Underinsured Bay Staters Face Tougher Tax Penalties

When Massachusetts first passed its landmark universal health insurance law, it included a provision that imposed a state income tax penalty on those who chose not to have health insurance. In 2008, uninsured Bay Staters paid up to $912 in penalties. Now state regulators have passed rules that would penalize individuals who have health insurance if their policies don’t meet minimum standards. To qualify, a policy must cover prescription drugs and mental health and substance abuse services along with the traditional coverage for hospital and doctor services.

State regulators are launching a full-scale educational effort aimed at employers and health insurers to explain the new requirements, which will go into effect on January 1. Health insurance companies will be required to tell policy holders whether their plans meet the new standards, and employers will need to know how to upgrade their employee health benefits to meet the requirements.

Despite the educational effort aimed at insurers and employers, state regulators acknowledged that it is up to the individual to make sure his or her health insurance policy complies with the new standards. Next year, they said, the tax penalty for those who fail to do so is likely to be higher than this year’s $912.