Massachusetts Health Insurance Changes

With the costs of health coverage continuing to skyrocket, Massachusetts has come to a crisis with respect to its health care system. As a result of increased costs, and difficulty for many high risk groups to maintain insurance, a statewide change is now coming into effect that will ensure that everyone has insurance. One large reason for the increase in costs that has precipitated these increases are overuse and misuse of the existing health care infrastructure.

Like any resource, the Massachusetts health care system can be abused. And those who abuse it often do so at the expense of those who don’t. Many people have a good insurance which they pay a portion of the costs where their employer pays the rest. However, these people may or may not use the entire value that they pay into the system each year. For example, if my health premiums total 100 dollars per pay period, that means that I would have to spend 2600 for health care in order for the system to start losing money on me. Fortunately, there are many many more people who don’t use their full amount and they are paying for those who become seriously ill and need coverage. In Massachusetts, this system began to break down because people started using the Emergency Room for standard care.

Understanding the penalties for lack of compliance is vital since it has a direct impact on your state taxes this year if you are a Massachusetts resident. In fact, according to the massachusetts website, “Individuals who cannot show proof of health insurance coverage by Dec. 31, 2007, will lose their personal income tax exemption when filing their 2007 income taxes. The 2006 personal exemption is $3,850 for an individual, which translates into a tax savings of approximately $204 for an individual (5.3 percent of $3,850). ” (sources at end of article) This means that there is a direct impact of thousands of dollars worth of taxable income for those who choose not to participate. This is important because it effectively forces individuals to pay for the healthcare services that are being used, whether they are actually using them directly or not. Importantly, the entire system relies upon accuracy with regard to tax filing and a tax system without loopholes.

Implementation of a system that ensures people have accurate, fair, and active insurance as required by this statute is going to be difficult in the best of scenarios. Even the most straightforward way of handling this via a sent item like a w-4 form that would include a series of information to validate your health insurance information is fraught with issues. Provided that the information is handled in this manner, it becomes another source of possible mistakes. If it is not handled this way, it seems quite possible that alternate implementations would jeopardize the ability to electronically file taxes. Like any new system, the devil’s in the details. And although the idea of taxing people that are currently gaming the system is seductive, it may be more costly and less effective than Massachusetts citizens might like.

Sources:

http://www.mass.gov/?pageID=hicterminal&L=2&L0=Home&L1=Frequently+Asked+Questions+(FAQ)&sid=Qhic&b=terminalcontent&f=for_individuals&csid=Qhic

http://www.mass.gov/?pageID=hicterminal&L=2&L0=Home&L1=Frequently+Asked+Questions+(FAQ)&sid=Qhic&b=terminalcontent&f=for_individuals&csid=Qhic

https://www.macommonwealthcare.com/goalmind/login/external/intro.jsp