The Massachusetts Health Care Reform Act (the Act) requires employers with 11 or more employees at Massachusetts locations to (among other things) make a “fair and reasonable” contribution to the health care premium costs of its employees or, alternatively, pay an annual “fair share contribution” (FSC) to the Commonwealth of $295 per employee. Enforcement of the FSC rules is split between two agencies: the Division of Health Care Finance and Policy (DHCFP) establishes rules relating to what constitutes a fair and reasonable contribution, and the Division of Unemployment Assistance (DUA) oversees compliance.

Effective October 1, 2009, the DHCFP issued a revised final FSC testing rule (the “final rule”) that was originally proposed on August 13, 2009. Please see An Employer’s Guide to the 2006 Massachusetts Health Care Reform Act for a comprehensive explanation of the impact of the Act on employers with employees at Massachusetts locations.

The final rule makes a handful of modest, though potentially important, changes to the FSC testing rules. After providing a brief summary of the FSC testing regime, this client advisory explains the key features of the newly issued DHCFP final rule and its consequences.