What are my obligations as an employer with 11 or more full-time equivalent employees?

• A Section 125 or Cafeteria Plan lets employees save money through pre-tax payments for health coverage. To establish your Cafeteria Plan, contact your broker, benefits lawyer, payroll vender, and accountant and provide them with the same documents and forms provided below. Your employees can enroll in a Cafeteria Plan during an open enrollment period, within a specific period of time following their date of hire, or on the date an employee first becomes eligible for a plan. To pay for the Section 125 Cafeteria Plan, an employee must enter into a salary reduction agreement with their employer, confirming they wish to pay for health care on a pre-tax basis.

Cafeteria Plan Handbook

Cafeteria Plan Waiver/Election/Compensation Form

Customizable Cafeteria Plan Document

Cafeteria Plan Agreement Form

Cafeteria Plan Implementation Checklist

Accept/Decline Cafeteria Plan

• Employers that do not offer health benefits to their employees are charged the Free Rider Surcharge . Employees who are not offered health insurance through work often go without it.  Therefore using the state maintains a Free Care Pool to pay for care when uninsured people need medical attention. The amount of the Free Rider Surcharge will vary from employer to employer.  It will be based on the number of employees, whether or not they obtain Free Care Pool medical attention, and the percentage of employees enrolled in the employer’s health plan.

• Employers of 11 or more full-time-equivalent employees will pay an annual Fair Share Contribution of up to $295 per employee if they do not make a “fair and reasonable” contribution to an employee health plan.  The funds will help pay for health plans for people who do not have the option of employer-sponsored health insurance.

HIRD Form

Someone who works 35 hours or more per week at a Massachusetts location (even if they live in another state).  This definition applies to the employees who are offered health plan benefits under the tests for a "fair and reasonable" contribution. 

A Fair Share Reasonable Contribution is 25% of full-time employees participating in the employer’s group health plan. Or an employer contribution of at least 33% toward a health plan premium for all full-time employees who are employed more than 90 days.

• All employers with 11 or more full-time equivalent employees must complete the HIRD Form.
• Individuals who are one of 11 or more full time employees must complete the HIRD Form.
• An employee who declines an employer-sponsored health plan or a section 125 Cafeteria Plan, including individuals that decline your company’s plan and accept their spouses.
• An employee who has other health coverage.

HIRD Form

Accept/Decline Cafeteria Plan

• Count up the payroll hours for all who worked for at least one month during the period from October 1, 2006 through September 30, 2007.
• For any single employee who worked more than 2000 hours, count 2000 hours only.
• Divide the total by 2000 hours to get the number of full-time-equivalent employees.

• Independent contractors.
• Employees under the age of 18.
• Part time employees averaging fewer than 64 hours per month.
• Waitstaff, service employees or bartenders.
• Students who are employed as interns or cooperative education.
• Seasonal employees.
• Temporary employees are not considered full-time employees.
• Workers from temp agencies (they are the temp agency’s employees).