Employer Medical Assistance Contributions

Over the last decade, a seemingly mundane topic has come to dominate the political debate. At the state and the federal levels, healthcare and the method by which it is funded have grown into contentious issues capable of eliciting heated discussion. This is especially true in Massachusetts, a state which struggles with ever rising medical costs despite serving as home to some of the nation’s leading hospitals. Just this past April, the state’s House of Representatives included a $16 billion allocation to MassHealth in their state budget proposal. Compared to the budget as a whole, that amounts to forty one percent of all proposed spending by the Commonwealth.

Recognizing this challenge, Governor Baker attempted to encourage enrollment in private insurance programs. Last year, he proposed a two pronged approach. The Administration would address a growing deficit in the state insurance system by temporarily increasing the employer medical assistance contribution (EMAC) businesses pay on a quarterly basis. At the same time, it would have instituted reforms removing any individual with access to private insurance from MassHealth’s rolls, slowing the program’s growth. While businesses agreed to this compromise with the understanding that steps were being taken to address the underlying problem, the Legislature eliminated the proposed changes to MassHealth and left employers with no such assurances.

As though this were not bad enough, many business owners were shocked in April when they received their first quarterly “contribution”. The new EMAC appraisal established two tiers of assessment. The first increased the existing annual EMAC charge from $51 per employee to $77, an additional cost of fifty one percent! However, if an employee is identified as a MassHealth member, the second tier is applied. This sets the charge for such employees at five percent of their wage up to $15,000, setting annual charges as high as $750 an employee! Moreover, these taxes apply to businesses with as few as six employees, and include both seasonal and part time workers when calculating the charge.

Employers have been frustrated further by the fact that they were never made aware of which employees, if any, were enrolled with MassHealth. This prevented them from offering those individuals insurance or at least setting aside funds for a charge they could have otherwise anticipated. At this Chamber, one member reported receiving a bill for $6,000 the first quarter. As a restauranteur with tight margins and limited ability to provide his employees healthcare, this individual estimates his assessment to amount to $20,000 by the year’s end.

The Governor initiated this program with the intention of bridging a $260 million gap in MassHealth’s budget over two years. As of this month, the Commonwealth appears likely to achieve this goal early. If this occurs, we hope he will follow through on his promise to end this costly experiment and return the EMAC to its original levels. In the meantime, steps should be taken to mitigate the program’s impact on small businesses. For a small retailer or eatery dependent upon part time labor, an unexpected expense of $750 can have a devastating impact. If nothing else, the Administration can take a more active approach in notifying businesses of what their contribution is likely to be and informing them of which employees are in need of health insurance.

Any businesses impacted by this assessment should consider reaching out to their local legislators. A directory of the region’s state senators and representatives can be found at the Chamber’s website by clicking here. We ask that you share your experience and any questions you may have with us as well. Please call Christopher McDermott, the Chamber’s Public Affairs Manager, at 978.353.7600 ext. 224 or email him at cmcdermott@northcentralmass.com to do so. We are keenly aware of this program’s impact on local business and want to be sure that your voice is heard.