Final Regulations & FAQ’s Released on New Employer Health Care Tax 

The MA Department of Unemployment Assistance (DUA) has issued a set of guidance documents and regulations on the new employer health care tax to be implemented through an increase in the Employer Medical Assistance Contribution (EMAC), set to take effect on January 1.  The regulations and FAQ’s are available on the DUA website.

The Governor and the Legislature included in this year’s state budget a temporary increase in the EMAC for all employers with 6 or more employees, and an additional tax/assessment on employers with employees on public health assistance.  The EMAC is an existing tax that most employers now pay as part of their unemployment insurance taxes.  EMAC funds are used to pay for subsidized health care for low-income residents of the Commonwealth.  The current EMAC contribution rate is 0.34% of wages, up to the annual wage cap of $15,000, with a potential maximum cost of $51 per employee per year.  For the wages paid in the years 2018 and 2019, the EMAC contribution will increase to 0.51% up to the annual wage cap of $15,000, which increases the potential maximum cost per employee to $77 per employee per year.

The additional tax/assessment on employers with 6 or more employees whose non-disabled employees obtain health insurance either from Medicaid/MassHealth (excluding the premium assistance program) or subsidized coverage through the MA Health Connector, is 5% of annual wages for each non-disabled employee, up to the annual wage cap of $15,000, for a maximum of $750 per employee per year. 

The DUA held listening sessions around the state in November to hear concerns from employers.  RAM testified and argued that employers who make an offer of affordable, qualifying coverage to employees, but whose employees decline that coverage and still go to MassHealth or the Connector, should not be liable for the EMAC Supplement.  We also highlighted that in the retail and restaurant industries, employee turnover is high.  Most employers utilize a waiting period of 60 or 90 days before an employee becomes benefits eligible, mainly because you do not know if that employee is going to stay with you that long.  The initial “fourteen days” threshold for liability of the EMAC Supplement in the proposed draft regulation was simply too low, and burdensome for the small employer.  We had asked for a 90 day waiting period or, at a minimum, that the EMAC Supplement not kick in until wages are shown for the same employee in two consecutive quarters.  The final regulation increased the threshold for liability to when an employee receives public subsidized health insurance coverage for a “continuous period of at least fifty six days.”

We had also urged the Department to consider a per employee quarterly cap of $187.50, but that was not adopted in the final regulation.

The liability of employers subject to the EMAC Supplement begins on January 1, 2018.