Current through Register 1531, September 27, 2024
(1)
Statement of Purpose; Application and Effective Date;
Organization.
(a) The goal of
the Massachusetts Health Care Reform Act (St. 2006, c. 58), is to ensure that
virtually all Massachusetts residents have affordable, comprehensive health
insurance designated as "creditable coverage."
Under St. 2006, c. 58, a resident is required to indicate
whether he or she has health insurance on his or her Massachusetts personal
income tax return. A resident who has access to affordable coverage but who
does not obtain the coverage, and to whom an exception does not apply, is
subject to penalties under M.G.L. c. 111M, § 2 which will be imposed
through the individual's personal income tax return. 830 CMR 111M.2.1 explains
various aspects of the health insurance individual mandate, including the need
to declare health insurance coverage on the income tax return, exceptions to
the mandate, calculation of any applicable penalties, employer reporting
responsibilities under M.G.L. c. 62C, § 8B, and appeal rights of taxpayers
in connection with the penalty under M.G.L. c. 111M, § 2.
St. 2006, c. 58 creates a new independent authority, the
Commonwealth Health Insurance Connector Authority, which is responsible, among
other things, for setting standards to determine whether affordable health
insurance is available to residents, based on the percentage of income
available to obtain coverage and the price of coverage. The Connector is also
responsible for reviewing appeals of the health care individual mandate due to
hardship.
In general, the implementation of the health care law involves
multiple agencies including the Connector and the Department of Revenue. The
purpose of 830 CMR 111M.2.1 is to explain the role of the Department in
implementing St. 2006, c. 58. 830 CMR 111M.2.1 must be read in conjunction with
any pertinent regulations promulgated by the Connector or other applicable
agencies.
For tax years beginning on or after January 1, 2014, the
federal Affordable Care Act instituted a federal mandate on individuals to
obtain and maintain health insurance. While both Massachusetts and federal
health care reform include this individual responsibility requirement, the
details associated with the respective mandates differ. Specifically, there are
differences associated with the penalties imposed on those who are not exempt
from the federal mandate and fail to comply with the mandate requirement, with
the standards defining what constitutes affordable coverage, and with the
standards defining the type of health insurance that satisfies the coverage
requirement.
With respect to penalties, to ensure that no taxpayer is
subject to the aggregation of both the state and federal penalties, this
regulation provides an adjustment in the circumstance where an individual is
subject to both the federal and the Massachusetts penalties.
(b) Effective beginning with taxable year
2007, 830 CMR 111M.2.1 applies to the penalty imposed under M.G.L. c. 111M,
§ 2. Effective January 1, 2008, 830 CMR 111M.2.1 applies to the penalty
imposed under M.G.L. c. 62C, § 8B. See St. 2006, c.
58.
(c)830 CMR 111M.2.1, is
organized as follows:
1. Statement of
Purpose; Application and Effective Date; Organization
2. Definitions
3. Individual Mandate for Health Insurance
Coverage
4. Massachusetts Personal
Income Tax Return; Requirements Relating to Health Insurance Coverage
5. Penalty for Failure to Obtain Affordable
Health Insurance Coverage; Interaction with the Federal Affordable Care
Act
6. Exceptions to the Individual
Mandate for Health Insurance Coverage
7. Appeals; Abatement of Penalty for Failure
to Obtain Affordable Health Insurance
8. Employers and Other Persons Required to
Document Health Insurance Coverage
9. Penalty for Failure to Provide
Documentation of Health Insurance
(2)
Definitions.
Affordability Schedule, annual
schedule of affordability adopted by the Board pursuant to
956 CMR
6.05: Determining
Affordability that shows the amount of money, based on an individual's
adjusted gross income, that the individual can be expected to contribute toward
the cost of health insurance that meets minimum creditable coverage
standards.
Board, the Board of the Commonwealth
Health Insurance Connector Authority, established by M.G.L. c. 176Q, §
2.
Creditable Coverage, as defined in
M.G. L. c. 111M, § 1 and
956 CMR
5.03: Minimum Creditable
Coverage.
Commissioner, the Commissioner of the
Department of Revenue.
Connector, the Commonwealth Health
Insurance Connector Authority established pursuant to M.G.L. c. 176Q.
