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Last month, on August 1st, Governor Charlie Baker signed into law S. 3822<https://malegislature.gov/Bills/190/H3822> “An Act Further Regulating Employer Contributions to Health Care.”  This new law which will take effect in 2018 will apply to all employers with 6 or more employees residing in Massachusetts.  It imposes a penalty of up to $750 for each active employee who is enrolled in either Mass Health or who receives subsidized coverage through the Mass Health Connector.  In addition, it raises the Employer Medical Assistance Contribution (“EMAC”) from it’s current annual maximum fee of $51/worker up to $77/worker.

This change is a temporary increase in fees and penalties to help offset the approximately $300 million budget deficit faced by the state’s Medicaid and Children’s Health Insurance Programs (CHIP).  Together the increased EMAC fee and penalty are expected to generate approximately $200 million, far less than what is needed to fix the shortfall.  Other proposals, including limiting the eligibility rules for MassHealth to restrict people who have coverage available through their employer were considered but not adopted.  As this will not solve the Medicaid budget deficit, we expect that the legislature will look to other areas for cost control in the future.  The additional fee and penalty will apply for two years, ending on December 31st, 2019.

Both the EMAC fee and the penalty are going to follow Mass unemployment insurance contributions, and the assessments are likely to be paid through the Department of Unemployment Assistance.  The EMAC will be based on .51% of wages up to $15,000, while the penalty (only for those workers covered by either Medicaid or a subsidized Health Connector plan) will be assessed 5.00% up to $15,000 in wages.  Based on the wage caps that could result in fees of $77 and $750 per worker, respectvely.

Please let us know if you have any questions.

Sincerely,

Matt Hollister, L.I.A., M.P.H.