As a business professional, it’s important to stay on top of state-specific employer laws and responsibilities. Each state has different rules and regulations, and you may have more tax responsibilities than employers in other states.
Massachusetts employers with over six full-time employees are subject to the Employer Medical Assistance Contribution, or ‘EMAC’. Additionally, Massachusetts employers might also be required to pay the temporary EMAC supplement tax, which went into effect in 2018.
The EMAC tax and the EMAC tax supplement are two different entities. We explore EMAC in depth and answer FAQs in this comprehensive review. And, we’ll show you how software can help you manage this cumbersome manual process.
What is EMAC?
The Employer Medical Assistance Contribution was first signed into law in 2014; it replaced the Unemployment Health Insurance (UHI) contribution. The legislation enacted a supplemental tax which funds health insurance programs in the state of Massachusetts.
The goal of the program is to help incentivize companies that offer a group health plan to enroll as many employees as possible in the group health plan and to keep people off of the state’s health plan programs.
In 2017, another act was signed into law that temporarily changed the existing EMAC contributions. The result created a temporary supplemental contribution and changed the unemployment insurance rate schedule. These newly updated employer contributions are effective for employee wages paid between January 1, 2018 – December 31, 2019.
Modifications to the new, temporary EMAC contributions include:
- A decrease in the scheduled unemployment insurance experience rate
- A temporary increase in the existing employer contributions
- A temporary supplemental contribution for employers with employees covered under MassHealth (the Massachusetts Medicaid program) or subsidizing coverage through the ConnectorCare program
What is the EMAC tax rate?
EMAC tax is based on two variables: how many years your company has been EMAC eligible and your employees’ individual wages.
The previous EMAC rate was 0.34% up to the annual wage cap of $15,000, with a maximum cost of $51 per employee per year. For wages paid in 2018 and 2019, the EMAC contribution will increase to 0.51% up to the annual wage cap of $15,000, which increases the maximum cost per employee to $77 per employee.
When you submit your company’s employment and wage detail report to the Department of Unemployment Assistance, they will send you a notice with your updated rate.
Employers are exempt from EMAC is a quarter when the average employee count is fewer than six or when an employer meets the definition of ‘newly subject’, meaning they have been in business for less than four years.
What is EMAC Supplemental Tax?
The EMAC supplement tax equates to 5% of the first $15,000 in annual earnings ($750 maximum) for each non-disabled employee who is enrolled in a state-subsidized health plan (MassHealth or ConnectCare)—regardless of whether the employer offers a group health plan or whether the employee is a full-time or part-time employee.
Remember, this supplement is an additional fee on top of the increased EMAC liability taxes.
What is the reason for the EMAC supplemental tax?
The state of Massachusetts has seen a substantial increase in the cost of health care coverage from employer-sponsored insurance to publicly subsidized coverage, which, in turn, increases the cost to taxpayers. The overall shift from commercial health coverage to public coverage has led to significant growth in MassHealth spending. The temporary tax increase in the employer medical assistance contribution will help offset the cost for employees on subsidized coverage while a longer-term solution is implemented. And, the overall goal of the EMAC program is to ensure that individuals are not enrolled in a state health program when they have access to an employer-sponsored plan.
How much is the EMAC supplement per employee?
The supplemental tax rate is 5% of an employee’s annual wages with an annual wage cap of $15,000, resulting in a maximum annual liability of $750 per affected employee.
The supplemental tax is to be paid in addition to standard EMAC tax rates.
Who has to pay the EMAC supplemental tax?
The EMAC supplement applies to employers with more than five employees in the state of Massachusetts whose non-disabled employees obtain health insurance from a state-sponsored health plan (MassHealth or ConnectCare). The employee must also be enrolled in the state-sponsored health plan for more than eight weeks during a quarter. The contribution does not apply to employees who earn less than $500 in wages per quarter.
How Do I Maintain EMAC Compliance?
Employers in the state of Massachusetts must file and submit their quarterly EMAC tax liability report to the Department of Unemployment Assistance (DUA).
Who is Subject to EMAC?
Employers that have more than five employees and that are over three years old are subject to EMAC regulations.
Employers with five or fewer employees are exempt, and all companies are exempt their first three years in business.
How Do I Report And Pay EMAC?
Of course, the number one question on everyone’s mind is how to expedite the compliance and payment process for EMAC. Luckily for you, solutions exist that can easily be customized to automate the process.
At PlanSource, we offer customizable benefits technology to simplify the complex. The platform can be configured with customized questions on the front end of benefits enrollment where employees would designate their election of the EMAC provided coverage with an electronic signature. This can be pulled via a simple report to get a complete roster of all employees who have gone this route.
In addition, the platform can be configured with declination reasons on the medical benefit election page, which include “elected state provided plan”. All declination reasons in the platform can be run via report as well and gives a great line of site in advance of any fees/financial “penalties” issued as a result.
PlanSource is proud to offer a user-friendly and intuitive administrative process to help manage EMAC in comparison to cumbersome, manual processes that can result in costly mistakes and fines.
⚡️ Supercharge Your EMAC ⚡️
Are you ready to put your compliance on cruise control? Contact us below for a free demo of how PlanSource can help automate your EMAC!