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Expert Employee Benefits and HR Consulting and Brokerage Firm

by | Senior Compliance Director

Summary: Employers with Massachusetts (MA) resident employees take note of:
  1. Certain Massachusetts state law with respect to health plan coverage requirements for state residents, and
  2. Compliance obligations in connection with employer health plan reporting requirements.

Read on for more information and next steps.

MA Health Plan Coverage –
MCC Background

The Massachusetts’ health care reform law, enacted in 2006, requires most residents of the state (who are over 18) who can afford health insurance to have coverage for the entire year or pay a penalty through their tax returns. These state residents must be enrolled in health insurance plans that meet MA Minimum Creditable Coverage (MCC) requirements. Massachusetts residents without MCC may face a tax penalty for each month of noncompliance; however, there is a grace period that allows lapses in coverage of three or fewer consecutive months.[1]

Generally, MCC-qualified health plans must cover four core areas of physician services, inpatient acute care, day surgery, and diagnostic procedures and tests. These core services must encompass coverage of a broad range of services including:

  1. Ambulatory patient services, including outpatient, day surgery, and related anesthesia
  2. Diagnostic imaging and screening procedures, including X-rays
  3. Emergency services
  4. Hospitalization (including at a minimum, inpatient acute care services)
  5. Maternity and newborn care, including prenatal care, post-natal care, and delivery and inpatient services for maternity care
  6. Medical/surgical care, including preventive and primary care
  7. Mental health and substance abuse services
  8. Prescription drugs
  9. Radiation therapy and chemotherapy

MCC Plan Cost-Sharing Limits

An MCC-compliant plan for Massachusetts residents must adhere to the following plan cost-sharing limits for 2025 (captured in the table below):

Plan Cost-Sharing Item 2025 Limits 2024 Limits Change
Coverage Deductible (Self-Only) $2,950 $2,950 No change
Coverage Deductible (Family) $5,900 $5,900 No change
Prescription Drug Deductible (Self-Only) $360 $360 No change
Prescription Drug Deductible (Family) $720 $720 No change
Maximum Out-Of-Pocket (Self-Only) $9,200 $9,450 Decrease of $250
Maximum Out-Of-Pocket (Family) $18,400 $18,900 Decrease of $500

Certain qualifying high-deductible health plans (HDHPs) may satisfy MCC requirements without meeting the limits outlined above, as well as certain health arrangements provided by an established religious organization under prescribed conditions.

Supplemental health plans, including accident-only, limited scope vision or dental benefits, and hospital indemnity insurance policies are generally not considered MCC-compliant plans.

Employers can apply for MCC certification if they sponsor a comprehensive health plan that does not satisfy all MCC requirements.

MA Form 1099-HC

Massachusetts taxpayers must indicate if they maintained MCC health plan coverage when completing their MA personal income tax returns using MA Form 1099-HC. Massachusetts taxpayers who do not maintain MCC for themselves and their dependents throughout the year and who do not qualify for an exception will be subject to a state tax penalty.

Group health plans covering Massachusetts residents are required to:

  1. Provide those individuals with MA Form 1099-HC by January 31 of the following year indicating whether the coverage was (or was not) MCC.
  2. Report this information to the MA Department of Revenue (DOR).

Employers that fail to provide Form 1099-HC to covered individuals or to complete the required reporting to the MA DOR may be subject to a penalty of $50 per individual to which the failure relates, up to $50,000 per year per violator.

Employer Next Steps

Although employers are not obligated to provide MCC for their Massachusetts employees, many employers do use their employment-based group health plans to satisfy the MCC requirements in an effort to help their Massachusetts resident employees avoid this state tax penalty.

  • Fully Insured Plans: Plan sponsors of fully insured plans can typically rely on their insurance carriers to provide MA Form 1099-HC to Massachusetts residents covered under the plan and complete the required reporting to the MA DOR.
  • Self-Funded Plans: Plan sponsors of self-funded plans generally have to negotiate with their third-party administrators (TPAs), as part of their administration fees, to provide MA Form 1099-HC to covered Massachusetts residents and complete the required reporting to the MA DOR.

Multistate employers sponsoring health plan coverage with Massachusetts resident employees are advised to take the following steps with their insurance carriers/TPAs:

  1. Determine if the plan(s) offered satisfies MCC requirements;
  2. Confirm that the insurance carrier or TPA will send Form MA 1099-HC to Massachusetts employees by January 31st after the end of a plan year; and
  3. Confirm the insurance carrier or TPA will complete the required MCC reporting to the MA DOR.

Reporting Rules – MA Health Insurance Responsibility Disclosure (HIRD)

The Health Insurance Responsibility Disclosure (HIRD) form is a state reporting requirement in Massachusetts, launched in 2018. The HIRD form collects employer-level information about employer-sponsored group health plan(s), assisting MassHealth in identifying its members with access to employer-sponsored group health plan coverage who may qualify for the MassHealth Premium Assistance Program. The MA DOR administers HIRD reporting through the MassTaxConnect web portal, which is the portal for employer-taxpayers to file returns and forms, and make tax payments.

The HIRD form requires employers to provide details related to coverage availability and eligibility, plan terms, contributions, wellness credits, and MCC status, amongst other items. Employers with multiple plans or substantive variations must report information about each plan offered in Massachusetts.

HIRD Employer Requirements

Employers (both in-state and out-of-state) who employed six or more employees within Massachusetts during the past 12 months are required to complete the HIRD form.

An individual is considered to be an employee if the employer included this individual in their quarterly wage report to the Department of Unemployment Assistance (DUA) during the past 12 months. Employers are required to complete the HIRD form if they reported six or more employees (includes all employment categories) in any DUA wage report during the past 12 months.

For out-of-state employers that are not required to file a quarterly wage report to the DUA, an individual is considered to be an employee if they are hired for a wage or salary in Massachusetts to perform work, regardless of full-time or part-time status.

Employers must complete the form even if they do not offer health coverage. Employers that are no longer in business are not required to file the HIRD form.

Click here for HIRD FAQs from the MA webpage for additional information.

Employer Next Steps

Filing Your HIRD Form

  1. Login to your MassTax Connect account
  2. Select the Withholding tax account
  3. Select the File health insurance responsibility disclosure hyperlink.

HIRD Form Deadline for Employers
The HIRD form will be available to be completed electronically* starting November 15 and must be completed by December 15 of the reporting year.
* The HIRD form must be completed electronically as paper forms will not be accepted.

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[1] The penalty does not apply to individuals with incomes less than 150% of the Federal Poverty Level (FPL), and the penalty amounts vary by age, income, and family size.