Department (DOR), the Department of
Revenue.
Lapse in Coverage, in the case of an
individual who loses creditable coverage due to job loss or otherwise, the
period that elapses before the individual regains creditable coverage.
Penalty, unless the context requires
otherwise, the penalty imposed by M.G.L. c. 111M, § 2, for failure to
obtain health insurance meeting standards for minimum creditable
coverage.
Resident for Health Care Purposes, an
individual as defined under M.G.L. c. 111M, § 1 "Resident"(3) or
(13).
Resident for Personal Income Tax
Purposes, an individual as defined under M.G.L. c. 62, §
1(f).
(3)
Individual Mandate for Health Insurance Coverage.
(a) Beginning July 1, 2007, the following
individuals 18 years of age and older are required by M.G.L. c. 111M, §
2(a) to obtain and maintain health insurance designated as creditable coverage
if such coverage is deemed affordable to them under schedules set annually by
the Board:
1. residents of the Commonwealth,
and
2. individuals who become
residents of the Commonwealth, within 63 days of becoming a resident.
In tax years 2008 and thereafter, residents who have terminated
any prior creditable coverage are required to re-obtain creditable coverage
within 63 days of such termination.
(b)
Creditable
Coverage. The Connector will define the parameters regarding what
constitutes creditable coverage. The minimum requirements for policies to
qualify as creditable coverage may vary from year to year, as determined by the
Connector. See
956 CMR
5.03: Minimum Creditable
Coverage.
(c)
Applicability of Mandate: Affordability. An individual
is required to obtain and maintain health insurance only if affordable coverage
is determined to be available to that individual. The Connector is responsible
for setting annual Affordability and Premium Schedules related to coverage.
Generally, the determination is based on the premium amount that is deemed
affordable based on an individual's adjusted gross income. The Department will
follow the determinations of affordability as determined by the Connector. The
Department will not make determinations of affordability separate from the
Connector.
(d) The health care
individual mandate does not give individuals the alternative of self-insurance.
In general, under the Affordable Care Act, for each month
during the taxable year, a nonexempt individual must have minimum essential
coverage or pay the shared responsibility payment. An individual has minimum
essential coverage for a month in which the individual is enrolled in and
entitled to receive benefits under a program or plan identified as minimum
essential coverage in U.S. Treas. Reg. § 1.5000A-2 for at least one day in
the month.
A taxpayer is liable for the shared responsibility payment for
a month under the provisions of U.S. Treas. Reg. § 1.5000A-1(c). For each
taxable year, the shared responsibility payment of an individual is computed
under U.S. Treas. Reg. § 1.5000A-4.
For federal income tax purposes, an individual is exempt from
liability for the shared responsibility payment for a month under the
provisions of U.S. Treas. Reg. § 1.5000A-3.
(4)
Massachusetts Personal Income
Tax Return; Requirements Relating to Health Insurance Coverage.
(a)
Residents Required to Report
Health Insurance Coverage on Personal Income Tax Return. A
resident who files or is required to file a Massachusetts personal income tax
return is required to indicate on the return whether he or she had creditable
coverage in force during the taxable year, as described in 830 CMR
111M.2.1(4)(a)1. and 2., to document such coverage. Coverage may be individual
coverage or coverage as a named beneficiary of a policy covering multiple
individuals. Generally, this documentation will be accomplished by providing
information furnished to the resident on Form MA 1099-HC, as discussed in 830
CMR 111M.2.1(8). If the coverage requirement cannot be demonstrated and
coverage is deemed affordable for the taxpayer, the taxpayer will be assessed
the penalty at M.G.L. c. 111M, § 2, unless an exception applies (as
described in 830 CMR 111M.2.1(6)).
1.Taxable Year 2007.
Every person who files or is required to file an individual return as a
resident, either separately or jointly with a spouse, and every part-year
resident who establishes a Massachusetts domicile more than 63 days before the
end of the taxable year must indicate on the return whether such person or
persons, as of December 31, 2007, had creditable coverage in force.
2.Taxable Years Beginning on or
after January 1, 2008. Every person who files or is required to
file an individual income tax return as a resident, either separately or
jointly with a spouse, and every part-year resident who resides in the
Commonwealth for more than 63 days, must indicate on the return whether such
person or persons had creditable coverage in force for each of the 12 months of
the taxable year for which the return is filed.
