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About the Massachusetts Health Insurance Tax

According to the MassResources website, the Massachusetts Health Reform Act of 2006 requires all state residents who are 18 years or older to purchase health insurance coverage. The tax is actually a penalty assessed for those who do not comply by having the required coverage. There are exceptions in the law for residents who cannot afford to buy coverage, have a hardship or have a religious objection.

  1. Affordability Issues

    • Residents who have experienced financial hardship during the tax year must file for a Certificate of Exception before December 1 of that year to avoid the penalty tax. Additionally, anyone who owes a penalty, but experienced hardship during the year preventing them from buying health insurance, regardless of their income, may file an appeal when filing their state income taxes.

      Massachusetts residents have an affordability tool available to them called Commonwealth Connector Affordability. The tool, which can be found on the Health Connector website, allows residents to see how much they should be able to pay for health insurance coverage. Income and family size are considered to determine if an affordable plan is available. However, residents who cannot find an affordable plan for themselves or their family are not required to pay the penalty for not purchasing a health plan.

    Assistance With Affordable Health Coverage

    • The Health Care Connector website states that there is low-cost or no-cost health coverage available for uninsured adults who meet certain requirements.

    Requirements for the Religious Exemption

    • Anyone who has "sincerely held religious beliefs" preventing him from obtaining health insurance may obtain a religious exception from the state. According to the Mass.gov website, the individual with this objection must file a sworn affidavit regarding his religious belief or claim the exemption on Schedule HC with his signature on his personal state tax return.

    The Tax Basis

    • Residents who do not buy health insurance coverage and do not qualify for exemptions are required to pay a penalty that is assessed on a monthly basis. The basis of the penalty is one-half the cost of the lowest-priced Commonwealth Choice coverage available to the individual. Other factors calculated into the penalty are age and income, and are based on the Federal Poverty Guidelines (FPG). Uninsured adults with incomes falling below 150 percent of the FPG are not assessed a penalty.

    The Employer's Role

    • According to the Mass Resources website, the state's health care law requires that employers with 11 or more full-time employees make a group health plan available and pay a "fair share" of the monthly premiums. Fair share is not defined here. Non-compliant employers are required to pay a Fair Share Contribution of $295 a year for each employee to the Health Safety Net Trust Fund.

      Employers meeting the minimum of 11 full-time employees must also set up a plan that allows their employees to purchase health insurance using pretax dollars through payroll deductions. There is also a penalty for non-compliance with this part of the health care law.

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