Employers Must Pay Fines for Employees with Subsidized Health Coverage

On August 1, 2017, Gov. Baker signed into law $200 million in new fees and fines on Massachusetts employers to help pay for employees who receive health insurance coverage through MassHealth or subsidized coverage through the Massachusetts Health Connector.

The new law, effective for a two-year period starting January 1, 2018, applies to employers with more than five employees. For every employee who has coverage through MassHealth or subsidized coverage through the Massachusetts Health Connector instead of coverage through the employer’s plan, the employer must pay a fine equal to five percent of the employee’s “wages” up to $750. Wages are defined as the “unemployment insurance taxable wage base,” which is $15,000 for 2017. Thus, the maximum fine is $750 ($15,000 times five percent equals $750).

The Department of Unemployment Insurance (DUI), in consultation with the Division of Medical Assistance and Health Insurance Connector Authority, is responsible for providing regulations for implementing the new law and once provided, employers must pay the fines in accordance with the regulations. Among many details the regulations will address are the number of days an individual must have MassHealth or subsidized coverage to trigger a fine.

The DUI will notify employers of any fines they must pay. Once notified, an employer may request a hearing provided the request is made within 10 days of receiving the notice.

Unfortunately, there is not much time between now and January 2018 for employers to plan for the new law and its potential impact on their budgets. Employers such as retail, hospitality, human services, and other industries employing a significant number of lower wage workers are likely to be most impacted.

The PS&A team will inform you when the regulations are published. Also, feel free to contact us with any questions or help needed.