(b)
Schedule HC, Health Care
Information. In general, taxpayers are required to provide health
insurance information to the Commissioner by completing Schedule HC, Health
Care Information, as part of their personal income tax returns. Taxpayers who
have required coverage will so indicate and will be required to provide
information documenting such coverage. In most cases, the information necessary
to document coverage will have been provided to the taxpayer by the taxpayer's
insurer or employer on Form MA 1099-HC (as described in 830 CMR 111M.2.1(8)).
In the case of a taxpayer who does not have creditable
coverage, the taxpayer will determine by completing Schedule HC whether
coverage is deemed affordable for the particular individual (as described in
830 CMR 111M.2.1(3)(c)) such that the mandate applies. The instructions to
Schedule HC include affordability and premium tables showing the monthly
premium amount that a taxpayer is deemed to be able to afford. Based on these
tables, a taxpayer who does not have coverage will determine whether affordable
health insurance is deemed to be available and therefore whether the mandate
applies to that taxpayer.
If the mandate does apply, based on deemed affordability, the
taxpayer may claim various exceptions (as described in 830 CMR 111M.2.1(6)) on
Schedule HC. Claims for the hardship exception to the mandate should be
indicated by completion of Schedule HC-A, Health Care Appeals. In the case
where coverage is deemed to be affordable to the taxpayer and no exception
applies, the applicable penalty (as described in 830 CMR 111M.2.1(5)) is
determined on Schedule HC.
(5)
Penalty for Failure to Obtain
Affordable Health Insurance Coverage; Interaction with the Federal Affordable
Care Act.
(a)
Penalty; In General. In general, a resident who has
access to affordable health insurance coverage but does not obtain and maintain
the coverage may be subject to a penalty under M.G.L. c. 111M, § 2, which
will be imposed through the resident's personal income tax return. If the
coverage requirement cannot be demonstrated and no exception applies, the
taxpayer will be assessed the penalty as further provided in 830 CMR
111M.2.1(5).
Except as provided in 830 CMR 111M.2.1, the penalty will be
assessed and collected in the manner of a tax under M.G.L. c. 62C. An appeal on
any issue connected with the assessment of the penalty other than hardship will
be filed with the Department. However, (as described in 830 CMR 111M.2.1(6) and
(7)) all appeals of assessments or proposed assessments of a penalty on the
basis of claimed hardship are within the jurisdiction of the Connector and are
subject to such procedures as may be established by the Connector. To the
extent of any inconsistency or overlap between processes established by M.G.L.
c. 62C and those established by the Connector, the Connector's procedures will
supersede those of M.G.L. c. 62C.
(b)
Penalty; Taxable Year
2007.
1.Assessment on
the Return. If a taxpayer does not indicate on his or her return
whether the taxpayer maintained health insurance, or if the taxpayer indicates
that he or she did not have creditable coverage in force on December 31, 2007,
then the taxpayer shall self-assess or be assessed the penalty of the loss of
the personal exemption at M.G.L. c. 62, § 3B(b), or, in the case of a
taxpayer who files jointly with a spouse who did maintain coverage, the loss of
1/2 of the personal exemption. However, the penalty will not be triggered
by a lapse in coverage of 63 days or less in a case where the lapse period
encompasses December 31, 2007.
2.Assessment by the
Commissioner. If a taxpayer indicates that he or she had
creditable coverage in force on December 31, 2007, but the Commissioner
determines after the fact, based on the information available to him, that the
requirement was not met, then the Commissioner will assess the penalty of the
loss of the personal exemption at M.G.L. c. 62, § 3B(b), or, in the case
of a taxpayer who files jointly with a spouse who did maintain coverage, the
loss of 1/2 of the personal exemption, first giving notice to such person
of his intent to do so and an opportunity for an appeal. However, the penalty
will not be triggered by a lapse in coverage of 63 days or less in a case where
lapse period encompasses December 31, 2007.
(c)
Penalty; Taxable Years
Beginning on or after January 1, 2008.
