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A new Employee HIRD Form for 2008
George L. Chimento
February 8, 2008
__________________________________________________________________
A. The new Employee HIRD Form
There's a new HIRD in town for Massachusetts employers. With little fanfare, the
2008 version of the required Employee HIRD form has just appeared on the
website of the Division of Health Care, Finance, and Policy. Employers should
immediately discontinue use of the 2007 version.
As a refresher:
1. Massachusetts employers must get employees to complete a HIRD Form after
they decline coverage under (i) an employer's group health insurance plan, or (ii) a
Section 125 plan which permits employees to purchase health insurance on a
pre-tax basis.
2. The signature deadline is 30 days after the end of open enrollment periods for
such plans, or 30 days after a decline which did not occur during open enrollment.
3. Employers must keep the HIRD forms for three years and be ready to produce
them if audited. Employees are supposed to keep copies so that they can be
produced if their Massachusetts tax form is audited.
4. Failure to get a HIRD signed when an employee declines Section 125 plan
coverage can be evidence that the employer is not administering a Section 125
plan according to Massachusetts law. And that means possible assessment of free
care pool expenses if uninsured employees don't pay hospital bills.
5. Collecting Employee HIRD Forms is not a one-time process. At a minimum, the
Forms must be collected annually from decliners after open enrollments. Also, new
employees who turn down coverage, and employees who drop coverage mid-year,
must complete forms.
6. The HIRD Form requirement only applies to employers which pay for at least
22,000 hours (the equivalent of 11 full-time employees) in the current 12 month
period from October 1- September 30. For this purpose, don't count more than
2,000 hours for any employee.
7. On the subject of whether an employer pays for 22,000 hours, related
employers generally do not have to be aggregated. The employing entity is
determined according to whether it has (or is supposed to have) a Division of
Unemployment (DUA) number. Employers are not determined on a controlled group
basis as they are for IRS qualified plans. Nor is "association in common purpose"
taken into account, unlike the rule for determining whether employers with
different DUA numbers must be aggregated to determine if they are required to
sponsor Section 125 plans. As mentioned above, the measuring period for the
Employee HIRD requirement is the current 12 months from October 1 through
September 30. That's different from the measuring period for the Section 125 plan
mandate. An employer must sponsor a Section 125 plan in a calendar year if it paid
for more than 22,000 hours in a preceding 12 month measurement period from
October 1 - September 30. Some fun.
More details on the Employee HIRD Form requirement are in the Division's
Regulation. Details on the Employer Section 125 requirement are in the
Connector's Regulation.
B. A few observations
The new Employee HIRD Form will be much easier to use. This is the result of the
Division listening to comments from employer representatives that the first (2007)
version of the Form was too confusing. Hopefully, my testimony at the public
hearing last fall helped a bit in this effort.
-- Here's what I like about the new Form.
1. The Employer is allowed to pre-populate the form with answers to three
straightforward questions: (i) did it offer health insurance to the employee, (ii) did
it offer a section 125 plan to the employee, and (iii) what is the dollar amount of
the least expensive health insurance (monthly employee's share) offered to the
employee?
2. The Employee then must answer three questions (i) did you accept employee
health insurance, (ii) did you agree to use the employer's section 125 plan to
purchase health insurance, and (iii) do you have other coverage?
-- Here's what I don't like.
The employee HIRD Form is an unnecessary and distracting requirement of the
Massachusetts Health Care law. I wish the legislature would reconsider the need
for it. Employers have enough to do with administering group health plans and
Section 125 plans and should not have to take on this additional chore.
The philosophy, I suppose, was to impress on employees the need to take
personal responsibility for insurance. However, have you ever heard an employee
remark, "Holy cow. I forgot about getting health insurance, and am I glad that I
got this HIRD Form to remind me about it."
People aren't that stupid. Most people who decline insurance (and who are
required to fill out these Forms) have health coverage elsewhere. So why threaten
serious financial penalties to employers who might forget to get the things signed
each year? It is a great mistake for the cause of health care reform to impose
record-keeping and administrative requirements on employers unless absolutely
necessary. The cooperation and good spirit of employers are critical for the system
to work.
This article is provided as a courtesy and may not be relied upon as legal
advice, or to avoid taxes and penalties. Distribution to promote, market, or
recommend any arrangement or investment to avoid or evade taxes,
including penalties, is expressly forbidden. Any communication with the
author as to its contents, does not, of itself, create a lawyer-client
relationship. Under the ethical rules applicable to lawyers in some
jurisdictions, this may be considered advertising.
