March 7, 2023
On January 1, 2019 the Affordable Care Act's (ACA) individual mandate was removed at the federal level. As a result, a number of States (California, Massachusetts, New Jersey, Rhode Island, Vermont and Washington, D.C.) adopted individual mandates. The States that have implemented an individual mandate have frequently implemented additional reporting requirements. The remainder of this paper provides an overview of the details of the pertinent States’ reporting requirements.
California
To its credit the State of California’s reporting requirements, which are discussed in FTB Publication 3895C (please note that there has not been an update for the 2022 reporting season presumably because no substantive changes have been made), mimics the federal ACA reporting requirements. Employers only need to complete Part I of the Form 1094-C along with the requisite Forms 1095-C.
Importantly, only employers who sponsor a self-insured plan need to submit a Form 1095-C and only if the individual accepted the coverage. An employer must furnish the Form 1095-C to the requisite employees by January 31, 2023. It should be noted that this is a stricter deadline than the federal government deadline imposes on employers of March 2, 2023. Employers are required to report the Forms to California by March 31, 2023. However, the California instructions state that no penalty will be assessed against an employer so long as the Forms are submitted to the franchise tax board by May 31, 2023. An employer can be penalized $50 per individual included on a return for which the failure occurs.
Massachusetts
The Massachusetts reporting requirements actually predate the ACA reporting requirements and have been in place since 2006. Unfortunately, as a result of the Massachusetts reporting requirements predating the ACA, the Massachusetts Form is not the same as the Form 1095-C. There are nuanced differences, such as the number of days that an individual needs to be covered for the month to be counted as a coverage month, between the federal Form 1095-C (only one day is required) compared to the Form MA 1099-HC (15 days are required). Therefore, we encourage all employers to closely review the Massachusetts rules when completing the Massachusetts Forms.
All self-insured employers must distribute the Form MA 1099-HC to the requisite employees by January 31, 2023. Self-insured employers are required to file the Form MA 1099-HC with the State by March 31, 2023. If an employer fails to file the Form MA 1099-HC with the State, the employer will be subject to a penalty of $50 per individual with a maximum penalty of $50,000. Finally, it should be noted that fully-insured plans can be liable to the State of Massachusetts if the carrier the employer uses does not file the Form MA 1099-HC on its behalf. Therefore, employers should verify that its carrier is satisfying its reporting obligations for the State of Massachusetts.
New Jersey
The State of New Jersey employer reporting requirements largely mimic the federal requirements. New Jersey only requires employers who sponsor self-insured plans to submit the Form 1095-C to the State. Additionally, an employer only needs to submit a Form 1095-C to the State if Part III is completed. In other words, an employer does not need to submit a Form 1095-C on behalf of a resident if the individual did not enroll in the self-insured plan. Employers must provide a Form 1095-C to the necessary employees by March 2, 2023, which is perfectly aligned with the federal deadline. Similarly, employers must file with the State of New Jersey by March 31, 2023. An employer who fails to meet the reporting requirements may be penalized $50 per form with the maximum penalty being $50,000. Similar to Massachusetts, an employer who sponsors a fully insured plan can be held liable if its carrier does not submit the necessary Forms to the State. Therefore, employers should verify that its carrier is satisfying its reporting obligations for the State of New Jersey.
Rhode Island
The State of Rhode Island employer reporting requirements largely mimic the federal requirements. Employers who sponsor self-insured plans must submit the requisite Forms 1095-C to the State. Similar to both Massachusetts and New Jersey, the carrier of a fully insured plan should report on an employer's behalf. However, if the carrier fails to report on the employer's behalf, it appears from the Rhode Island website, the employer would have to fulfill the reporting obligations. Employers must provide a Form 1095-C to the necessary employees by March 2, 2023, which is perfectly aligned with the federal deadline. Employers must file with the State of Rhode Island by March 31, 2023.
Washington DC
The District of Columbia’s employer reporting requirements largely mimic the federal requirements. Employers can use the Forms 1094-C and 1095-C to meet the DC reporting requirement. All employers who are applicable large employers (meaning employers who sponsor a fully-insured plan or a self-insured plan) must submit the Forms 1094-C and 1095-C to the Office of Tax and Revenue (see Q10 from OTR Notice 2020-04). The Forms must be furnished to the requisite individuals by March 2, 2023 and are due to the Office of Tax and Revenue by April 30, 2023. There is currently no penalty associated with the DC reporting requirements.
One item that is challenging about the DC Forms is its system only accepts the .txt file format and the system will not accept XML files which are used by the federal system. We would highly encourage DC to make changes to their system to bring it more in line with the federal system.
Vermont
While Vermont has an individual mandate, as of the date of this publication, there are no employer reporting requirements. Cheers to that.
Conclusion
An employer must be aware of the State reporting requirements for States in which the employer has employees residing. Accord Systems has clients in all 50 States and is well versed in assisting clients with their State reporting obligations. If you are interested in learning about our tools to ensure accurate Forms are submitted to the IRS and the applicable States or you need assistance filing the Forms 1094-C and 1095-C, please don’t hesitate to contact us.
About the author – Ryan Moulder serves as General Counsel at Accord Systems, LLC and is a Partner at Health Care Attorneys P.C. Ryan received his LL.M. from Georgetown University Law Center and his J.D. from Saint Louis University School of Law. He has distinguished himself as a leader in the Affordable Care Act arena and has written and spoken on a variety of ACA topics as it relates to compliance for companies.
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