30 June 2017 Massachusetts Governor Baker proposes increase in employer taxes to cover MassHealth shortfall — cost partially offset by lower state unemployment insurance taxes Massachusetts Governor Charlie Baker recently sent to the state legislature a proposed plan to partially fund the $600 million MassHealth shortfall with an increase in employment taxes. This plan would replace the previously proposed $2,000 per employer fair-share contribution. Per the Associated Industries of Massachusetts blog, the proposal was the result of a compromise between the Baker Administration and the business community. The plan provides for a two-year rate increase (2018-2019) in the current Employer Medical Assistance Contribution (EMAC), offset by a two-year state unemployment insurance (SUI) rate decrease. As proposed, employers' EMAC taxes would increase by $200 million per year while the SUI rate decrease is expected to save employers $335 million over the two-year period. The EMAC, which only applies to employers with six or more employees, would be increased to 0.51%, up from the current 0.34% for fully subject employers, raising the cost per employee from $51 to $77. A second tier would be created to require applicable employers to pay an additional 5% (up to $750) in EMAC taxes per nondisabled employee if the employee is signed up for a public healthcare plan rather than the employer's plan. The taxable wage base would remain at $15,000 in both cases. The SUI proposal would replace the law's automatic increase by three levels to Rate Schedule F that is due to occur on January 1, 2018, to Rate Schedule D for calendar year 2018 and Rate Schedule E for 2019. Employer SUI tax rates for calendar year 2017 are currently assigned under Rate Schedule C, ranging from 0.73% to 11.13%. As we previously reported, the governor had 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 would have amounted 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. It seems likely that the FY 2018 budget impasse will continue past the start of the July 1, 2017 fiscal year. On June 26, 2017, the governor approved legislation that continues to fund the state government until final action on the FY 2018 general appropriations bill is taken. Document ID: 2017-1054 |