[return to Home]
A new Employee HIRD Form for 2008
George L. Chimento
February 8, 2008
__________________________________________________________________
A. The new Employee HIRD Form
There's a new HIRD in town for Massachusetts employers. With little fanfare, the
2008 version of the required Employee HIRD form has just appeared on the
website of the Division of Health Care, Finance, and Policy. Employers should
immediately discontinue use of the 2007 version.
As a refresher:
1. Massachusetts employers must get employees to complete a HIRD Form after
they decline coverage under (i) an employer's group health insurance plan, or (ii) a
Section 125 plan which permits employees to purchase health insurance on a
pre-tax basis.
2. The signature deadline is 30 days after the end of open enrollment periods for
such plans, or 30 days after a decline which did not occur during open enrollment.
3. Employers must keep the HIRD forms for three years and be ready to produce
them if audited. Employees are supposed to keep copies so that they can be
produced if their Massachusetts tax form is audited.
4. Failure to get a HIRD signed when an employee declines Section 125 plan
coverage can be evidence that the employer is not administering a Section 125
plan according to Massachusetts law. And that means possible assessment of free
care pool expenses if uninsured employees don't pay hospital bills.
5. Collecting Employee HIRD Forms is not a one-time process. At a minimum, the
Forms must be collected annually from decliners after open enrollments. Also, new
employees who turn down coverage, and employees who drop coverage mid-year,
must complete forms.
6. The HIRD Form requirement only applies to employers which pay for at least
22,000 hours (the equivalent of 11 full-time employees) in the current 12 month
period from October 1- September 30. For this purpose, don't count more than
2,000 hours for any employee.
7. On the subject of whether an employer pays for 22,000 hours, related
employers generally do not have to be aggregated. The employing entity is
determined according to whether it has (or is supposed to have) a Division of
Unemployment (DUA) number. Employers are not determined on a controlled group
basis as they are for IRS qualified plans. Nor is "association in common purpose"
taken into account, unlike the rule for determining whether employers with
different DUA numbers must be aggregated to determine if they are required to
sponsor Section 125 plans. As mentioned above, the measuring period for the
Employee HIRD requirement is the current 12 months from October 1 through
September 30. That's different from the measuring period for the Section 125 plan
mandate. An employer must sponsor a Section 125 plan in a calendar year if it paid
for more than 22,000 hours in a preceding 12 month measurement period from
October 1 - September 30. Some fun.
More details on the Employee HIRD Form requirement are in the Division's
Regulation. Details on the Employer Section 125 requirement are in the
Connector's Regulation.
B. A few observations
The new Employee HIRD Form will be much easier to use. This is the result of the
Division listening to comments from employer representatives that the first (2007)
version of the Form was too confusing. Hopefully, my testimony at the public
hearing last fall helped a bit in this effort.
-- Here's what I like about the new Form.
1. The Employer is allowed to pre-populate the form with answers to three
straightforward questions: (i) did it offer health insurance to the employee, (ii) did
it offer a section 125 plan to the employee, and (iii) what is the dollar amount of
the least expensive health insurance (monthly employee's share) offered to the
employee?
2. The Employee then must answer three questions (i) did you accept employee
health insurance, (ii) did you agree to use the employer's section 125 plan to
purchase health insurance, and (iii) do you have other coverage?
-- Here's what I don't like.
The employee HIRD Form is an unnecessary and distracting requirement of the
Massachusetts Health Care law. I wish the legislature would reconsider the need
for it. Employers have enough to do with administering group health plans and
Section 125 plans and should not have to take on this additional chore.
The philosophy, I suppose, was to impress on employees the need to take
personal responsibility for insurance. However, have you ever heard an employee
remark, "Holy cow. I forgot about getting health insurance, and am I glad that I
got this HIRD Form to remind me about it."
People aren't that stupid. Most people who decline insurance (and who are
required to fill out these Forms) have health coverage elsewhere. So why threaten
serious financial penalties to employers who might forget to get the things signed
each year? It is a great mistake for the cause of health care reform to impose
record-keeping and administrative requirements on employers unless absolutely
necessary. The cooperation and good spirit of employers are critical for the system
to work.
This article is provided as a courtesy and may not be relied upon as legal
advice, or to avoid taxes and penalties. Distribution to promote, market, or
recommend any arrangement or investment to avoid or evade taxes,
including penalties, is expressly forbidden. Any communication with the
author as to its contents, does not, of itself, create a lawyer-client
relationship. Under the ethical rules applicable to lawyers in some
jurisdictions, this may be considered advertising.
[return to Home]
