Massachusetts: Employer Medical Assistance Contribution Updates and New Annual Reporting Obligation (article)
In 2017, Massachusetts passed a law that temporarily increased the amount of the Employer Medical Assistance Contribution (EMAC), and imposed a new penalty (“EMAC supplement”) on employers. This temporary increase in the EMAC is anticipated to be an offset, at least to some degree, of a suspension in the scheduled increases of the unemployment insurance rates for 2018 and 2019. The law is scheduled to sunset on December 31, 2019.
In late 2017, the Massachusetts Department of Unemployment Assistance (DUA) released final regulations relating to the EMAC supplement, together with a set of FAQs.
In addition, Governor Baker signed a law (HB 4008, Chapter 110 of 2017 Session Laws), which includes a provision that requires Massachusetts employers to submit a health insurance responsibility disclosure (HIRD) form, on an annual basis.
As background, the EMAC was enacted in 2014 following the repeal of the Massachusetts fair share contribution requirement. Its purpose is to help fund health coverage for the uninsured. The contribution requirement applies to employers employing six or more employees in the Commonwealth, including state and local governments, non-profit entities, and those employers subject to the Massachusetts unemployment insurance provisions.
Currently, the amount of the EMAC is 0.34 percent on the first $15,000 of each employee’s wages paid during the calendar year. Beginning January 1, 2018, the EMAC contribution fee increases to 0.51 percent of the employee’s wages, which results in an increased per person liability amount from $51 to $77.
EMAC Supplement. An employer is liable for payment of an EMAC Supplement at the point it employs six or more employees in the first calendar quarter of 2018. The number of employees in a calendar quarter is calculated by dividing the total number of employees employed during the quarter, by three. For determining the number of employees, all employees who work or receive wages for any part of the pay period that includes the 12th of the month are counted.
An employer is liable for payment of the EMAC supplement in the amount of 5 percent of annual wages, up to the annual wage cap of $15,000, or $750 for each non-disabled employee who obtains health insurance coverage from MassHealth (excluding the premium assistance program), or who receives subsidized coverage through ConnectorCare for a continuous period of at least 56 days. EMAC Supplement payments are due quarterly, by the last day of the month following the end of the applicable quarter.
The EMAC Supplement would not apply in the event an employee has MassHealth coverage (available to individuals whose income falls below 138 percent of the federal poverty level) as a secondary payer, and employer-sponsored coverage as primary payor. If an individual obtains coverage through ConnectorCare (available to individuals whose income falls below 300 percent of the federal poverty level), then the EMAC Supplement would not be assessed, as long as he/she is eligible for adequate and affordable employer-provided coverage.
In the event an employer disputes its liability for the EMAC Supplement based on a determination made by the DUA, it has the right to request a hearing on the matter, as long as the request is made within 10 days of receiving the DUA’s determination of liability. Failure to pay the EMAC Supplement could result in penalties, together with interest on the amount due.
The Massachusetts Department of Unemployment Assistance (DUA) is delegated to develop a health insurance responsibility disclosure (HIRD) form. The required contents of the HIRD form would include verification of whether the employer offered to pay, or arrange, for the purchase of health insurance, as well as insurance-related information, such as premium cost, types of benefits offered, cost sharing details, eligibility criteria, and any other information deemed necessary by the DUA. The HIRD form is required to be filed on an annual basis by employers employing 6 or more employees in the Commonwealth. In addition, the law establishes penalties, ranging from $1,000 to $5,000 per violation, for failure to file the form, or falsifying information contained on the form. As of the date of this writing, the HIRD form is not yet publicly available, but will likely be due later this year, or immediately following the close of the calendar year, perhaps in early 2019.
The information contained in this article is provided as general guidance and may be affected by changes in law or regulation. This article is not intended to replace or substitute for accounting or other professional advice. Please consult a CBIZ professional. This information is provided as-is with no warranties of any kind. CBIZ shall not be liable for any damages whatsoever in connection with its use and assumes no obligation to inform the reader of any changes in laws or other factors that could affect the information contained herein.