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Massachusetts Legislature Proposes Limited Relief for Employer Medical Assistance Contribution (EMAC) Supplemental Payments

In a series of blog posts going back to last August, we reported on certain amendments to the Massachusetts Employer Medical Assistance Contribution (EMAC) rules. As we previously explained, the EMAC contributions are required of employers with more than five employees in Massachusetts. Last year’s amendments increased the basic EMAC annual fee to $77 per employee from $51 per employee and added a new, supplemental penalty of up to $750 for each non-disabled worker who receives health insurance coverage through MassHealth or who opts out of employer-provided coverage and instead receives subsidized coverage from the Massachusetts Health Connector (i.e., the Commonwealth’s Affordable Care Act marketplace). While the EMAC penalties seemed relatively innocuous when viewed in isolation, the actual amounts of the supplemental payments turned out in many cases to be substantial. Small employers are being particularly hard hit.

Responding to a drumbeat of alarms from trade associations and employers, the Massachusetts Legislature has proposed an amendment to the EMAC rules providing for hardship waivers. The provision, which is included in Section 68 of H. 4800 (“An Act making appropriations for the fiscal year 2019”), reads as follows:

SECTION 68. Chapter 63 of the acts of 2017 is hereby amended by inserting after section 14 the following section:

Section 14A. (a) The director of unemployment assistance, in consultation with the secretary of administration and finance, shall develop and may approve a hardship waiver for an employer experiencing a financial hardship due to its liability under an increased contribution pursuant to section 3, 5, 7 or 9. In evaluating eligibility for a hardship waiver under this section, special consideration may be given to businesses including, but not limited to: (i) businesses with limited or variable revenue; (ii) small businesses; (iii) employers with seasonal or temporary employees; and (iv) employers providing services that serve the public interest. The hardship waiver may reduce or fully exempt an employer from its liability under an increased contribution.

In addition, Section 68 of H. 4800 holds out the prospect of an extension of the due date of contributions. It provides:

(b) The director of unemployment assistance, in consultation with the secretary of administration and finance, shall develop and may approve procedures for providing advanced notice and extending the due date of a contribution required under section 9. The director may provide notice of the procedures for requesting an extension to an employer at the same time and in the same manner as the notice of a liability determination.

The full contours and extent of the relief afforded by these proposed amendments are not yet known. The Division of Unemployment Assistance (in consultation with the Executive Office of Administration and Finance) would first need to issue regulations. While regulations should give employers some sense of the scope of relief, the practical scope of the relief will not be known until the Division of Unemployment Assistance starts processing—and approving or denying—hardship applications or requests for payment extensions.

We understand that these amendments to the EMAC rules are likely to be enacted into law, either with the consent of the Baker Administration or over its veto. Until this legislation is enacted, and implementing regulations proposed and adopted, the current law remains in place. This means that employers are exposed to and must timely pay penalties or risk sanctions even in the case of amounts under appeal.

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Special thanks to Julie Cox, Senior Vice President of Government Relations & Manager of Operations, ML Strategies, for her help with this post.

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Author

Alden J. Bianchi

Member / Chair, Employee Benefits & Executive Compensation Practice

Alden J. Bianchi is an employee benefits and compensation attorney at Mintz. He advises clients on retirement plans, compensation arrangements, ERISA issues, benefits issues in mergers and acquisitions, and health and welfare plans. Alden is an authority on health care reform.