Massachusetts DUA Releases Updated FAQs on EMAC Contributions That Incorporate the Final Regulations

The Massachusetts Department of Unemployment Assistance (DUA) recently released an updated set of FAQs that add an additional five Q&As to generally incorporate the final regulations for the Employer Medical Assistance Contribution (EMAC).

As background, the EMAC rules generally impose additional employer fees on employers with at least five employees, regardless of whether the employers offer health coverage to their employees. In August 2017, MA passed “An Act Further Regulating Employer Contributions to Health Care” (the Act) that, among other things, increased the EMAC and imposed a tax penalty, or “EMAC Supplement.” The Act applies only for 2018 and 2019, and it increases the EMAC fee from $51 per employee to $77 per employee. It also adds a temporary EMAC supplement contribution (for 2018 and 2019) that applies when non-disabled employees who aren’t eligible for an employer group health plan have coverage through the state (which may include MassHealth or the MA ConnectorCare Program). This EMAC supplement is based on the wages of employees who receive health-subsidized coverage and is applied to part- and full-time employees. The time-limited increase in the EMAC and additional supplement are intended to help offset the costs for employees on subsidized coverage while longer-term reforms are established and implemented.

The EMAC final regulations are generally the same as the proposed regulations but include some minor modifications. One difference is to the definition of “Liability for EMAC Contribution Supplement” that extends the days required for an employee to be covered through MassHealth or ConnectorCare before a payment is assessed. Specifically, the covered employer is liable for a payment of the EMAC Supplement if one or more non-disabled employees receive health insurance coverage through MassHealth or ConnectorCare and coverage continues for at least 56 days (as opposed to the 14 days provided for in the proposed regulations). Also note that the employer won’t be liable for a payment for employees who only enroll in the MassHealth Premium Assistance Program.

A second difference is that the final regulations clarified that cities, towns, regional school districts and educational collaboratives aren’t considered covered employers and, therefore, aren’t subject to or liable for the EMAC supplement, except under limited circumstances. The final regulations also include a provision on how to determine the date of receipt of an electronically transmitted notice of determination by the DUA.

Employers should work with tax counsel and payroll providers to make adjustments relating to the increased EMAC and potential supplemental contributions as well as any potential change within the final regulations’ provisions relating to the payment and collection of contributions or payments.

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