A coalition of businesses led by Associated Industries of Massachusetts (AIM) is asking the legislature, specifically the state House Ways and Means Committee, to allow, at minimum, the increase to the Employer Medical Assistance Contribution (EMAC) to expire at the end of 2019 as provided for by law. The governor's FY 2020 budget proposal assumes the increase to the EMAC will sunset by the end of calendar year 2019; however, there has been some discussion of extending the increase.

AIM has gone further to request that legislation be enacted that would repeal the EMAC increase for calendar year 2019, pointing out the state has collected millions more dollars than anticipated in 2018. According to AIM, by the time the EMAC assessment sunsets in 2019, Massachusetts businesses are anticipated to pay 30% more than the $400 million intended under the 2017 legislation. (HB 1647.)

2017 legislation increased the EMAC for 2018–2019

As we reported, 2017 HB 3822 increased the EMAC for two years (2018–2019) and added a second-tier tax to partially fund the $600-million MassHealth shortfall. These added taxes are offset by a two-year decrease in employer state unemployment insurance (SUI) rates. These changes were part of a proposed 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. (EY Payroll NewsFlashes Vol. 18, #113, 6-30-2017, #143, 8-21-2017, #185, 11-2-2017 and #191, 11-10-2017; and Vol. 19, #025, 1-28-2018.)

2018–2019 EMAC rates

According to the Department of Unemployment Assistance, the 2018–2019 EMAC rates are assigned as follows:

• New employers. New employers subject to unemployment contributions for their first time are exempt for the first three years
• Year 4. Employers in their fourth year of being subject to EMAC pay at a rate of 0.18% (up from 0.12% for years prior to 2018)
• Year 5. Employers in their fifth year of being subject to EMAC pay at a rate of 0.36% (up from 0.24% for years prior to 2018)
• Year 6 and over. Employers in their sixth year or more of being subject to EMAC pay at a rate of 0.51% (up from 0.34% for years prior to 2018)

Employers are exempt from the EMAC in a quarter in which they have fewer than six employees and are in their first three years of being "newly subject" under the unemployment insurance law.

Employers of six or more employees pay EMAC contributions on the first $15,000 of each employee's wages paid during the calendar year.

Employers that paid an EMAC rate of 0.36% in 2018 will pay a rate of 0.51% for calendar year 2019, except for those meeting exempt or reduced rate criteria. Employers operating within 3 years following the "Newly Subject" status as of MGL 151A, pay at rates of 0.18% and 0.36% respectively.

Second-tier EMAC information

For 2018 and 2019, a second-tier EMAC was created to require applicable employers to pay an additional 5% on the employee's taxable wages if the nondisabled employee receives health insurance coverage through the Massachusetts Division of Medical Assistance (MassHealth) or subsidized insurance through the Massachusetts Health Insurance Connector Authority (ConnectorCare) rather than through the employer's plan.

The taxable wage base for the second-tier EMAC is also $15,000 (5% times $15,000 = a maximum of $750 per employee).

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EY Payroll News Flash