MA Health Care Reform
Individual Mandate
AcademyHealth's Annual Research Meeting (ARM)
June 29, 2010
Melissa Cummings-Niedzwiecki
Cummings Niedzwiecki
Director of Strategy and Implementation
Overview of the Massachusetts
Individual Mandate
• Ad
Adultlt residents
id t 18 and
d over mustt obtain
bt i iinsurance
coverage so long as it is “deemed affordable”
• Adults who can afford to purchase insurance, but do not
have it, are subject
j
to p
penalties p
paid through
g their
income tax returns
• Adults who are deemed unable to afford
ff
health
insurance are not subject to these penalties
• Penalties enforced by Department of Revenue through
income tax returns through
g regular
g
enforcement and
collection procedures
Requirements and Penalties Phased-in
• T
Tax Year
Y
2007
– Must have coverage by December 31, 2007 or
– Lose personal exemption on state income tax (valued
at $219/individual)
• Tax Year 2008 and beyond
- Must have coverage for entire year
p to 50% of least costly
y health insurance
- Penaltyy up
available for each month not covered
- Gaps of 63 days permitted (extended to three months
i 2008 and
in
d 2009)
• Tax Year 2009 and beyond
– Must carry a certain minimum creditable level of
creditable coverage (MCC)
Exemptions to Individual Mandate
- Adjusted gross income < 150% FPL
- Cl
Claims
i
a religious
li i
objection
bj ti b
based
d on sincerely
i
l
held religious beliefs
- Receives a “Certificate of Exemption” from the
Connector stating that health insurance was not
affordable for them
- Permissible lapse in coverage of 63 consecutive
days or less (3 months in 2008 and 2009)
- Insurance is not affordable based on affordability
schedules
h d l adopted
d t db
by th
the C
Connector
t B
Board
d and
d
incorporated in tax returns
Affordabilityy Determination
Employer offered
Yes
affordable health insurance
No
Eligible for government
subsidized health insurance
Yes
Penalty
No
Able to afford
private health insurance
No
No Penalty
Yes
Taxpayers subject to
penalty
pe
a ty may
ay appea
appeal to
the Connector
Role of Carriers/Certain Employers
•
Taxpayers with
T
ith private
i t insurance
i
receive
i a Form
F
MA 1099-HC
1099 HC ffrom th
their
i
insurance carrier or employer
•
Every MA 1099-HC issuer must also send an electronic report to DOR
Primary Challenges
•
•
•
•
•
•
•
•
•
Uncharted territory
How to verify health insurance coverage
Lack of common identifier between insurers and DOR
Lack of public awareness
Development of a “simple” tax form
New training for customer service staff
Internal and external resistance
Phased-in nature of the mandate
Lack of new funding to support implementation
Guiding Principles
• Keep it simple – important not to alienate taxpayers and
tax preparers from the goals of this effort
• Leverage existing filing systems, databases and data
processing procedures
• Be generous and constructive in enforcement of the
mandate while still maintaining the integrity of the
mandate
2008
008 Tax
a Data
ata S
Show
o Most
ost Adult
du t Filers
e s Insured
su ed
•
Out of 3.95
3 95 million tax filers,
filers over 3.8
3 8 million,
million or 96.4%
96 4% of filers,
filers had insurance at
some point in 2008.
•
Of the 3.8 million tax filers to report coverage at some point, close to 96%, or 3.65
million filers,
filers had insurance for the full year or the entire period that the mandate
applied to them.
•
Roughly 53,000 tax filers, or 1.3% of filers, lacked insurance for all or part of 2008 but
were deemed
d
d able
bl tto afford
ff d h
health
lth iinsurance ffor th
the period
i d without
ith t coverage and
d
thus subject to a penalty.
•
Over 84% of the tax filers subject to a penalty, or about 45,000 filers, were assessed
the
h penalty
l on their
h i tax return, d
down 2
25%
% ffrom the
h 60
60,000
000 who
h were assessed
da
penalty in 2007. The remaining filers appealed the penalty to the Connector.
•
p
DOR assessed $16.4 million in penalties.
Visit the health care section on DOR’s website at www.mass.gov/dor for 2007 and 2008 health care
reports.
Lessons Learned
• IInvite
it key
k stakeholders
t k h ld
tto ttable
bl to
t accomplish
li h objectives
bj ti
• Leverage existing resources and processes
• Convene a strong cross
cross-divisional
divisional team of senior
managers from the outset of the project
• Strong, sustained bi
bi-partisan
partisan support at all levels
• Open and transparent process fosters shared ownership
• Sufficient lead time
• Compromise is essential
• Understand roles and responsibilities across agency
boundaries and communicate accordingly
• Celebrate success
Thank You