Mass Governor Baker signed into law H. 3822, “An Act Further Regulating Employer Contributions to Health Care”; the law increases the Employer Medical Assistance Contribution (“EMAC”) and also imposes a tax penalty, call the “EMAC supplement” which applies to Massachusetts employers with more than five employees (ie.6 or more Full Time, Part Time etc.).
In order to assist the Department of Unemployment Insurance (DUA) and other agencies to manage this penalty; employers will now be required to provide a healthcare coverage form as follows.
“Every employer with 6 or more employees, doing business in the commonwealth, shall annually complete and submit the form under oath. The form shall indicate whether the employer has offered to pay or arrange for the purchase of health care insurance and information about such health care insurance such as the premium cost, benefits offered, cost sharing details, eligibility criteria and other information deemed necessary by the division.”
The Commonwealth is also added various penalties in connection with this filing “An employer who knowingly falsifies or fails to file any information required by this section, or its implementing regulation, shall be subject to a penalty of not less than $1,000 or more than $5,000 for each violation.”
This EMAC supplement takes effect as of January 1, 2018
The penalty is calculated as 5% of a covered employee’s unemployment insurance taxable wages up to the $15,000 per year (i.e., a cap of $750 per covered employee). This penalty only applies to employees who receive health insurance through mass health or obtain a subsidy through the Mass Connector, the Commonwealth’s ACA marketplace. It will be automatically calculated by the DUA.
While no specifics have yet emerged the guidance indicates that there will be a dispute process that an employer can utilize after assessment has been made.
BenefitScape has now added this feature to our reporting and will be using our software reporting system to assist employers that have employees in Massachusetts to fulfill this reporting responsibility and will assist any of our clients in verifying or disputing the penalty. We expect that this dispute resolution process will be similar to the one we now have in place for Federal penalties which are outlined in IRS letter 226J.
Conclusion: While some of the core components of the ACA such as the individual mandate and the Cadillac tax are going by the wayside there is expanded reporting coming from the states. In addition it is becoming very obvious that in order to effectively comply with all of these elements for multistate employers you have to have an accurate verifiable database that can be used to report manage and dispute penalties.