1.Assessment on the
Return. If a taxpayer does not indicate on his or her return
whether the taxpayer maintained health insurance, or if the taxpayer indicates
that he or she did not have creditable coverage in force, then a penalty will
be assessed of up to 50% of the cost of the lowest cost premium available to
the individual through the Connector. The penalty will be assessed for each of
the months the individual did not meet the requirement of creditable coverage.
However, the penalty will not be triggered by a lapse in coverage of 63 days or
less between periods of coverage. In the case of an individual with a lapse in
coverage exceeding 63 days, the penalty will be assessed for the period in
excess of 63 days.
2.Assessment by the
Commissioner. If the taxpayer indicates that he or she had health
insurance which meets the creditable coverage standards in force, but the
Commissioner determines after the fact, based on the information available to
him, that the requirement of creditable coverage was not met, then the
Commissioner will assess the penalty first giving notice to such person of his
intent to do so and an opportunity for an appeal. The penalty is an amount up
to 50% of the cost of the lowest cost premium available to the individual
through the Connector. The penalty will be assessed for each of the months the
individual did not meet the requirement of creditable coverage. However, the
penalty will not be triggered by a lapse in coverage of 63 days or less. In the
case of an individual with a lapse in coverage exceeding 63 days, the penalty
will be assessed for the period in excess of 63 days.
3.Determination of Penalty
Amount. The Commissioner will annually publish a penalty schedule.
The penalty calculation will be based on the lowest monthly cost premium
available through the Connector in the taxable year to which the penalty
applies.
(d)
Interest and Penalties under M.G.L. c. 62C, §§ 32 through
33. Interest and penalties under M.G.L. c. 62C, §§ 32
through 33 accrue on unpaid penalties under M.G.L. c. 111M, § 2 in the
same manner as they apply to unpaid taxes. Interest on the penalty under M.G.L.
c. 111M, § 2 commences with the due date of the original return without
regard to extensions and continues to the date of the payment of the
penalty.
(e)
Enforcement . The Commissioner shall have all
enforcement and collection procedures available under M.G.L. c. 62C to collect
any penalties assessed under 830 CMR 111M.2.1(5)(e). However, no penalties will
be enforced against an individual seeking review until the review is complete
and any subsequent appeals are exhausted.
(f)
Commonwealth Care Trust
Fund. The Commissioner shall deposit all penalties assessed under
M.G.L. c. 111M. § 2 that he or she collects into the Commonwealth Care
Trust Fund.
(g)
Interaction with the Federal Affordable Care Act.
1.
Background. The
Affordable Care Act is the Patient Protection and Affordable Care Act,
Public Law
111-148, and the Health Care and Education
Reconciliation Act, Public
Law 111-152, as amended.
In general, under the Affordable Care Act, for each month
during the taxable year, a nonexempt individual must have minimum essential
coverage or pay the shared responsibility payment. An individual has minimum
essential coverage for a month in which the individual is enrolled in and
entitled to receive benefits under a program or plan identified as minimum
essential coverage in U.S. Treas. Reg. § 1.5000A-2 for at least one day in
the month.
A taxpayer is liable for the shared responsibility payment for
a month under the provisions of U.S. Treas. Reg. § 1.5000A-1(c). For each
taxable year, the shared responsibility payment of an individual is computed
under U.S. Treas. Reg. § 1.5000A-4.
For federal income tax purposes, an individual is exempt from
liability for the shared responsibility payment for a month under the
provisions of U.S. Treas. Reg. § 1.5000A-3.
2.
Adjustment For Payment of the
Federal Shared Responsibility Payment. For months beginning after
December 31, 2013, the federal Affordable Care Act requires that for each month
of the taxable year, a nonexempt individual must have minimum essential
coverage or pay a shared responsibility payment. A taxpayer's liability for the
shared responsibility payment for a month must be reported on the taxpayer's
federal income tax return for the taxable year that includes any months of
noncompliance.
For tax years beginning on or after January 1, 2014, an
individual who does not have health insurance meeting both the Massachusetts
standard of creditable coverage and the federal standard of minimum essential
coverage may be subject to both (1) the Massachusetts penalty imposed by M.G.L.
c. 111M, § 2, and (2) the federal shared responsibility payment under IRC
§ 5000A. However, in the circumstance where a taxpayer is subject to both
the Massachusetts penalty and the federal shared responsibility payment, the
amount of the taxpayer's Massachusetts penalty is reduced to account for
payment of a federal shared responsibility payment. If the federal shared
responsibility payment is greater than the amount that the taxpayer would owe
as the Massachusetts penalty, the Massachusetts penalty is reduced to
zero.
