956 CMR 6.00 Determining Affordability for the Individual Mandate

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1 956 CMR 6.00 Determining Affordability for the Individual Mandate Section 6.01 Authority Section 6.02 Purpose Section 6.03 Scope Section 6.04 Definitions Section 6.05 Determining Affordability Section 6.06 Financial Hardship Appeals Section 6.07 Annual Certification Section 6.08 Right to a Hearing Section 6.09 Notification of the Right to Request a Hearing Section 6.10 Hearings Section 6.11 Payment of Penalty During Pendency of Appeal Section 6.12 Administrative Information Bulletins Section 6.13 Severability of Provisions Section 6.01 Authority 956 CMR 6.00 is promulgated in accordance with the authority granted to the Connector by M.G.L. chapters 111M, 118H, and 176Q. Section 6.02 Purpose The purpose of 956 CMR 6.00 and other regulations to be adopted by the Connector in the future is to implement the provisions of M.G.L. chs. 111M, 118H, and 176Q, pertaining to how state agencies, Massachusetts residents, and employers will determine whether health insurance is affordable so that individuals who have not purchased health insurance may then determine whether they are obligated to pay a penalty pursuant to M.G.L. ch. 111M, 2. In general, if an individual can purchase affordable insurance in accordance with these regulations and does not do so, that individual will have to pay the appropriate penalty to the Massachusetts Department of Revenue. Individuals who can demonstrate that no Connector health plans are affordable for them under the standards set pursuant to these regulations may seek a certificate that the penalty should not be assessed. At the same time, the Connector will implement, through these regulations, an appeal process that will set standards allowing residents to claim that a penalty should not be assessed because of financial hardship that prevented them from purchasing coverage. This regulation arises out of the health care reform enactments in St. 2006, ch. 58, which provide for an individual mandate designed to encourage Massachusetts residents to purchase health insurance. Section 6.03 Scope 956 CMR 6.00 contains the Connector s regulations governing how state agencies and individuals will determine whether, based on their income and other factors, Massachusetts residents are able to purchase affordable health insurance, as specified in M.G.L. chs. 111M, 1

2 118H, and 176Q. The Connector also promulgates other regulations, and publishes other documents affecting its programs, including statements of policy and procedure, conditions of participation, guidelines, billing instructions, administrative information bulletins and other documents as necessary Section 6.04 Definitions As used in 956 CMR 6.00, the following terms shall mean: Appeal Representative a person who: (a) is sufficiently aware of an Appellant s circumstances to assume responsibility for the accuracy of the statements made during the appeal process, and who has been provided with written authorization from the Appellant to act on the Appellant s behalf during the appeal process; (b) has, under applicable law, authority to act on behalf of an Appellant in making decisions related to health care or payment for health care. An Appeal Representative may include, but is not limited to, a guardian, conservator, executor, administrator, holder of power of attorney or health care proxy. Appellant an individual who seeks a hearing with the Connector as provided in 956 CMR Application - a form prescribed by the Connector to be completed by the Appellant or a representative, and submitted to the Connector or its designee, to bring an appeal of a decision as provided in 956 CMR Board- the Board of the Commonwealth Health Insurance Connector Authority, established by M.G.L. c. 176Q, 2. Commonwealth Health Insurance Connector Authority or Connector or Authority- the entity established pursuant to M.G.L. c. 176Q, 2. Couple two persons who live together and are married, and have no children under the age of 19 living with them. Employer-sponsored insurance-a group health plan to which an employer has made a contribution of at least 20 percent of the annual premium cost of a family health insurance plan or at least 33 percent of an individual health insurance plan. Family persons who live together, and consists of: (a) a child or children under age 19, any of their children, and their parent(s); (b) siblings under age 19 and any of their children who live together even if no adult parent or caretaker relative is living in the home; or (c) a child or children under age 19, any of their children, and their caretaker relative when no parent is living in the home. A caretaker relative may choose whether or not to 2

