New Employer Health Care Tax Now in Effect

Employers’ liability unknown until April 1st

The MA Department of Unemployment Assistance (DUA) has finalized regulations and FAQ’s on the new employer health care tax to be implemented through an increase in the Employer Medical Assistance Contribution (EMAC), which took effect on January 1. The temporary assessment was adopted last year as part of the state budget.
The EMAC is an existing tax that most employers 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. This increase has two parts, or tiers:
1. A temporary increase in the existing EMAC, and
2. A temporary supplemental assessment for employers with employees covered under MassHealth (the MA Medicaid program) or subsidized coverage through the MA Health Connector.
The former EMAC contribution rate was 0.34% of wages, up to an 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 has been increased to 0.51% up to the annual wage cap of $15,000, for a potential maximum cost per employee of $77 per employee per year.
The EMAC Supplement applies to employers with more than five employees whose non-disabled employees obtain health insurance either from MassHealth (excluding the premium assistance program) or subsidized coverage through the Connector. The Supplement is 5% of annual wages for each non-disabled employee, up to the annual wage cap of $15,000, for a maximum assessment of $750 per employee per year.
The increases are now in effect and are set to expire on December 31, 2019. Employers will see their first EMAC increases and EMAC Supplement costs (if any) in their first quarter unemployment insurance bills (on or about April 1).