Example. In 2014, taxpayer J failed to
obtain and maintain health insurance for all 12 months. As a result, J is
subject to both a federal shared responsibility payment of $95 and a
Massachusetts penalty (before adjustment) of $708. After adjustment for the
amount of J's liability for the federal shared responsibility payment of $95,
the amount of J's Massachusetts penalty for 2014 is $613 ($708 -
$95).
3. In a case where a
taxpayer has not actually paid the federal shared responsibility payment for
the taxable year, the Commissioner has the authority to disallow the adjustment
to the Massachusetts penalty provided above in 830 CMR
111M.2.1(5)(g)2.
4.
Special Rules. The Commissioner will issue additional
guidance to address the interaction of the federal shared responsibility
payment and the Massachusetts penalty in special circumstances. To the extent
that federal law may be amended to defer or eliminate a federal shared
responsibility payment, the provisions of 830 CMR 111M.2.1 pertaining to the
calculation and imposition of a Massachusetts penalty remain in effect, and
adjustment of the Massachusetts penalty amount to take into account the impact
of the federal shared responsibility payment would not be
necessary.
(6)
Exceptions to the Individual Mandate for Health Insurance
Coverage. Residents to whom the individual mandate applies who
have not purchased health insurance satisfying the requirement of creditable
coverage will not be subject to penalty if one or more of the following
exceptions apply. A taxpayer should indicate on Schedule HC whether an
exception is being claimed.
(a)
Connector Certificate of Exemption (Issued in Advance of Tax
Filing). By regulation, the Connector has established procedures
for granting an annual certificate upon the request of a resident who:
1. will be filing a Massachusetts personal
income tax return;
2. has sought to
purchase health insurance coverage through the Connector; and
3. seeks a certificate stating that no
Connector health plans are affordable for such person. See
956 CMR
6.06: Determining Affordability for
the Individual Mandate. A taxpayer who has received a Certificate of
Exemption from the Connector should so indicate on the taxpayer's Schedule HC
and must provide the certificate number provided by the
Connector.
(b)
Exemption from Coverage Requirement Based upon Religious
Belief.
1.
General. An individual will generally be exempt from
the penalty under M.G.L. c. 111M, § 2 if he or she files a sworn affidavit
with his or her personal income tax return stating that he or she did not have
creditable coverage and that his or her sincerely held religious beliefs are
the basis of the refusal to obtain and maintain creditable coverage during the
12 months of the taxable year for which the return was filed. Claiming the
religious exemption on Schedule HC along with the signature of the taxpayer on
his or her personal income tax return fulfills the affidavit
requirement.
2.
Scope
of Exemption. No Meaningful Benefit from Coverage. The individual
health care mandate in Massachusetts is a requirement to maintain health
insurance coverage. The Department interprets the religious exemption as a
legislative acknowledgement that maintenance of health insurance would provide
little benefit to an individual whose sincerely held religious beliefs would
cause the individual to object to
substantially all forms of
treatment that would be covered by the insurance. It is appropriate for the
religious exemption from the individual mandate to be available to such a
person. On the other hand, health insurance may provide a substantial benefit
to an individual who would object to certain specific treatments, such as blood
transfusions, but who would otherwise seek standard medical treatment of
conditions such as a broken bone or an infection. Thus, a claim of religious
exemption in the latter situation would not be appropriate.
Sincerely held religious beliefs, including the scope of
objections to various potential health care treatments, will vary among
individuals. Thus, whether health insurance would provide no meaningful
benefit to an individual, such that a claim of religious exemption
from the individual mandate would be appropriate, is a matter of individual
conscience. However, the Department may question a claim of exemption where
facts are sufficiently extreme as to cast doubt on the sincerity of the
religious beliefs asserted.
3.
