22 August 2017 Massachusetts Employer Medical Assistance Contributions increase starting in 2018, new tax for employees opting for public health care, cost partially offset by lower state unemployment insurance taxes Massachusetts Governor Charlie Baker recently signed legislation (HB 3822) into law that effective in 2018 increases the Employer Medical Assistance Contribution (EMAC) and adds a new second tier tax to partially fund the $600 million MassHealth shortfall. These added taxes will be offset by a decrease in future employer state unemployment insurance (SUI) rates. As we reported previously, the EMAC increase and SUI rate decrease were part of a proposed MassHealth compromiseplan sent by the governor and the business community to the state legislature to replace the previously proposed $2,000 per employer fair-share contribution. Other parts of the Baker Administration/business community compromise plan that would have made long-term structural changes to MassHealth to solve the shortfall problem did not make it into the final legislation. The legislation provides for a two-year rate increase (2018-2019) in the current EMAC, offset by a two-year SUI rate decrease. Employer EMAC taxes will 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, applicable to employers with six or more employees, is increased to 0.51%, up from the current 0.34% for fully-subject employers, raising the cost per employee from $51 to $77. Other EMAC rates assigned to newer employers are similarly changed. A second tier is 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 health care plan rather than the employer's plan. The law replaces the SUI automatic increase by three levels from the Rate Schedule F (as originally proposed for 2018) to Rate Schedule D for calendar year 2018 and to 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%. It is anticipated that guidance will be forthcoming concerning how the new second tier assessment will be determined and enforced pursuant to nondisabled employees who have elected public health care rather than the employer's plan. In the meantime, employers can prepare by determining how best they will identify Massachusetts employees who have enrolled in the state's public health plan or otherwise receive state-subsidized coverage. Document ID: 2017-1357 |
