May 31 is the deadline for self-insured employers and health insurance carriers to submit applicable ACA information to the California Franchise Tax Board (FTB) for the 2020 tax year.
The deadline for submitting ACA state reporting information was previously March 31st but was extended by the FTB. Since this is the first year for the additional ACA reporting in the state of California, we thought it best to cover everything you need to know about filing before the deadline later this week.
Who must file ACA returns with the California FTB?
Self-insured employers and health insurance carriers are required to file additional ACA healthcare information to the FTB annually. The instructions state that self-insured ALEs have the option of submitting (a) IRS Forms 1094-B and 1095-B or (b) Forms 1094-C and 1095-C with Part III in the 1095-C completed for those non-employees. Health carriers and self-insured employers alike should note the federal IRS Forms 1094-B and 1095-B will satisfy the California 3895C instructions.
What information needs to be included in Forms 1094-C and 1095-C?
Included in Forms 1094-C and 1095-C should be enrollee healthcare information for an applicable employers’ self-insured health plan. Self-insured employers must report information about each individual enrolled in the healthcare coverage offered and as such, must complete parts I, II, and III of the 1095-C forms. The instructions state that employers should not submit 1095-C forms for employees who received an offer of coverage but did not enroll.
The health insurance information entered on the 1095-C and 1095-B forms relates to Minimum Essential Coverage (MEC) and identify to the FTB individuals who received and maintained qualifying healthcare coverage as required by the California Individual Mandate.
What are the penalties for not meeting the deadline?
The FTB website states that “the penalty for not reporting is $50 per individual who was provided health coverage.” Self-insured employers and health insurance carriers may file with the FTB before May 31 without concern for penalty assessments.
Can I paper file or do I need to file electronically?
If you need to submit more than 250 information returns, your organization must file electronically. If however, you have less than 250 returns, you can choose to paper file. These same rules apply to the federal ACA information returns for submission to the IRS. According to the FTB filing website, all paper filings should be sent to the following address:
HEALTH CARE MANDATE FRANCHISE TAX BOARD
PO BOX 2288
RANCHO CORDOVA CA 95741-2288
Best practices for ACA reporting, however, suggest filing electronically, as there are a number of considerable benefits, including, ease of use, ability to immediately obtain documentation, and receiving an e-filing submission status.
How should I file?
The FTB website outlines steps for filing electronically and by mail. Head to the California Instructions for filing federal Forms publication for details on physical mail filing. For instructions on reporting electronically, visit the FTB’s Minimum Essential Coverage Information Reporting page.
The reporting responsibilities for self-insured employers and health insurance carriers reinforce California’s Individual Mandate requirement for state residents to obtain and maintain qualifying healthcare coverage. By submitting the healthcare enrollee information reporting, the state can verify who received coverage and impose penalties accordingly. State residents who fail to obtain and maintain healthcare coverage could be subject to a penalty of $750 per California adult, and $375 per child for the 2020 tax year.
As a reminder, employers should remember that the FTB will be publishing ACA state reporting non-compliance information on its website annually. While it is unlikely for the FTB to identify non-reporting employers by name, the format for which the information will be displayed remains unknown.
ACA state reporting requirements are also required in D.C., Massachusetts, New Jersey, and Rhode Island. Check-in with your local state authorities for information on the reporting deadlines and requirements.
As a reminder, ACA state reporting requirements are in addition to federal Employer Mandate reporting requirements. Under the ACA’s Employer Mandate, Applicable Large Employers (ALEs) are employers with 50 or more full-time employees and full-time equivalent employees) and are required to offer Minimum Essential Coverage (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.
If you need assistance meeting the ACA California state reporting requirements, contact us to learn about our stand-alone ACA state filing reporting services. For more information on state ACA reporting requirements, we invite you to download the 2021 ACA Essential Guide for Employers.
Missing an ACA filing or furnishing deadline could land your organization a significant penalty from the IRS. To ensure you never miss one, download the ACA 101 Toolkit, which documents the various federal and state reporting deadlines.