22 February 2017 Massachusetts governor proposes reinstituting employer 'fair-share' assessment to relieve medical insurance deficit Massachusetts Governor Charlie Baker included in his fiscal year 2018 budget proposal (HB 1) a plan to reinstitute the "fair-share contribution" formerly assessed against employers without a health insurance plan. Effective January 1, 2018, the contribution, intended by the governor to partially cover a $600 million shortfall in the state healthcare system (MassHealth) for low-income residents, would amount to up to a $2,000 yearly per-employee assessment for employers with more than 10 full-time employees that fail to offer adequate health insurance to their full-time employees. The fair share contribution, by contrast, equaled up to $295 per employee annually. See the Associated Industries of Massachusetts blog for more information on how the assessment would be determined and which employers would be liable. The repeal of the Fair Share provision under M.G.L. c. 149, Section 188 was contained in the Massachusetts FY 2014 budget, signed by former Governor Patrick on July 12, 2013. The Fair Share provision was repealed as of July 1, 2013 and the elimination of the contribution was effective for third quarter 2013. Under the former Massachusetts Fair Share requirements, employers with 11 or more full-time equivalent employees were required to make a "fair and reasonable" contribution to their employees' health insurance costs or pay a Fair Share Contribution of up to $295 per employee. Employers were also required to file an annual report (Employer Fair Share Report) and collect from employees a form (Employee HIRD Form) when they declined employer-sponsored health insurance or participation in a Section 125 plan. Governor Patrick repealed the employer Fair Share requirements on the argument that they were duplicative of the employer-shared responsibility provisions of the Affordable Care Act. While the FY 2014 budget bill repealed the fair share contribution, employers continue to pay a quarterly contribution that provides for health insurance for the uninsured, the Employer Medical Assistance Contribution (EMAC), which in 2014 replaced the Unemployment Health Insurance (UHI) contribution paid by employers since 1990. As we reported, the EMAC rate for employers that have been liable for six years or more continues at 0.34% for 2017, up to the taxable wage base of $15,000 per employee. Employers are exempt from payment of the EMAC in any quarter whenever the average employee count is fewer than six. Newly liable employers are also exempt for up to the first three years of liability from the EMAC and receive a reduced EMAC rate for the next two years. Employers in their fourth year of liability in 2017 pay at 0.12% and at 0.24% if in their fifth year of liability for 2017. As with state unemployment insurance (SUI) returns and taxes, employers file their EMAC quarterly reports and pay the associated tax electronically via UI Online. Legislation enacted in mid-2014, and effective January 2015, which increased the state unemployment insurance (SUI) taxable wage base to $15,000, froze the SUI rate schedule for calendar years 2015-2017, and raised the minimum wage incrementally to $11 by 2017, also modified the EMAC. (SB 2195, Chapter 144.) The legislation increased by one year the number of years of liability necessary to achieve a SUI experience rate. This also changed the number of years a new employer is exempt from the EMAC. As a result, newly liable employers are exempt from the EMAC for up to the first three years of liability (changed from up to two years of liability) and are assigned a special EMAC rate in the fourth and fifth years of liability (previously, the third and fourth years). Employers that have been liable for six years (formerly five years) receive the fully-liable EMAC rate (currently 0.34%).
Document ID: 2017-0362 | |||||||||||
