UI Health Insurance Program
Massachusetts employers covered by the Unemployment Insurance Law are also liable for a health insurance contribution. The funds from this contribution provide health insurance for eligible unemployment insurance claimants. This health insurance is called the Medical Security Plan, which is administered by DUA.
Health insurance contributions receipts are deposited in the Medical Security Trust Fund. They are not credited to employers' UI accounts and are completely independent of the unemployment contribution trust fund.
DUA is responsible for the collection and processing of health insurance contributions which includes employer liability and wage determinations, as well as enforcement and employer auditing.
Employer Responsibilities
Payment of the health insurance contribution is similar to paying unemployment insurance contributions. In general, employers are required to report to DUA subject wages, the number of employees, and to remit payment of contributions each calendar quarter. Changes in ownership or operation status must be reported immediately, and employers must keep records of data provided to DUA, including any supporting documentation from which data is derived.
Each employer subject to the unemployment insurance contribution is also subject to health insurance contribution reporting requirements. This includes those employers who are in the reimbursable system.
Wages, Wage Base and Wage Exemption for Health Insurance
The definition of wages for health insurance contributions is the same as that for Unemployment Insurance contributions. The health insurance contribution wage base is the first $14,000 of an employee's wages paid during the calendar year.
Whenever an average of fewer than six employees are employed during a quarter, wages paid in that quarter are exempt. That is, they are not to be considered as part of the wage base for the quarter (or calendar year), nor are employers liable for payment of health insurance contributions. This does not change the definition of wages as forms of remuneration but only exempts those wages based solely upon the average number of employees in a quarter. Because wages are exempt, the average employee count precludes payment of health insurance contributions for any quarter in which fewer than six workers are employed. (Please see Liability Exemptions)
Liability and Liability Exemptions for Health Insurance Contributions
Employers must pay contributions on the first $14,000 of each employees wages paid during the calendar year. The amount of contributions due (or liability) is derived by multiplying these wages by an assigned rate. The result is the amount that must be paid as a health insurance contribution.When a quarterly contribution report is not submitted to DUA as required, the amount of liability cannot be established and therefore will be estimated.
Employers are not liable for payment of health insurance contributions in a quarter whenever the average employee count is fewer than six (because wages are exempt for that quarter).
Also, employers are exempt when they meet the definition of " newly subject ". That is, an employer is not liable for payment of health insurance contributions, for up to two years after first becoming subject to the Unemployment Insurance Law.
Reduced Liability
In addition, in the two years following expiration of the " newly subject " status, employer liability is reduced through two lower contribution rates for the two calendar years following the" newly subject " status. The liability exemptions and reductions are intended to ease burdens on newly formed businesses and organizations.Health Insurance Contribution Rates
The health insurance contribution rate is a flat rate of .12 percent for all subject employers—except for those meeting the exempt or reduced rate criteria. (Employers operating within two calendar years following the " newly subject " status pay at rates of .04 percent and .08 percent respectively.)Reporting/Payment Requirements
All subject employers must file a Health Insurance Quarterly Contribution Report (Form 1700)
each calendar quarter except in the following circumstances. Newly Subject
Employers with " newly subject " status are not required to file a quarterly report until that status expires.Average Employee Count
Employers who employ fewer than an average of six employees in a calendar quarter are not required to file a quarterly report for that quarter, except for the first quarter each calendar year. However, you must file and pay if you employ an average of six or more employees in any quarter.Employers must file a quarterly report and pay contributions in full by the quarter due date to avoid interest and penalties. Although the Division of Unemployment Assistance will make every effort to mail a quarterly report to employers, failure to receive a report does not preclude an employer from the reporting and payment requirements.
Enforcement
Interest will accrue on unpaid principal at the rate of 12 percent per year from the quarter due date until fully paid. Employer records may be periodically subjected to an audit performed by a DUA representative. Dunning activities may include estimation of liability.
A late filer penalty may be assessed at 10% of contribution due up to $100 but not less than $25 for each quarterly report filed late.
DUA may also intercept any payments due to an employer from the Commonwealth of Massachusetts.