Your ACA State Filing Questions Answered
3 minute read:
We recently hosted a webinar on the growing number of states requiring ACA reporting in addition to federal filing with the IRS. With the 2020 tax year having been the first year for many states requiring additional AACA reporting, we thought it best to share some of the questions we received during the webinar.
Without further ado, see below the most frequently asked questions as they relate to ACA state reporting.
Q: We are self-insured and have employees throughout many U.S. states. Do we need to complete ACA reporting in all of the states that we have employees in?
A: Generally, state ACA reporting depends on whether you have employees in those states, and not whether you have a physical office in those states. Your organization should check whether you have employees in each of the applicable jurisdictions. California, New Jersey, Washington D.C., and Rhode Island appear to require reporting even if you have just one resident employee. Massachusetts has its own unique rules.
Q: What are the Rhode Island state regulations for ACA reporting?
A: Corresponding to the state Individual Mandate, Rhode Island’s ACA state reporting requires all employers offering Minimum Essential Coverage (MEC) to state resident employees to submit state-level reporting to track compliance with the state’s Individual Mandate. Employers and health sponsors providing MEC to an individual will be required to file a return with the Rhode Island Division of Taxation (DOT) and provide a return to the individual. Compliance with the IRS furnishing requirement of Forms 1095-C satisfies the Rhode Island furnishing requirement.
Please note that there is no underlying obligation to offer coverage, unlike the federal ACA requirements. For the 2020 year, the furnishing deadline of January 31, 2021, was extended to March 2, 2021. The filing deadline to the Rhode Island DOT was March 31, 2021, the same deadline for e-filing ACA returns with the IRS.
Corrections will be accepted until December 31 of the filing year. Employers that fail to report may be subject to a penalty, which is “reviewed on a case by case basis and addressed as its unique facts and circumstances warrant.”
Q: Where can I get the 1095-C and 1095-C forms?
A: The specific forms that must be filed vary from state to state. In certain states, the federal forms can be used. Check your local state government website to find information regarding which forms should be used when completing annual ACA state filing reports.
Q: Is California accepting 1095-B forms for fully-insured health plans?
A: If you are a fully insured employer, you should not be completing Form 1095-B. Only self-insured employers are required to submit 1095-B forms.
Q: Are fully insured California employers required to complete state ACA reporting?
A: No, so long as your health insurer submits the state reporting on your behalf. For information on California’s statewide ACA reporting requirement for employers, head to our post on reporting instructions.
Q: If state filing is done electronically when generating a corrected 1095-C form, how do you submit a correction to the corresponding states?
A: The various state portals that require electronic filings for originals should have mechanisms to submit corrected returns as does the IRS.
Q: Where does each state gather the employee information in order to determine which employees should be reported by the employer in order to assess applicable fees? Does this come from the individual tax filings?
A: That’s unclear. The state gets the individual state tax return so it has some information. That return may be used to verify an individual’s statement in the state tax return that he/she had coverage.
ACA state reporting is currently required in New Jersey, California, Washington D.C., Massachusetts, Vermont, and Rhode Island. More states are expected to follow. These reporting requirements are in addition to the federal reporting filing requirement under the ACA’s Employer Mandate.
Under the ACA’s Employer Mandate, Applicable Large Employers (ALEs), organizations with 50 or more full-time employees and full-time-equivalent employees, are required to offer MEC to at least 95% of their full-time workforce (and their dependents) whereby such coverage meets Minimum Value (MV) and is affordable for the employee or be subject to Internal Revenue Code (IRC) Section 4980H penalties.
Employers looking to get a handle on state ACA reporting should download The 2021 ACA Essential Guide for Employers. For important ACA state filing deadlines, download the 2021 ACA 101 Toolkit.
Undertaking an ACA Penalty Risk Assessment can tell you if your organization is at risk of receiving ACA penalties from the IRS.
