Massachusetts' new and increased Employer Medical Assistance Contribution ("EMAC") Assessments are beginning January 1st, 2018 and ending December 31st, 2019. Fiscal Year 2018's budget-related legislation temporarily increased an existing employer fee known as EMAC and also created a new, temporary, 5% assessment on employers to help offset a projected future $600 million shortfall in the MassHealth program.
The new and increased assessments are effective January 1, 2018, remain in effect through December 31st, 2019. The two-year EMAC assessment is expected to raise $200 million in revenue in 2018 and another $200 million in 2019.
EMAC will be offset by a decrease in future employer state unemployment insurance rates over the same two years, which is expected to save employers $335 million over the two-year period.
What is it?
The EMAC is a MA payroll tax paid by employers. The purpose of the EMAC is to help finance the cost of subsidized care for low-income residents. The EMAC is relatively new; having been enacted effective January 1, 2014 as part of the legislation repealing the MA Fair Share Contribution and the Medical Security Program (MSP) (the latter provided qualifying individuals receiving unemployment insurance benefits with health care coverage if no other coverage was available).
EMAC applies to employers with six (6) or more employees including Full Time and Part Time in a calendar quarter and contains the following two tiers:
Tier One: An increase in the current EMAC contribution rate employers are already paying, which applies to the first $15,000 in wages paid to each employee; resulting in a maximum annual per employee contribution of $77 in 2018 and 2019 instead of the $51 annual contribution currently paid by employers.
o The EMAC contribution rate will increase to .51 of one percent for the two years, up from the current .34 of one percent for fully subject employers.
o Other EMAC rates for employers newly subject to the EMAC rules are similarly increased.
Tier Two: A new, separate, targeted assessment requires employers to pay 5% of wages on the first $15,000 in wages paid (capped at $750 per affected employee) for each non-disabled employee of the employer who is either covered by MassHealth (not including the Premium Assistance Program) or who receives subsidized Health Connector coverage.
Potential Reapperance of the HIRD
The proposed new Section 79(a) to chapter 118E of the Special Senate Committee on Health Care Cost Containment and Reform's Health Care Report requires the Division of Medical Assistance to create a Health Insurance Responsibility Disclosure (HIRD) form, which must be completed by employers of 6 or more and submitted annually by the employer, under oath. According to proposed new section 79(a):
The HIRD form “shall indicate whether the employer has offered to pay for or arrange for the purchase of health care insurance and information about such health care insurance including, but not limited to:
- the premium cost
- benefits offered
- cost sharing details
- eligibility criteria
Both new Sections 78(a) and 79(a) caution that an “employer receiving information that identifies or may be used to identify a MassHealth member or recipient of subsidized health insurance shall not use or disclose such information except as authorized by the division.”
The draft legislative text anticipates that employers will receive information to determine which employees are enrolled in MassHealth or one of the ConnectorCare plans. The source of this information apparently will be the Division of Medical Assistance and/or other state agencies.
Employers must treat this employee information as confidential/protected information. Clarification of this process in the draft DUA regulations would be helpful. It appears the HIRD form is intended to be an annual reporting of employer offers of coverage -- in much greater detail than the HIRD forms of old; perhaps similar to IRS Form 1095-C, without the monthly boxes.
How This Affects You
You may not be based in Massachusetts or have any employees working in the Commonwealth. However, as history has shown us, Massachusetts has been a forerunner of federal regulation, in particular, with the Massachusetts Health Connector and the Affordable Care Act. We want to stay ahead of the curve and prepare for the future. Come join us!
Get started with your Tax Year 2017 ACA Compliance and Reporting today! Call us at (508) 655-3307 or email Kim at email@example.com