3 be part of the family. A parent may choose whether or not to be included as part of the family of a child under age 19 only if that child is: 1. pregnant; or 2. a parent. A child who is absent from the home to attend school is considered as living in the home. A parent may be a natural, step, or adoptive parent. Two parents are members of the same family group as long as they are both mutually responsible for one or more children who live with them. Federal Poverty Level or FPL- the income standard, by such name, issued annually in the Federal Register, as adjusted to account for the last calendar year s increase in prices as measured by the Consumer Price Index. Gross Income the total money earned or unearned, such as wages, salaries, rents, pensions, or interest, received from any source without regard to deductions. Hearing an administrative, adjudicatory proceeding pursuant to 801 CMR 1.00 to determine the legal rights, duties, benefits or privileges of Appellants pertaining to whether they are obligated to pay a penalty for failure to purchase health insurance. Individual- an individual who is a resident of the Commonwealth. Minimum Creditable Coverage or Creditable Coverage As defined in 956 CMR Premium or Premiums The periodic payment made by the Individual for health insurance. In the case of Employer-Sponsored Insurance, the Premium is the portion of the annual premium cost paid by the employee. Resident- as defined under M.G.L. c. 111M. Section 125 Plan as defined in 956 CMR Section 6.05 Determining Affordability (1) Affordability Schedule (a)the Board will formally vote to adopt an affordability schedule annually, no later than June 1 of every year, that shall establish the percentage of an Individual s gross income that the Individual can be expected to contribute toward the cost of that individual s health insurance. The Board shall also consider whether the affordability schedule should establish percentages of gross income that couples and/or families can be expected to contribute toward the cost of health insurance. The affordability schedule shall be issued for use by the Massachusetts Department of Revenue, other state agencies, and members of the public for their use in determining whether residents who have not purchased health insurance can purchase affordable insurance and are thus subject to a penalty for their failure to purchase insurance 3

4 (b)the Board shall allow public comments before it formally votes to adopt its annual affordability schedule. (c)before adopting an affordability schedule, the Board will provide a copy of the schedule to the House and Senate Committee on Ways and Means and the Joint Committee on Health Care Financing. (2) Schedule of Premiums (a) The Board will formally vote to adopt a Premium schedule that establishes the lowest levels of Premium (or Premiums) that are deemed by the Board to be available for minimum creditable coverage for Individuals, couples, and families for a calendar year. The Premium schedule may be combined with the affordability schedule. (b) The Board shall consider deductibles in setting the Premium schedule and shall also allow for variances based on age and rate basis types. (c) The Board shall allow public comments before it formally votes to adopt its annual Premium schedule. (d) The Board will deliver the Premium schedule to the Massachusetts Department of Revenue by December 1 of each year. Section 6.06 Financial Hardship Appeals (1) A taxpayer who has been assessed a penalty by the Massachusetts Department of Revenue for failure to purchase health insurance that meets the standards of minimum creditable coverage has the right to appeal that assessment to the Connector. (2) The Connector may, in its sole discretion, grant an appeal based upon an Appellant s financial hardship as defined in this regulation. (3) Financial hardship means that the Appellant assessed a penalty by the Massachusetts Department of Revenue can show to the Connector that, within the calendar year for which the penalty was assessed, the Appellant: (a) was homeless, or was more than 30 days in arrears in rent or mortgage payments, or received a current eviction or foreclosure notice; (b) received a shut-off notice, or was shut off, or was refused the delivery of essential utilities (gas, electric, oil, water, or telephone); 4

