Q: I am a small business owner and rely on your column and other columns on boston.com for helpful information. I was recently at a networking event and another small business owner was talking about “HERD compliance.” I have done a bit of research but could not find any information online. Can you tell me what this is?
A: Employee benefits are a complex topic, especially for small businesses. In 2006, Massachusetts enacted legislation called Health Care Reform. This law requires that all Massachusetts residents maintain health insurance. Under this law, employers with 11 or more Full-Time Equivalent Employees (FTEs) are required to offer health insurance, contribute towards the cost of the health insurance and offer a Section 125 plan.
Joe Tagman, Benefits Consultant of Northern Benefits of Massachusetts, explains: “The HIRD (Health Insurance Responsibility Disclosure) form documents that the employer has offered an employer-sponsored health plan to benefits eligible employees and the use of a Section 125 plan to both full- and part-time employees. Employers are required to obtain signed HIRD forms each year, from all employees, and retain the forms for three years. Non-compliance can result in a Fair Share Contribution (FSC) penalty or a Free-Rider Surcharge.”
Compliance is a challenge for many employers but seems to be more burdensome for the small to mid-sized employer. The smaller business often has few resources to deal with the myriad of compliance issues. The Department of Unemployment Assistance (DUA) also requires an on-line FSC and HIRD filing annually or quarterly. Tagman warns, “According to the September 2011 report from the Division of Health Care Finance and Policy, since the implementation of the FSC penalty, the state of Massachusetts has assessed over 60 million dollars in liability to non-complaint employers.”
Some resources to explore include www.mass.gov. If you click on the tab for businesses or search the term “HIRD,” additional information is available. To access a 2011 HIRD form, you can download a copy using this link http://www.mass.gov/Eeohhs2/docs/dhcfp/g/hcr/employee_hird_2011.pdf. Additionally, if you have a benefits broker, this individual should be able to assist with compliance issues. If your broker is not proficient in Massachusetts Health Care Reform compliance, shop for a broker or consultant who has this expertise.