Some Cape business owners were caught off guard earlier this year when they got a sudden, unexpected bill from the state—a penalty for employees who qualify for Mass Health or the Health Connector, instead of employer-offered plans.
The fee—called the Employer Medical Assistance Contribution supplement, or EMAC for short—cost some businesses thousands of dollars. This supplement is in addition to fee employers pay for each worker—that’s $77 per worker.
It’s the state legislature’s way of trying to pay for the increasingly high costs of subsidized health care, but it’s pinching many local businesses.
WCAI's Kathryn Eident talked with Curran Leahy-Lonigro, a local lawyer who specializes in employment law, to better understand what’s going on. Eident also talked with WCAI producer Hayley Fager about an ammendment in the Senate budget aimed at easing the burden for local businesses.
Eident: Can you explain the Employer Medical Assistance Contribution supplement changes that have caught some local businesses off guard?
Leahy-Lonigro: There's confusion because you can be assessed penalties for employees that are not eligible for your insurance and employees that are subject to mandated insurance under the Affordable Care Act. So, I think that's a source of confusion. And then the amount of the penalty is certainly more substantial than the pure contribution side. The penalty is 5% of wages, capped at $15,000—up to $750 per employee, per year.
Eident: This supplement was put in place because of the rising costs of the state and to run things like Mass Health, correct?
Leahy-Lonigro: The changes to EMAC were part of a larger appropriation bill. The governor initially rejected the bill, saying the Legislature needed to take a more balanced approach to funding Mass Health. So, the governor went back and said, ‘you know let's try to think of additional things so that employers aren't burdened.’ But, the House and the Senate rejected that. So, certainly people in the business community were hoping that the governor would veto the bill. Again, he did not. But some of his statements indicated that his hope and his expectation was that the House and Senate would come through with additional reforms.
Eident: Have you been hearing from small businesses on the Cape about this; that they're getting pinched?
Leahy-Lonigro: We've certainly been hearing from folks who are have penalties in the five figures. And so, figuring out how to budget for an expense like that is difficult. And then the options for lowering the penalty in future quarters are not all that great for people, because it may be even more costly to add certain folks to your health insurance. So, it's definitely a burden on employers of all sizes. And I think the smaller employers are feeling the pinch more.
Eident: So how does an employer, especially a small business, try to budget for a fee of this level?
Leahy-Lonigro: It's not an easy answer. One of the things that we've been talking to our clients about is possibly creating a form that you can use to get that information from your employees. You certainly can't require that they sign up for your coverage, but you can at least ask the question so that you have an understanding of if they're not on your insurance, what insurance are they electing? Therefore, you know whether they may pose a penalty for you.
Eident: I think it's interesting that if you offer insurance to an employee and they don't elect to take it, you end up, as a business owner, facing a penalty.
Leahy-Lonigro: Well, I think this is one of the areas that will get cleaned up over time. Right now, what is happening for some employers is that they're being penalized for employees who are eligible for their coverage and have not elected it. That's not an outright basis to appeal a penalty. However, Mass Health eligibility requirements say that an individual cannot sign up for Mass Health if they receive affordable coverage from their employer.
So, that's something that's really important for employers to be aware of is: what is the definition of affordable coverage and are they providing that to their employees? If they're not, they may want to do an assessment to say what would it cost us to increase our contribution to our health plans so that we are considered quote unquote affordable there for our employees if they're eligible for our plan would not be eligible for Mass Health and would therefore not garner us a penalty.
Eident: There is a sunset clause--is that a hopeful thing, or is there worry that in the meantime lawmakers could make this permanent?
Leahy-Lonigro: I think there's both hope and worry. The clause says that as of December 31, 2019, the supplement will go away, and the contribution will be lowered again. I think employers are hopeful that it will actually sunset when it says it will. But I think folks are scared also that start to flow on a regular quarterly basis. We may not see the other reforms made and therefore this will continue.
Eident: That was Curran Leahy-Lonigro, a lawyer who specializes in employment law at the Falmouth-based firm, Foley and Foley P.C. With me now in studio is Morning Edition Producer Hayley Fager with some information on a bill filed by Cape Senator Julian Cyr to provide some relief to businesses that feel crunched.
Fager: Cyr’s proposed amendment is a waiver for businesses that can't pay the fees. Any business can apply for the exemption if the EMAC payment would exhaust cash on hand or seriously harm their business.
The Baker administration can offer partial or full waivers and they’ll consider if businesses have limited or variable revenue. That could include things like being a seasonal business. And they can give extra consideration to employers that serve the public interest.
There's also language in the amendment to extend due dates and have advanced notice for EMAC invoices, so people don't get surprised and have to pay last minute again.
*This transcript was lightly edited for grammar and clarity.