5 (c) had non-cosmetic medical and/or dental out-of-pocket expenses (exclusive of premium payments), totaling more than 7.5% of the Individual s, couple s or family s gross annual income that were not subject to payment by a third-party; or (d) incurred a significant, unexpected increase in essential expenses resulting directly from the consequences of: i. domestic violence; ii. the death of a spouse, family member, or partner with primary responsibility for child care; iii. the sudden responsibility for providing full care for an aging parent or other family member, including a major, extended illness of a child that requires a working parent to hire a full-time caretaker for the child; or iv. a fire, flood, natural disaster, or other unexpected natural or human-caused event causing substantial household or personal damage for the individual filing the appeal. (4) In considering any appeal based upon grounds of financial hardship, the Connector shall also consider, with respect to the calendar year for which the penalty was assessed: (a) Whether the Appellant had access to a Section 125 Plan through an employer; (b) Whether the Appellant had access to or purchased employer-sponsored insurance; (c) If the Appellant purchased employer-sponsored insurance, what was the cost to the Appellant of that insurance, including the Premiums, deductible, copayment and co-insurance; (d) If the Appellant purchased employer-sponsored insurance, whether that insurance provided minimum creditable coverage and, if it did not, the extent to which it deviated from minimum creditable coverage standards; and (e) When the Appellant last had the opportunity to purchase employersponsored insurance, relative to the effective date of this regulation, 956 CMR (5) The Connector shall consider any other grounds that an Appellant may claim demonstrates that he or she cannot afford to purchase health insurance. 5

6 (6) For 2007, any hardship appeals granted will be granted for the full calendar year. (7) For 2008 and years thereafter, the Connector may waive the penalty in whole or in part, depending on whether it determines that the Appellant has established that a hardship existed for all or part of the calendar year for which the penalty was assessed. Section 6.07 Annual Certification (1) The Connector will accept requests from residents who have sought to purchase health insurance coverage through plans from the Connector and who seek a certificate stating that no Connector health plans are affordable for those individuals. (2) The Connector will determine whether to grant a request for a certificate by considering the Appellant s financial situation, including, without limitation, the affordability and Premium schedules and all the factors set forth in 956 CMR Section 6.08 Right to a Hearing Appellants are entitled to a hearing with the Connector to appeal: (1) any assessment of a penalty by the Department of Revenue for failure to purchase health insurance coverage that meets the standards of minimum creditable coverage; or (2) any denial of a certificate pursuant to 956 CMR Section 6.09 Notification of the Right to Request a Hearing and Time for Filing Appeals (1) An Individual who has been assessed a penalty by the Department of Revenue will be notified in writing of his or her right to file an appeal with the Connector. (2) An Individual who has been denied a certificate pursuant to 956 CMR 6.07 will be notified in writing of that decision and of his or her right to file an appeal with the Connector. (3) An Individual who wishes to appeal pursuant to 956 CMR 6.08 must file an Application on a form approved by the Connector. The completed Application must be received at the Connector address specified on the Application within 30 days from the date of the notice issued pursuant to 956 CMR 6.09(1) or (2). (4) An Appellant will be notified in writing of the right to have an Appeal Representative. 6

7 Section 6.10 Hearings Hearings will be conducted for, and by, the Connector using the policies and procedures set forth for informal hearings pursuant to 801 CMR 1.02, and those set forth in 956 CMR 6.00 for any appeals. Section 6.11 Payment of Penalty During Pendency of Appeal An Appellant will not be required to pay the penalty assessed during the pendency of the appeal before the Connector. Section 6.12 Administrative Information Bulletins The Connector may, from time to time, issue administrative information bulletins that set out policies that are consistent with the substantive provisions of 956 CMR In addition, the Connector may issue administrative information bulletins which specify the information and documentation necessary to implement 956 CMR The Connector may also issue administrative bulletins containing interpretations of 956 CMR 6.00 and other information to assist persons subject to this regulation meet their obligations under 956 CMR Section 6.13 Severability of Provisions The provisions of 956 CMR 3.00 are hereby declared to be severable. If any such provisions or the application of such provisions or circumstances shall be held invalid or unconstitutional, such invalidity shall not be construed to affect the validity or constitutionality of any remaining provisions of 956 CMR 6.00 or the applications of such provisions or circumstances other than those held invalid. REGULATORY AUTHORITY 956 CMR 6.00: M.G.L. chs. 111M, 118H, and 176Q. 7