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The state of New Jersey has issued information for employers on third-party reporting to support the state’s new individual healthcare mandate. Employers with employees in New Jersey will now need to comply with these state-level reporting requirements, in addition to the requirements of the Affordable Care Act’s Employer Mandate.
The guidance provides instructions on employers’ responsibilities for state-level reporting as a result of the state’s individual mandate that went into effect on January 1.
The state is requiring Applicable Large Employers – companies with 50 or more employees – to use IRS forms 1094-C and 1095-C, (1095-B, and 1094-B if self-insured) to communicate health insurance information to the state, in addition to their federal responsibilities for furnishing annually these forms to full-time employees and to the IRS.
Employers will have to submit their state-level ACA reporting information by February 15, 2020, using New Jersey’s system for filing W-2 forms. Filing instructions are anticipated to be provided in mid-2019. The IRS deadline for reporting ACA information electronically for the 2019 tax year is March 31, 2020.
In the event ACA reporting forms 1094-C and 1095-C are discontinued by the federal government, the state will issue similar forms to employers to use to report on carrying out their healthcare responsibilities to the state and New Jersey taxpayers.
The guidance also notes that employers based out of state that withhold and remit New Jersey Gross Income Tax for New Jersey residents have the same filing requirements as businesses located in New Jersey.
Under New Jersey’s individual mandate, residents of the state must obtain health insurance that meets Minimum Essential Coverage as designed by the ACA or face an individual tax penalty as high as $3,012. New Jersey joins Massachusetts, Vermont and the District of Columbia in passing their own state-level individual mandate. Currently, Maryland, Hawaii, Connecticut, Rhode Island, Minnesota, California and Washington are considering their own individual mandates for residents.
As more states pass their own individual mandates, expect healthcare regulations to become more complicated and fragmented, adding new layers of complexity to what employers face in addressing compliance with the federal ACA.
The IRS is actively enforcing the ACA’s Employer Mandate. The ACA requires that Applicable Large Employers (ALEs), organizations with 50 or more full-time employees and full-time equivalent employees, 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 IRC Section 4980H penalties.
The IRS has been issuing penalty notices under IRC Section 4980H (Letter 226J) and IRC Sections 6721/6722 (Letter 5005A/Form 886A). The tax agency is projected to issue more than $228 billion in penalty assessments by the year 2026.
The IRS is expected to start issuing Letter 226J penalty notices for the 2017 tax year this summer.
As ACA reporting grows more and more complex, employers need to ensure they are in full compliance to reduce their risk of receiving an ACA penalty assessment. Employers may want to consider undertaking a cost-free ACA Penalty Risk Assessment to ensure that they are operating within the regulatory requirements of the ACA.