Medical Health
Care. Any individual who claimed a religious exemption from the
individual mandate but received medical health care during the taxable year for
which the return is filed shall be liable for providing or arranging for full
payment for the medical health care and be subject to the
penalty assessed under M.G.L. c. 111M, § 2. For purposes of 830 CMR
111M.2.1(5)(b)3., the Department will interpret "medical health care" as health
treatment by or supervised by a medical doctor and customarily covered by
health insurance policies qualifying as minimum creditable coverage. Medical
health care includes, without limitation, acute care treatment at hospital
emergency rooms, walk-in clinics, or similar facilities. Medical health care
excludes treatment not administered or supervised by a medical doctor, such as
chiropractic treatment, preventive dental care, midwifery, personal care
assistance, and eye examinations in situations not customarily covered by basic
health insurance policies. Medical health care will also exclude physical
examinations where required by third parties, such as a prospective employer,
and vaccinations.
4.
Self-insurance Is Not an Alternative to the Individual
Mandate. The health care individual mandate does not give
individuals the alternative of self-insurance. Where maintenance of health
insurance would provide meaningful benefit to an individual, taking that
individual's religious beliefs into account, separate payment by the taxpayer
or others for medical health care services does not remove the statutory
requirement for insurance coverage or the penalty for failure to obtain
required coverage.
(c)
Hardship (as Determined by the Connector). Schedule HC
includes a set of worksheets and schedules to determine if health insurance is
deemed affordable for a taxpayer. If these worksheets and schedules indicate
that a taxpayer could have afforded health insurance such that a penalty for
lack of coverage would normally apply, the taxpayer may nevertheless appeal
imposition of the penalty by filing an appeal claiming that a hardship
prevented him or her from purchasing health insurance. Hardship appeals may be
requested on the income tax return by completion and filing of Schedule HC-A.
The determination of whether to allow an appeal is made by the Connector, not
the Department. If a taxpayer files with his or her income tax return a
Schedule HC-A requesting a hardship appeal, the Department will not assess a
penalty unless a final determination is received from the Connector denying the
appeal. Procedural issues relating to hardship appeals are discussed in greater
detail in 830 CMR 111M.2.1(7): Appeals.
(7)
Appeals; Abatement of Penalty
for Failure to Obtain Affordable Health Insurance.
(a)
General; Applicable Appeals
Procedures; Coordination with Connector. The penalty is generally
assessed and collected in the manner of a personal income tax under M.G.L. c.
62C. Accordingly, abatement and appeal processes under M.G.L. c. 62C generally
apply where a taxpayer wishes to apply for an abatement of a penalty that has
previously been assessed or where a taxpayer wishes to contest the
Commissioner's proposal to assess such penalty. The major exception to the
applicability of M.G.L. c. 62C processes is that hardship appeals of the
penalty are reviewed by the Connector, not the Department, with a right to seek
judicial review pursuant to M.G.L. c. 30A, § 14, instead of appealing to
the Appellate Tax Board. Hardship appeals are subject to the procedures of the
Connector, and such procedures supersede M.G.L. c. 62C. See generally,
956 CMR 6.00: Determining
Affordability for the Individual Mandate. Actions for judicial review of an
appeal decision are subject to the provisions of M.G.L. c. 30A, § 14, and
any standing orders of the Superior Court regarding such actions. A primary
condition of Connector procedures for hardship claims is that appeals of a
penalty may be filed only once for a particular tax year. If a taxpayer files
Schedule HC-A with the taxpayer's income tax return requesting a hardship
appeal, the appeal may be pursued only at that time; it may not be raised again
later on an application for abatement under M.G.L. c. 62C, § 37.
(b)
Hardship Appeal to the
Connector.
1.
Hardship Appeal Requested on
Original Return; Penalty is Not Assessed Pending Appeal.
a.A taxpayer who files Schedule HC-A, Health
Care Appeal, as part of his or her personal income tax return is not required
to assess the penalty at M.G.L. c. 111M, § 2 when computing the amount of
tax due. Rather, such a taxpayer is allowed to compute and pay the tax due
separate from the penalty pending the determination by the Connector of whether
the taxpayer has grounds for appeal of the penalty.
b.The procedure for filing a hardship appeal
and the grounds for appeal are explained in the Connector's regulations. See
956 CMR 6.07:
Hardship Appeals and 6.08: Grounds for Appeal of Penalty.
