As a small business owner, you need to stay on top of your state-specific employer responsibilities. Because each state has different laws, you may have more tax responsibilities than an employer in another state.
If you are an employer in Massachusetts, you might be required to pay the employer medical assistance contribution (EMAC) tax. You may also be required to pay the temporary EMAC supplement tax.
The EMAC tax and EMAC supplement tax are separate. Learn what both taxes are, whether you need to pay them, and your filing responsibilities below.
What is the employer medical assistance contribution tax?
The employer medical assistance contribution tax is an employer-only tax Massachusetts employers with six or more employees pay. EMAC is a percentage of each employee’s wages. Massachusetts employers must file and report their quarterly EMAC tax liability to the Department of Unemployment Assistance (DUA).
As a Massachusetts employer, you must pay EMAC tax in addition to your state unemployment insurance (UI) tax liability and Workforce Training Fund Program contributions. EMAC tax contributions fund health insurance programs in Massachusetts, not unemployment or workforce training programs.
Even if you offer employer-sponsored health insurance to your employees, you must pay the employer medical assistance contribution tax if you have six or more employees.
When you submit your employment and wage detail report to the DUA, they will determine if you must pay EMAC tax. If you are required to pay the tax, the DUA will send you a notice with your rate.
You do not need to pay EMAC tax during a quarter where your average employee count is less than six. And, employers are exempt from paying EMAC tax for up to three years after becoming subject to Massachusetts’ unemployment insurance law.
2018-2019 contribution rates
Your EMAC contribution rate depends on how long you have been subject to the unemployment insurance law. Massachusetts uses a tiered system to give newer employers a reduced EMAC rate.
The contribution rate is a percentage of the first $15,000 of each employee’s wages. After an employee earns $15,000, do not contribute EMAC tax on their wages.
Here are the 2018-2019 EMAC rates for employers:
After six years of being subject to unemployment insurance law, all employers pay the same rate of 0.51% for EMAC tax.
What is the EMAC supplement tax?
The EMAC supplement tax is a 2018-2019 tax qualifying employers contribute for each of their non-disabled employees who obtain health insurance from MassHealth or subsidized coverage through the Massachusetts ConnectorCare program.
EMAC supplement is a temporary program to help cover the costs of employees who are on subsidized coverage. EMAC supplement tax funds MassHealth (Massachusetts’ Medicaid and Children’s Health Insurance Program) and Massachusetts ConnectorCare programs.
The employer medical assistance contribution supplement tax does not take the place of the EMAC tax. Employers who are required to pay the EMAC supplement tax pay it in addition to EMAC tax, state unemployment tax, and workforce training contributions.
Not all Massachusetts employers who pay the EMAC tax pay the EMAC supplement tax. And if you are exempt from paying the EMAC tax, you may still have to pay the EMAC supplement tax. You must pay the EMAC supplement tax if you meet all of the following qualifications:
- You have an average of six or more employees during a quarter
- At least one non-disabled employee obtains primary health insurance from MassHealth or subsidized coverage through the Massachusetts ConnectorCare program
- The employee is enrolled in one of the above health programs for more than eight consecutive weeks
- The employee earns wages of at least $500 per quarter
After submitting your employment and wage detail report, the DUA will send you a notice if you are required to pay EMAC supplement tax.
You can appeal the DUA’s determination if you have less than six employees, submitted wages for independent contractors instead of employees, or if employees have been using the qualifying health care for less than eight consecutive weeks.
2018-2019 contribution rate
The EMAC supplement tax is a standard contribution rate of 5% per qualifying employee’s wages, up to $15,000. The maximum amount you will contribute per applicable employee is $750 per year.
Only contribute EMAC supplement tax for non-disabled employees who are enrolled in one of the health care programs for at least eight consecutive weeks and earn at least $500 per quarter.
How to pay EMAC and EMAC supplement taxes
After submitting your employment and wage detail report, the DUA tells you which taxes you are responsible for. Then, the DUA calculates how much you owe for EMAC tax, EMAC supplement tax, state unemployment insurance, and workforce training.
Pay EMAC and EMAC supplement taxes through your unemployment insurance online account.
You can make payments to the DUA via paper check, ACH debit, or ACH credit.
Filing and payment due dates
File a wage detail report with the Department of Unemployment Assistance and remit your liability.
You must file your wage detail report and pay EMAC tax, EMAC supplement tax, state unemployment tax, and workforce training contributions by 3 p.m. of the quarterly due dates:
- Quarter 1: April 30
- Quarter 2: July 31
- Quarter 3: October 31
- Quarter 4: January 31
The DUA charges late payers interest on unpaid liabilities at an annual rate of 12%.
What happens after 2019?
The EMAC supplement tax is only in place during 2018 and 2019. After 2019, the Massachusetts legislature will replace the supplement tax with a more sustainable solution.
More information will be available on Massachusetts’ government website toward the end of 2019.
Need help calculating and withholding your EMAC tax and EMAC supplement tax? Patriot’s online payroll software has you covered. After you enter your employee information, our software will automatically calculate your EMAC tax contribution amounts. Get your free trial today!
This is not intended as legal advice; for more information, please click here.