State And Federal Government Move To Enforce Employer Health Care Assessments

On Tuesday, November 7, 2017, the Massachusetts Executive Office of Labor and Workforce Development issued proposed regulations to implement the Employer Medical Assistance Contribution (EMAC) supplemental assessment that was signed into law by Governor Baker this summer. At nearly the same time, the Internal Revenue Service announced that it would begin enforcement of the employer mandate enacted as part of the federal Affordable Care Act. Employers and human resources managers should pay close attention to these developments.

The Massachusetts law increases the existing EMAC contribution and implements a temporary supplemental contribution. It applies to wages paid beginning January 1, 2018 and, as of now, is scheduled to expire at the end of 2019. The Affordable Care Act imposes a penalty on employers that fail to offer health insurance or that offer health insurance that is not affordable or that does not offer minimum value. The penalty is triggered when at least one employee receives a subsidy for a health plan purchased on an Exchange.

Massachusetts Supplemental EMAC Contribution

The Baker Administration and Massachusetts Legislature acted to impose the supplemental EMAC contribution because of an observed increase in public health insurance coverage (especially MassHealth) and a concomitant decline in employer-based health insurance coverage at a time when the economy is stable and unemployment is low. Earlier this year, Governor Baker proposed a package of reforms to the MassHealth program, the Connector, and the employer health insurance market to address this increase in publicly-sponsored coverage. (For more details, see our July 11, 2017 blog post and client alert.) Governor Baker's proposed Medicaid reforms are currently under review by the U.S. Department of Health and Human Services.

Under the new state law, the existing EMAC contribution, first enacted in 2014 and imposed on employers of more than five employees, will increase from 0.34% of the first $15,000 in wages to 0.51%. This will result in a maximum cost to employers of $77 per employee. In addition, a new supplemental assessment will apply to employers of more than five employees if at least one of those employees receives coverage through MassHealth or the Connector for a period of more than 14 consecutive days. The supplemental assessment is equal to 5% of the first $15,000 in wages, for a maximum assessment of $750 per employee.

The new regulations implement the...