Massachusetts sets 2025 individual-mandate coverage dollar limits 

July 23, 2024

The Massachusetts Health Connector has published 2025 dollar limits on deductibles and other cost sharing for minimum creditable coverage (MCC), as required by regulations (956 Mass. Code Regs. 5). The Massachusetts individual mandate, in effect since 2007, requires state residents to maintain MCC or face a potential state tax penalty. Providing MCC is not an employer mandate, but many employees use employment-based health coverage to satisfy the individual mandate. In addition, health plan reporting requirements compel plan sponsors (or their vendors) to determine whether their coverage meets MCC standards. Deductibles and out-of-pocket maximums (OOPMs) are reviewed annually and typically adjusted. Regulations also clarify MCC criteria for health arrangements provided by religious organizations.

By Jan. 31 after the close of a coverage year, health plans providing MCC must distribute Form MA 1099-HC to covered individuals residing in Massachusetts and report this information to the state Department of Revenue (DOR). While the law applies to plan sponsors and state-regulated insurers, most self-funded employers rely on third-party administrators (TPAs) to determine MCC status, distribute forms and file the DOR report. Insurers subject to the regulation must comply with the reporting requirements. MCC reporting becomes an employer obligation if an insurer is not subject to the state’s laws and will not agree to file the reports. Reporting may be more complex for employers with multiple TPAs for a single plan.

Insurers subject to Massachusetts regulation must determine and disclose MCC status. Plan sponsors whose TPAs or non-Massachusetts-regulated insurers will not do this may review plan provisions and self-certify that the plan qualifies as MCC if it meets all the requirements outlined below in the MCC standards section. Employers that self-certify need not complete or submit any special form or filing. They only need to distribute Forms MA 1099-HC and report to the DOR.

A plan failing to meet core or alternative MCC standards may submit an MCC Certification Application to the Health Connector. Applications for the 2025 plan year are due by Nov. 1, 2024. Applications for prior years are no longer accepted. Any application must identify a deviation from MCC standards. If a plan received certification for 2020 or later and has not expanded any deviation from MCC standards, resubmission is not necessary and not welcomed.

The application may include an actuarial attestation/certification (Section E) showing coverage has equal or greater value than a Health Connector bronze-level plan. While not required (unless requested), the attestation may expedite the application process. Actuarial equivalence does not guarantee MCC certification approval. Even if coverage is actuarially equivalent, the Health Connector will not approve a plan failing to provide the core services discussed below in the MCC standards section.

TPAs providing MA 1099-HC reporting services commonly require self-funded plan sponsors to attest that their plans meet MCC standards. Any self-funded employer — including one with different vendors for medical and carved-out prescription drug or mental health benefits — must base its attestation on the combined features of the plan. TPAs typically require employers to complete this attestation in late summer or early autumn — well before reports are due in January. Missing the TPA deadline may result in TPA refusing to handle the reporting requirements.

To qualify as MCC, a plan must cover four core services: physician services, inpatient acute care, day surgery, and diagnostic procedures and tests. Within these services, the plan must cover a broad range of services, including:

• Ambulatory patient services, including outpatient, day surgery and related anesthesia
• Diagnostic imaging and screening procedures, including X-rays
• Emergency services
• Hospitalization, including — at a minimum — inpatient services typically provided at an acute care hospital
• Maternity and newborn care, including prenatal care, post-natal care, and delivery and inpatient maternity services
• Medical/surgical care, including preventive and primary care
• Mental health and substance abuse services
• Prescription drugs
• Radiation therapy and chemotherapy

MCC may consist of one or more plans meeting the standards. Coverage for all individuals must include all core services and the broad range of benefits. For example, a plan cannot limit coverage for maternity services to an employee or spouse but exclude those services for covered dependent children. Indemnity-type plans will not qualify.

A plan cannot impose a dollar limit or utilization cap on core services or any single illness or condition, or an overall maximum on prescription drugs. Utilization limits may apply if based on “reasonable medical management techniques” rather than dollar amounts.

A plan’s OOPM applies to deductibles, copayments, coinsurance and similar charges for core health benefits. Annual preventive health services required by federal law (42 USC § 300gg-13) must be covered without a deductible, even if a plan is grandfathered under the Affordable Care Act (ACA).

MCC rules index the annual deductible to an annual OOPM adjustment in line with the ACA (42 USC § 18022). The US Department of Health and Human Services (HHS) annually announces the ACA adjustment well in advance of the upcoming year; HHS announced the 2025 adjustment and limits in November 2023.