c.A taxpayer who files Schedule HC-A
requesting a hardship appeal will be sent a Notice, "Statement of Grounds for
the Appeal of the Health Insurance Mandate" or any successor Notice. The Notice
will inform the taxpayer of such application and documentation requirements as
may be determined by the Connector. The Notice will also inform the taxpayer of
the Commissioner's intent to assess the applicable penalty if the appeal is
dismissed or denied on the merits by the Connector. It is anticipated, subject
to inter-agency agreements, that the taxpayer will be instructed to submit the
appeal request form, along with any documentation and further information to
the Department for processing purposes. The Department will forward the
application, documentation and further information to the Connector for
consideration and for determination on the merits.
d.The Connector will inform the Commissioner
of its determination of a hardship appeal. If the appeal is denied, the
Commissioner will assess the penalty. In the event that the taxpayer seeks
judicial review of an appeal denial by the Connector, the Department will not
assess the penalty unless and until the determination of the Connector is
finally upheld.
2.
Hardship Appeal Not Requested
on Original Return.
a.Application for
Abatement. In cases where a taxpayer does not file Schedule HC-A
with the personal income tax return requesting a hardship appeal, the penalty,
if otherwise applicable, will be self-assessed and collected. In this
situation, the taxpayer may later claim hardship by timely filing the request
in the manner of an application for abatement under M.G.L. c. 62C, § 37.
The Commissioner will refer the claim to the Connector in a manner similar to
the process followed when Schedule HC-A is filed with the original return. If
the Connector grants the appeal, the Commissioner will abate the penalty. Any
appeal from a denial by the Connector must be timely taken to Superior Court.
If the Connector informs the Commissioner that an appeal has been denied, the
individual is not a person aggrieved by the failure of the Commissioner to
abate a tax for purposes of M.G.L. c. 62C, § 39 and no appeal of the
hardship determination lies with the Appellate Tax Board.
b.Stay of Involuntary
Collection. The filing of an application for abatement shall stay
involuntary collection of the disputed penalty. Interest under M.G.L. c. 62C,
§ 33(a) will continue to accrue. The stay expires on the date on which any
right of appeal from a refusal or deemed refusal by the Commissioner to grant
an abatement of such penalty expires without any appeal having been filed, or
as otherwise provided in M.G.L. c. 62C, § 32(e).
c.No Penalty Self-assessed on
Original Return. In an instance where a taxpayer indicated on the
taxpayer's personal income tax return that the taxpayer carried required health
insurance or that the individual mandate did not apply due to reasons other
than hardship, and the Department later determines that a penalty should be due
because health insurance was not in fact maintained or because the individual
mandate did apply under the circumstances, the Department will send the
taxpayer a Notice of Intent to Assess the applicable penalty amount. The
taxpayer may confer with the Commissioner in the same manner as upon receipt of
a Notice of Intent to Assess a tax and may dispute the proposed assessment,
provided however that a hardship appeal will be determined by the Connector in
the manner described in 830 CMR 111M.2.1(7)(b)2.a.
(c)
Other Appeals -
Penalty Is Assessed Prior to Appeal. Appeals based on issues other
than hardship are governed by M.G.L. c. 62C, §§ 26, 37.
Example: In the course of preparing
Schedule HC, Health Care, and filing his personal income tax return for 2007, a
taxpayer made a mistake in applying the Affordability Tables. Based upon his
mistaken understanding of the Affordability Tables, this taxpayer indicated on
Schedule HC that private health insurance was deemed affordable to him and, as
a result, that he was not entitled to his personal exemption. The taxpayer did
not claim a hardship appeal to the Connector. After filing his return without
the benefit of his personal exemption and paying his tax (including the penalty
assessed under M.G.L. c. 111M, § 2), the taxpayer subsequently learned
that the correct application of the Affordability Tables to his situation would
have shown that private health insurance was not deemed affordable to him, and
that he was entitled to his personal exemption. This taxpayer may file an
application for abatement within the time limits provided in M.G.L. c. 62C,
§ 37.
