How many employees does an employer need to offer health insurance?
Businesses with 11 or more full-time-equivalent employees must offer Section 125 plans to enable their employees, including employees who may not be eligible for the employers’ group health plan, to purchase health coverage on a pre-tax basis. Those who do not may be required to pay a surcharge if their employees (or dependents of their employees) make significant use of the state’s Health Safety Net, formerly the Uncompensated Care Pool. This is called the Free Rider Surcharge. Section 125 plans offer tax benefits for both the employer and the employee. Through a Section 125 plan, the employee is able to pay for health coverage on a pre-tax basis that is not subject to federal or state income taxes or federal FICA withholding taxes. On average, Section 125 plans reduce the cost of health insurance to employees in Massachusetts by 41 percent. Private employers also save 7.65 percent in FICA taxes. The Health Connector will offer more detailed information on Section 125 plans and help e
