rights at commencement of coverage: For employers with 2 to 19 employees, the health carrier is responsible for providing notice of continuation rights under Mini-COBRA when an employee and their spouse first begin coverage.

• Notice of election upon qualifying event: Following a qualifying event (like employment termination, divorce, or a dependent child aging out), the carrier must provide a notice of election rights within 14 days of receiving notice of the event.

• Note: While the carrier is primarily responsible, they may contract with the employer to distribute these notices. 

• Form MA 1099-HC

• This form is used to report Minimum Creditable Coverage (MCC) and must be furnished to all Massachusetts resident employees who had MCC during the previous calendar year. The deadline is typically January 31. 

• Federal notices (applicable in Massachusetts)

• ACA Exchange notice

• Purpose: Informs employees about the Health Insurance Marketplace and explains that they may be eligible for a tax credit to purchase coverage there if the employer's plan does not meet certain affordability standards.

• Distribution: Must be provided to new hires within 14 days of their start date and is considered a best practice to include in new hire paperwork. There is no specific penalty for failure to provide this notice. 

• ACA Form 1095-C

• Purpose: Documents the offer of health coverage for each employee. For tax year 2024 and beyond, employees only receive a copy upon request, provided they are informed of their right to request it.

• Distribution: The form must be filed with the IRS annually by Applicable Large Employers (ALEs), which are employers with 50 or more full-time equivalent employees. 

• ERISA notices

• Summary Plan Description (SPD): Provides a comprehensive summary of an employer's group health plan. It must be provided to plan participants within 90 days of coverage and updated as needed.

• Summary of Benefits and Coverage (SBC): Explains plan coverage and costs in a standard format. It must be provided during open enrollment, upon initial eligibility, and when a special enrollment right is triggered. 

• COBRA notices

• General notice: Provided to covered employees and their spouses when they first enroll in the plan. It explains their rights to COBRA continuation coverage.

• Election notice: Sent to qualified beneficiaries when a qualifying event occurs that would cause them to lose their health coverage. 

• Other required federal notices

• HIPAA Special Enrollment Rights: Explains special enrollment rights triggered by events like marriage, birth, adoption, or loss of other coverage. Must be provided at or before initial enrollment.

• CHIPRA notice: Informs employees of opportunities for premium assistance through state programs.

• Medicare Part D Creditable Coverage notice: Informs Medicare-eligible individuals whether their employer's prescription drug coverage is "creditable" or "non-creditable." Must be distributed annually. 

 

Here are the notices that Massachusetts employers must provide to employees regarding their health benefits, including both state-specific and applicable federal mandates. 

Massachusetts-specific notices

Paid Family and Medical Leave (PFML) notices 

• Workplace poster: All employers must display a poster from the Department of Family and Medical Leave (DFML) explaining PFML benefits. The poster must be available in English and any language spoken by five or more employees.

• Initial written notice: Within 30 days of a new hire's start date, employers must provide a written notice with an acknowledgment form explaining PFML benefits, contribution rates, and other details.

• Annual notice: If PFML contribution rates change, employers must provide updated information to all employees at least 30 days before the new rate takes effect.

• PFML notices based on employer size:

  • Employers with 25 or more employees must use a specific notice for their workforce.

  • Employers with fewer than 25 employees must use a different notice. 

Mini-COBRA notices

• Notice of rights at commencement of coverage: For employers with 2 to 19 employees, the health carrier is responsible for providing notice of continuation rights under Mini-COBRA when an employee and their spouse first begin coverage.

• Notice of election upon qualifying event: Following a qualifying event (like employment termination, divorce, or a dependent child aging out), the carrier must provide a notice of election rights within 14 days of receiving notice of the event.

• Note: While the carrier is primarily responsible, they may contract with the employer to distribute these notices. 

Form MA 1099-HC

• This form is used to report Minimum Creditable Coverage (MCC) and must be furnished to all Massachusetts resident employees who had MCC during the previous calendar year. The deadline is typically January 31. 

Federal notices (applicable in Massachusetts)

ACA Exchange notice

• Purpose: Informs employees about the Health Insurance Marketplace and explains that they may be eligible for a tax credit to purchase coverage there if the employer's plan does not meet certain affordability standards.

• Distribution: Must be provided to new hires within 14 days of their start date and is considered a best practice to include in new hire paperwork. There is no specific penalty for failure to provide this notice. 

ACA Form 1095-C

• Purpose: Documents the offer of health coverage for each employee. For tax year 2024 and beyond, employees only receive a copy upon request, provided they are informed of their right to request it.

• Distribution: The form must be filed with the IRS annually by Applicable Large Employers (ALEs), which are employers with 50 or more full-time equivalent employees. 

ERISA notices

• Summary Plan Description (SPD): Provides a comprehensive summary of an employer's group health plan. It must be provided to plan participants within 90 days of coverage and updated as needed.

• Summary of Benefits and Coverage (SBC): Explains plan coverage and costs in a standard format. It must be provided during open enrollment, upon initial eligibility, and when a special enrollment right is triggered. 

COBRA notices

• General notice: Provided to covered employees and their spouses when they first enroll in the plan. It explains their rights to COBRA continuation coverage.

• Election notice: Sent to qualified beneficiaries when a qualifying event occurs that would cause them to lose their health coverage. 

Other required federal notices

• HIPAA Special Enrollment Rights: Explains special enrollment rights triggered by events like marriage, birth, adoption, or loss of other coverage. Must be provided at or before initial enrollment.

• CHIPRA notice: Informs employees of opportunities for premium assistance through state programs.

• Medicare Part D Creditable Coverage notice: Informs Medicare-eligible individuals whether their employer's prescription drug coverage is "creditable" or "non-creditable." Must be distributed annually.