Example: A taxpayer filed a hardship
appeal along with his Massachusetts personal income tax return for 2007. The
taxpayer received the Department's Notice, Statement of Grounds for the Appeal
of the Health Insurance Mandate. The Notice explained that failure to respond
to the Notice within 30 days would result in the automatic dismissal of the
appeal. The taxpayer failed to respond to the Notice, resulting in the denial
of his appeal. The taxpayer did not seek judicial review of the dismissal in
Superior Court. Accordingly, the penalty under M.G.L. c. 111M, § 2 was
assessed and billed. For tax year 2007, this taxpayer is not entitled to file
an application for abatement of the penalty based on hardship because a
taxpayer is entitled to file only one hardship appeal to challenge the
imposition of a penalty for a particular tax year. See
956 CMR 6.07;
830 CMR 111M.2.1(7)(a).
(8)
Employers and Other Persons
Required to Document Health Insurance Coverage.
(a)
Documentation of Creditable
Health Care Coverage; Health Plan That Is Employment-sponsored.
Effective Jan 1, 2008, an employer or other sponsor of an employment-sponsored
health plan is required to:
1.provide, or
arrange with service providers or insurance carriers to provide, a written
statement (Form MA 1099-HC), annually on or before January
31st of each year, to each subscriber or covered
individual residing in the Commonwealth to whom it provided creditable
coverage, as defined in M.G.L. c. 111M, in the previous calendar year;
and
2.provide a separate report
electronically verifying the statement to the Commissioner. The first
statements and reports are required to be issued no later than January 31, 2008
for the tax year ending December 31, 2007.
(b)
Documentation of Creditable
Health Care Coverage; Health Plan That Is Not
Employment-sponsored. If a resident is not covered under a
Massachusetts-based employment-sponsored health plan, carriers licensed or
otherwise authorized to offer health coverage under M.G.L. chs. 175, 176A,
176B, and 176G shall:
1. provide, or arrange
with service providers to provide, a written statement (Form MA 1099-HC),
annually on or before January 31st of each year, to
each subscriber or covered individual residing in the Commonwealth to whom it
provided creditable coverage, as defined in M.G.L. c. 111M, in the previous
calendar year; and
2. provide a
separate report electronically verifying the statement to the Commissioner.
In lieu of Form MA 1099-HC, individuals who
are recipients of MassHealth and ConnectorCare will be provided the information
needed to indicate their coverage on Schedule HC. For these individuals,
MassHealth will provide an annual report to the Department to document the
coverage of both MassHealth and ConnectorCare recipients.
(c)
Content of
Reports. The statements and reports shall identify the carrier or
employer, the covered individual and covered dependents, the insurance policy
or similar numbers and the dates of coverage during the year, and shall provide
other information as required by the Commissioner of Revenue; but shall be
limited to the minimum amount of personal information necessary for the purpose
of M.G.L. c. 111M and shall not include information about previous or current
diagnoses or treatments. Except for the office of Medicaid, the statements and
reports shall not include social security numbers. The Commissioner of Revenue,
in consultation with the Commissioner of Insurance, may specify the content and
format of the statements and reports. The Commissioner of Revenue may disclose
the information in the statements and reports to the Division of Insurance, the
Division of Health Care Finance and Policy and the Connector. M.G.L. c. 62C,
§ 8B(c). The information in the statements and reports shall be
confidential and shall not constitute a public record.
(9)
Penalty for Failure to
Provide Documentation of Health Insurance.
(a) Pursuant to M.G.L. c. 62C, § 8B,
carriers, employers or other sponsors of employment-sponsored health plans that
fail to provide written statements to covered individuals or to report to the
Commissioner in violation of 830 CMR 111M.2.1(9) shall be punishable by a
penalty of $50 per individual to which the failure relates, not to exceed
$50,000 per year per violator.
(b)
The Commissioner shall assess the penalties under M.G.L. c. 62C, § 8B as a
tax subject to M.G.L. c. 62C.
(c)
The Commissioner may abate for reasonable cause all or any portion of the
penalties imposed under M.G.L. c. 62C, § 8B. A taxpayer seeking an
abatement of any penalties must present specific facts establishing that its
failure to submit the documentation or reports required by M.G.L. c. 62C,
§ 8B was due to reasonable cause. A mere assertion, by affidavit or
otherwise, that a taxpayer's failure to timely file such documentation or
reports was reasonable or excusable due to oversight or inadvertence is
insufficient to establish reasonable cause.
REGULATORY AUTHORITY
M.G.L. c. 62C, §§ 3, 8B; M.G.L. c. 111M, §
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