States Give New Life to the Individual Mandate and Usher in Extra Reporting Requirements

As more states pass their own individual mandate, many now have their own version of employer reporting requirement.  Does your Company have to Comply with an ACA State Individual Mandate?

Although the ACA individual mandate is gone at the federal level; many states have begun to implement their own ACA state individual mandates, which require residents to purchase and maintain qualifying health coverage or face a state tax penalty.  We anticipate that more states will follow suit in pursuing ACA state individual mandates. So, employers should anticipate some reporting changes at the state level. Now is the time to determine if you have employees who reside in a state with an ACA individual mandate.

As a disclaimer, we (Selerix) are not consultants or legal counsel and can't dictate employers' decisions..  We can only offer our understanding of the expectation related to the state-level requirements outlined by individuals states.  That said, we always advise employers to seek guidance from their advisor and/or legal counsel.  
 

Which states are affected by the ACA state individual mandate?
To date, six states have passed individual mandates of which three are effective for the 2019 reporting year, the District of Columbia, Massachusetts and New Jersey.       

  • California – Effective January 1, 2020
  • District of Columbia
  • Massachusetts
  • New Jersey
  • Rhode Island – Effective January 1, 2020
  • Vermont – Effective in 2020

Below is what we know so far and will continue to provide updates as more information is released.

California Individual Mandate
Important dates:
Employers are required to file annually by March 30. For the 2020 tax year, the due date is currently March 30, 2021

Employer obligations:
In-state and out-of-state employers who employ California residents are obligated to provide the same data outlined in Section 6055 of the Affordable Care Act. This section specifically covers the enrolled coverage of employees while Section 6056 covers the offer of coverage to employees. Final details are not available; however, they have indicated fully insured employers will rely on their insurer to provide data to the State and self-insured employers will be required to submit their own data to the State.

Process for filing:
No details are available at this time

District of Columbia Individual Mandate
Important dates:
Employers are required to report annually, within 30 days after the IRS tax deadline. For the 2019 tax year, the due date is extended to June 30, 2020.

Employer obligations:
In-state and out-of-state employers who withhold and pay payroll tax to D.C. or who employ D.C. residents, even if the employer does not withhold D.C. payroll taxes.  ALE's sending 1095-C forms to employees and filing 1095-C and 1094-C forms with the IRS, are required to file forms with the state.  Employers who only have fully insured coverage cannot rely on the insurer to provide 1095-B forms alone, they will still need to submit 1095-C and 1094-C forms to D.C.

Process for filing:
D.C. will leverage their mytax.dc.gov portal using the Office of Tax and Revenue’s proscribed file format and has indicated this would be the same information provided to the IRS, for employers who employ non-D.C. residents, they must only include requested information in the file.

Massachusetts Individual Mandate
Important dates:
Employers are required to report annually. The reporting period is from Nov 1 to Nov 30*
(*For the 2019 tax year, the deadline is January 31, 2020)

Employer obligations:
The reporting requirement for employers with employees who reside in the state of Massachusetts relates to Form MA 1099-HC.  Most insurance companies issue the forms on the employers’ behalf and send the state a reporting listing all the Form MA 1099-HC they issued.

The Health Insurance Responsibility Disclosure (HIRD) form, is a state reporting requirement for Massachusetts Employers which collects employer-level information about their employer-sponsored insurance (ESI) offerings.  The HIRD reporting is administered by MassHealth and the Massachusetts Department of Revenue (DOR) through the MassTaxConnect web portal.

Process for filing:
Most insurance companies issue the forms on the employers’ behalf and send to the state however if the insurance company doesn’t file Form MA 1099-HC on their behalf, employers are required to upload the XML files through MassTaxConnect.   

New Jersey Individual Mandate
Important Dates:
For the 2019 tax year, the filing due date is March 31, 2020.

Employer Obligations:
In-state and out-of-state employers who employ New Jersey residents, even if the employer does not withhold New Jersey payroll taxes.
ALE's sending 1095-C forms to employees and filing 1095-C and 1094-C forms with the IRS are required to file forms with the state.  Employers who only have fully insured coverage cannot rely on the insurer to provide 1095-B forms alone, they will still need to submit 1095-C and 1094-C forms to the state of New Jersey.

Process for filing:
New Jersey will leverage the same secure transport system that is used by employers or their vendor to submit W-2 forms. New Jersey requests the same XML file format used for submitting to the IRS. However, for employers who employ non-New Jersey residents, they must edit the file in order to remove those records.

Rhode Island Individual Mandate
Important dates: 
No due dates have been set yet, but it’s anticipated employers reporting to begin in 2021 for the 2020 tax year.

Employer obligations:
No guidance has been released around employer reporting obligations.

Process for filing:
No details are available at this time.

Vermont Individual Mandate 
Important dates:
No due dates have been set yet, but it’s anticipated employers reporting to begin in 2021 for the 2020 tax year.

Employer obligations:
No guidance has been released around employer reporting obligations.

Process for filing:
No details are available at this time.

Other states that are actively considering and/or pursuing a statewide individual mandate:

  • Connecticut
  • Hawaii
  • Maryland
  • Minnesota
  • Washington

Selerix will continue to monitor developments and keep employers informed as more ACA updates become available.

Thank you,

Selerix ACA Support