For 2025 plan years, Bulletin 02-24 keeps the maximum MCC deductibles at 2024 levels:

MCC rules set the OOPM to match federal ACA limits, which decreased (for the first time ever) from 2024 levels:

Other types of plans may qualify as MCC without meeting all the monetary standards set out above. As in prior years, certain high-deductible health plans (HDHPs) can qualify. Religious organizations providing care for their members are considered MCC under certain conditions. Other state and federal health plans can also be considered MCC.

The Health Connector will allow a plan sponsor or insurer to self-certify an HDHP if it meets one of the following standards:

• The HDHP complies with federal health saving account (HSA) requirements under 26 USC § 223, meets all MCC standards that do not conflict with HSA contributions and facilitates access to an HSA.
• The plan sponsor maintains a health reimbursement arrangement (HRA) in combination with a federally compliant HDHP.

A health arrangement provided by an established religious organization composed of individuals with sincerely held beliefs may be MCC. Beyond any financial statement or disclosure required by law, the organization cannot represent that it has sufficient financing to meet members’ anticipated financial or medical needs or has had a successful history of meeting them. The organization also cannot use common insurance terms, such as “health plan,” “coverage,” “copay,” “copayment,” “deductible,” “premium,” and “open enrollment,” or refer to itself as “licensed.” Additional requirements apply to use of funds, disclosures and reporting to the Health Connector.

Individual policies sold on or off the Health Connector and certain publicly funded state and federal health plans also qualify as MCC, including:

• Catastrophic health plans meeting ACA requirements
• Medicare Part A or Part B
• Public health plans offered under the Public Health Service Act
• Children’s Health Insurance Program (CHIP) and Medicaid coverage (except limited programs)
• Qualifying student health insurance programs under the laws of any state
• Indian Health Service or tribal organization medical care
• State health benefits risk pool
• Federal Employees Health Benefits Program coverage
• Health benefit plans offered via the Peace Corps
• Young adult health benefit plans
• US Veterans Health Administration benefits
• Health plan for AmeriCorps National Service Network members

Employers may face a $50 penalty per individual for reporting failures and unspecified fines for state tax-filing noncompliance. However, employers do not have to provide MCC and do not face a direct penalty for not offering MCC. Massachusetts requires residents to maintain coverage satisfying MCC rules.

Resident penalties for failure to maintain MCC vary and apply only to adults deemed able to afford health insurance under the state’s affordability rules. The Health Connector annually establishes affordability standards based on a resident’s income relative to the federal poverty level (FPL) and premiums charged under the Massachusetts- subsidized ConnectorCare program or by the Health Connector. Anyone deemed unable to afford health insurance will not face a penalty. No penalty will exceed 50% of the minimum monthly premium an individual would have paid for insurance through the Health Connector. Individuals may appeal a penalty to claim a hardship prevented them from purchasing health insurance.

The following chart outlines 2024 tax year penalties for uninsured Massachusetts residents.

• Employers with health plans covering employees residing in Massachusetts should take these steps:
• Determine if the plan covering state residents satisfies MCC requirements.
• Contact the insurer or TPA to find out if it will send Form MA 1099-HC and report to the DOR.
• Complete any requested attestation by a vendor’s requested due date.
• Complete an MCC application for any plan deviating from MCC standards, if not previously certified.
• Plan for any changes needed to offer MCC in 2025.

• Massachusetts Health Connector
• Administrative Information Bulletin 02-24, Guidance regarding MCC regulations for calendar-year 2025 (Massachusetts Health Connector, Feb. 29, 2024)
• MCC Certification Application for plan years beginning on or after Jan. 1, 2024 (Massachusetts Health Connector, Oct. 31, 2023)
• 2023 Form MA 1099-HC, Individual-mandate healthcare coverage (Massachusetts DOR, Jan. 12, 2024)
• Technical Information Release 24-1, Individual-mandate penalties for tax year 2024 (Massachusetts DOR, Feb. 1, 2024)
• Premium adjustment percentage, maximum annual limitation on cost sharing, reduced maximum annual limitation on cost sharing and required contribution percentage for the 2025 benefit year (CMS, Nov. 15, 2023)
• 956 Mass. Code Regs. 5, Minimum creditable coverage rules
• 956 Mass. Code Regs. 6, Affordability rules
• 956 Mass. Code Regs. 12.00, Eligibility, enrollment and hearing process for Health Connector programs
• 26 USC § 223(c)(2)(A)(ii), High-deductible health plan exclusion
• 42 USC § 300gg-13, Coverage of preventive health services
• 42 USC § 18022(d)(1), Levels of coverage in exchange plans

• 2025 HSA, HDHP and excepted-benefit HRA figures set (May 10, 2024)
• Some states require group health plan sponsor reporting (Dec. 11, 2023)

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