All Massachusetts employers with more than 11 employees or more full-time equivalent employees must adopt and maintain a Section 125 plan by July 1, 2007. This is a cost-effective way for employers to offer their employees a pre-tax way to buy insurance.
Employers with 11 or more employees who fail to offer a Section 125 payroll deduction option to all their employees may be assessed a Free Rider Surcharge if their employees or dependents signifi cantly utilize the state's UCP (also known as the "free care pool") or the Health Safety Net Trust Fund.
Employers with 11 or more full-time equivalent employees employed in Massachusetts must make a "fair and reasonable premium contribution" toward health insurance for employees. If they fail to do this, they will be subject to the Fair Share Contribution of no more than $295 per employee per year.
Those with 10 or fewer employees are not required to establish Section 125 plans, but may do so if they choose.
The Health Connector Employer FAQ contains additional information about employer requirements.
