If you are a Massachusetts small business with at least six, full or part-time employees whose non-disabled employees are on a state subsidized healthcare plan like the ConnectorCare program OR MassHealth, then get ready for your first quarterly fine due by April 30, 2018!
Massachusetts is not alone in trying to plan for an expected $460 million budget deficit in 2018 due to its rising, publicly-subsidized healthcare costs. With a $550 million Medicaid shortfall, Oregon legislators opted to shift the focus from businesses to insurers and hospitals, with an “assessment” of a 1.5% tax on premiums and a new .7% tax on healthcare providers, presumably to avoid having more companies leave the high-tax state, but Massachusetts’ new law will undoubtedly have broad impacts on small businesses.
The Employer Medical Assistance Contribution Supplement is in effect January 1, 2018-December 31, 2019.
The EMAC supplement payment, which is really a penalty for not paying for employee healthcare benefits, is a 5% contribution applied to a wage base of up to $15,000 for each employee’s annual wages. It impacts:
- Businesses with more than five employees.
- Who do not pay for healthcare benefits or whose employees choose not to accept them.
- Who have non-disabled workers who get insurance through MassHealth or subsidized coverage through ConnectorCare for a continuous period of 14 days. (There is an exclusion for the premium assistance program).
- Whose employees earn over $500.00 in a quarter. The EMAC maximum charge is $750 per year per employee.
The Bottom Line
Rather than the Legislature considering more permanent measures to stabilize healthcare spending through reforms, it chose to place a $200 million burden on the employer community. Although H.3822’s new fees will be offset by a reduced increase in state unemployment insurance (SUI) rates, there are a number of pain points in this bill.
First, the law applies even if an employee declines/waives the employer’s sponsored healthcare plan. Let’s face it. If they can get insurance cheaper through the Connector or FREE on MassHealth, who can blame them?
Secondly, as the penalty applies to a wage base up to the first $15,000, if a worker earns it all in the first quarter, it will cost the business $750 payable in that quarter for that one employee. There is no monthly payment plan option over the course of a year.
Thirdly, it leaves open the possibility of employers pressuring employees to accept company benefits that are more costly or possible discrimination against potential employees who are on a state subsidized plan.
H.3822 is a penalty to be reckoned with and it’s going to hurt! If you are a business with over 5 employees and are looking to hire additional employees over the next 2 years, find out how using Partnership Employment can help you avoid these hefty fines.