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Massachusetts Proposed $2,000 Per Worker Health Insurance Tax

By Eastern Benefits, Jan. 27, 2017
Massachusetts Proposed $2,000 Per Worker Health Insurance Tax

Massachusetts Proposed $2,000 Per Worker Health Insurance Tax

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Massachusetts employers may face major tax assessments in 2018 to make up for the state’s deficit in MassHealth (Medicaid) funding. MassHealth is the state’s largest expense (approximately 40% of the entire state budget) and it has been increasing significantly each year since the passage of the Affordable Care Act due to the ACA’s Medicaid expansion rules. 

To make up for some of the MassHealth deficit, the FY 2018 proposed budget, submitted by the Baker Administration on January 25, calls for a $2,000 per full time equivalent employee assessment on businesses with more than 10 employees if the employer does not contribute at least $4,950 towards each full time employee’s health care and have an 80% take up rate (participation rate) in a group health plan.

Full time employees are defined as those working 35 hours per week. The proposed tax would be assessed on a prorated basis for all full time equivalent employees and a formula based on the employers actual health plan participation rate. Assessments would be made on a quarterly basis. 

The governor is also attempting to tackle the actual cost of health care in his budget by proposing a cap on what health care providers are allowed to charge for their services. This will certainly get a ton of push back from the health care provider community.  

Please keep in mind that this is a “proposed” budget and many of the details are still vague and need to be fleshed out. The budget procedure is a long and arduous process that needs to pass in the Massachusetts House and Senate. We expect to see much debate of this proposed assessment over the coming months.  

Eastern Benefits will continue to keep you informed of important updates and changes as they occur. In the meantime, employers may wish to contact their state senators and representatives to voice their concerns over these proposed assessments. 

Helpful Links: 

Proposed Assessment Will Hurt Employers Who Provide Health Insurance

Taxpayers Foundation Analysis of Governor Baker’s FY 2018 Budget 

Massachusetts Budget Process 

Gov. Charlie Baker Defends Proposed $2,000 Per Worker Health Insurance Fee 

Find My Legislator (Massachusetts) 

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