ACA reporting season for the 2024 tax year is upon us and the first deadline is approaching. Applicable Large Employers (ALEs) in California must furnish 1095-C forms to employees by Jan. 31, 2025 to comply with the state’s individual mandate.
Under the California Individual Mandate, applicable organizations must also file ACA information on their employees and their dependents to the California Franchise Tax Board (FTB). The ACA information should include enrollee healthcare details for all persons enrolled in the coverage, including non-employees such as dependents, spouses, and COBRA beneficiaries.
Overview of What’s Required
California employers offering self-funded healthcare plans and health insurance carriers must furnish 1095-C healthcare information to their employees and their dependents by the Jan. 31 deadline.
The instructions indicate that self-insured ALEs have the option to submit either:
- IRS Forms 1094-B and 1095-B or
- Forms 1094-C and 1095-C with Part III in the 1095-C completed for non-employees
Organizations have the option to file this information both electronically and by print and mail. However, employers that have more than 250 returns, must file their ACA information electronically.
The FTB website outlines steps to file electronically and via physical mail. The California instructions for filing federal forms publication details how to physically mail your filings and the FTB’s Minimum Essential Coverage Information Reporting page dives into how to submit the filings electronically.
The deadline for filing this information is March 31, though penalties will not be assessed until after May 31.
The Risk of Non-Compliance
Employers that fail to comply with California’s Individual Mandate reporting requirements will face a $50 penalty per individual who received health coverage.
As a reminder, California Individual Mandate non-compliance information will subsequently be published on the FTB’s website as required by the statute. Accordingly, the state agency will publish the non-compliance information by March 1.
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.
Organizations should note that California’s ACA reporting requirements are in addition to the ACA’s Employer Mandate.
Under the ACA’s Employer Mandate, ALEs, or employers with 50 or more full-time employees and full-time equivalent employees must:
- Offer Minimum Essential Coverage (MEC) to at least 95% of their full-time employees (and their dependents) whereby such coverage meets Minimum Value (MV); and
- Ensure that the coverage for the full-time employee is affordable based on one of the IRS-approved methods for calculating affordability
New Federal 1095-C Print and Mail Rules
Under the Employer Reporting and Improvement Act and the Paperwork Burden Reduction Act, ALEs have a new option to meet their furnishing obligations that no longer requires them to automatically furnish Form 1095-C to full-time employees. Instead, employers can opt to provide these forms only upon employee request, provided they meet certain conditions:
- Employee Notification: Employers must provide clear, conspicuous, and accessible notice to employees, informing them of their right to request Form 1095-C. The IRS may provide specific guidelines on the timing and manner of this notification.
- Timely Furnishing Upon Request: Upon receiving a request, employers must furnish the employees Form 1095-C by the later of:
- Jan. 31 of the year following the calendar year in which coverage was provided, or
- 30 days after the date of the request, whichever is later.
It’s important to note that these rules only apply to federal ACA furnishing, and California employers must still adhere to the state’s individual mandate.
Leverage Trusaic to Meet California’s Furnishing Requirements
Trusaic’s ACA compliance service enables you to offload 1095-C furnishing and filing responsibilities for California. Our designated support team prepares and distributes your 1095-C forms on-time to applicable employees by U.S. mail or electronically on demand.
Given the new legislation, we offer our clients two options to choose from:
- e-Distribution + Print and Mail (CA, RI, NJ only)
- Print and Mail only
Option 1 is our recommended approach and organizations can e-distribute with ease utilizing Trusaic’s platform. Our e-distribution platform makes it easy for an employer to notify their employees of the option to receive their forms while providing them with a link where they can access the form electronically.
This also simplifies any employee follow-up requests for a form as the employer can simply resend the link to their employee giving them digital access to their forms. This ensures all your forms are distributed on-time and can be easily tracked for compliance purposes.
There’s still time left to meet California’s Jan. 31 deadline and ensure compliance this ACA reporting season. Book a meeting to learn how other companies are adopting this approach to Form 1095-C furnishing.
