Massachusetts Employers: Prepare for Supplemental Unemployment Tax Assessments

Massachusetts employers will soon see the impact of House Bill 3822, signed last year by Governor Charlie Baker. In an effort to offset the significant shift from commercial to publicly subsidized health care coverage, in 2018 and 2019, there will be an increase in the existing Employer Medical Assistance Contribution, as well as a new supplemental fee for employers whose non-disabled employees either receive coverage through the Massachusetts Division of Medical Assistance (MassHealth) or have their coverage subsidized by the Massachusetts Health Insurance Connector Authority (ConnectorCare).

Beginning in the first quarter of 2018, all employers will likely see an increase in their existing EMAC, assessed through the Department of Unemployment Assistance. The increase is intended to be temporary and applicable to wages paid in calendar year 2018.

Additionally, employers with more than five employees who are non-disabled and receive health care coverage through MassHealth or receive subsidized care through ConnectorCare for a period of at least 56 continuous days, will be assessed a supplemental fee of up to 5% of a covered employee’s unemployment insurance taxable wages (up to a cap of $750 per covered employee). The assessment will be based on wages on record with the DUA for the employer, and will apply to both full and part-time employees. There are scant few exceptions to this EMAC Supplemental Contribution, but one is that an EMAC Supplemental Contribution will not be assessed for any employee in any quarter who receives health insurance coverage through MassHealth or ConnectorCare on the basis of permanent or total disability.

Employers also need to be aware that the DUA’s assessment determination may only be appealed within 10 days of receipt by the employer of the determination notice. Further, because the determination notice is presumed received as early as the date of electronic transmission from the DUA, employers need to check their online DUA accounts to ensure that they have not lost the opportunity to appeal an EMAC Supplemental Contribution assessment.

Although the EMAC Supplemental Contributions currently are intended to apply to wages paid in calendar year 2018, there is a possibility that this program may be extended into future years. So in-house counsel, and anyone responsible for paying unemployment taxes, should stay tuned.