Massachusetts Governor signed into law H. 3822, “An Act Further Regulating Employer Contributions to Health Care,” on August 1, 2017. The Act will temporarily increase current employer fees and impose new penalty fees on employers, which will help finance the Commonwealth’s Medicaid and CHIP Programs, known as MassHealth. The Act will be applicable 2018 and 2019 and will sunset on December 31, 2019.


The Act significantly effects Massachusetts employers with more than five employees. The Act:


Increases the required Employer Medical Assistance Contribution (EMAC) to annual maximum of $77 per employee from $51 per employee. Employers with an average of six or more employees per quarter are required to make EMAC contributions. Newly eligible employers follow a phased-in schedule.


Imposes employer penalty assessments up to $750 (5% of annual wages) for each non-disabled employee who receives health coverage through MassHealth or opts out of employer coverage and receives subsidized coverage through the Marketplace (Massachusetts Health Connector.)


The taxable wage base for both the increased EMAC contribution and the penalty fees remain at $15,000. The Act’s new fees will be offset by a two-year decrease in employer state unemployment insurance (SUI) rates in the future.


The Act replaces the SUI automatic increase by three levels, going from Rate Schedule F (originally proposed for 2018) to Rate Schedule D for calendar year 2018 and to Rate Schedule E for 2019.


Employer SUI tax rates for calendar year 2017 are currently assigned under Rate Schedule C, ranging from 0.73% to 11.13%.


We anticipate additional guidance, including rules for payment of assessed penalties from the agencies in the coming months.



Thank you for choosing Paylocity as your Payroll Tax partner. Should you have any questions please contact your Paylocity Account Manager. 


      This information is provided as a courtesy, may change and is not intended as legal or tax guidance. Employers with questions or concerns outside the scope of a Payroll Service Provider are encouraged to seek the advice of a qualified CPA, Tax Attorney or Advisor.