Employers have various regulations they need to comply with, making ACA reporting compliance a top priority. The Tax Cuts and Jobs Act of 2017 removed the penalty for not having health insurance, resulting in states enacting measures to keep health insurance costs low. California, the District of Columbia (D.C.), Massachusetts, New Jersey, Rhode Island, and Vermont are the current states to have enacted state-level ACA reporting requirements, with more states expected to hop onboard. In this guide, we’ll walk through the state-by-state ACA reporting requirements to ensure you remain compliant if you’re an employer operating in one of these states.California ACA Reporting RequirementsThe California mandate is an individual mandate that took effect starting Jan. 1, 2020, which requires residents of the Golden State to maintain minimum essential coverage. Below are a few guidelines California employers can follow:
- Employers, including self-insured employers, regardless of their Applicable Large Employer (ALE) status, can file 1094/5-B and C forms to California’s Franchise Tax Board (FTB) by March 31, with the option to file on or before May 31 without penalty.
- Employers with 250 or fewer forms can be printed and mailed using the same 1094/5-B and C forms they filed with the IRS.
- Employers with more than 250 forms must file electronically.
- To file electronically, employers must register and complete a testing cycle before being approved.
- Employers who are fully insured do not need to submit California mandate reporting as long as their insurance provider reports to the FTB.
- All employers must provide employees with their 1095-B and C forms by Jan. 31, which is already required under the ACA.
District of Columbia ACA Reporting RequirementsThe District of Columbia requires individuals to carry a minimum level of coverage or receive an exemption, or they will face a penalty. This regulation was created through the Individual Taxpayer Health Insurance Responsibility Requirement Amendment Act of 2018 and is effective for tax years ending on or after Dec. 31, 2019. Below are some of the general ACA reporting requirements for D.C.:
- Applicable entities, defined as employers or employment-based health plan sponsors with 50 or more employees, must submit compliance information to the district’s Office of Tax and Revenue. Other applicable entities include providers of minimum essential coverage and insurance carriers.
- Employees who had taxes remitted and withheld in D.C., or those with a home or mailing address, are considered D.C. residents, subject them to minimum essential coverage.
- Employers can submit the same IRS forms, but they must be a piped delimited text (.txt) file, not an XML format.
- All forms must be submitted electronically.
- For 2023, the deadline is May 1.
Massachusetts ACA Reporting RequirementsMassachusetts employers don’t need to provide employee-level details when submitting their filings, but their mandate requires employers to file by Dec. 15 of the reporting year and provide Form 1099-HC to their employees. This information must also be reported to the state Department of Revenue or employers may face a penalty of $50 for each employee, up to $50,000.New Jersey ACA Reporting RequirementsNew Jersey’s ACA reporting requirements are similar to D.C.’s reporting requirements, where all residents must maintain qualifying coverage or face a tax penalty, which took effect on Jan. 1, 2019. New Jersey employers who employ New Jersey residents must submit their forms electronically in accordance with the New Jersey Health Insurance Market Preservation Act, which can be done with these steps:
- Submit 1095 forms through the MFT Secure Services in an XML file.
- Use New Jersey’s forms if the IRS forms are ever discontinued.
- Complete all electronic filings by March 31.
For employers with fewer than 50 forms, Form NJ-1095 must be used. These state-level ACA reporting requirements are mandatory for New Jersey-based and out-of-state employers who employ New Jersey residents.Rhode Island ACA Reporting RequirementsUnless an employer’s insurance provider completes the reporting requirement, Rhode Island employers must report coverage information for their Rhode Island-based employees. Rhode Island accepts the federal forms for reporting purposes, and employers can submit these forms on the Division of Taxation webpage, with a deadline falling on March 31.Vermont ACA Reporting RequirementsAs of 2021, Vermont’s ACA reporting requirements will only take effect if the federal ACA reporting requirements are eliminated.What Does the Future of State-Level ACA Reporting Look Like?After the federal government ended the penalty for individuals not having health insurance, certain states took preventative measures by enacting their own ACA reporting requirements to ensure health insurance remained affordable and accessible. California, D.C., Massachusetts, New Jersey, Rhode Island and Vermont took the lead on this movement, and it’s expected other states will follow suit. If you’re an employer, it’s important to remain vigilant and updated on state-level ACA reporting requirements to ensure compliance.
Managing state-level ACA reporting requirements can be complex and time-consuming. Adopting ACA reporting software is one way to stay ahead and updated at all times, and many ACA service providers actively monitor state-level reporting requirements.ACA Reporting Requirements FAQsWhat is ACA reporting compliance?ACA reporting compliance refers to the regulations employers must abide by to ensure health insurance coverage is affordable and accessible. There are several key provisions of ACA reporting compliance, including providing affordable health insurance coverage to at least 95 percent of full-time employees and their dependents, as well as providing employees with a notice of coverage and additional benefits on Form 1095-C.
ACA reporting compliance is important for several reasons. To start, remaining compliant with reporting requirements can help employers avoid penalties and fees that hurt their bottom line and reputation.What are ACA reporting requirements for employers?Employers need to follow several compliance requirements, including:
- Applicable Large Employers (ALEs) are employers with 50 or more full-time employees. ALEs must provide affordable health insurance with a minimum value to at least 95 percent of their workforce and dependents.
- In order for health insurance coverage to be deemed affordable, an employee’s costs can exceed a certain portion of their household income.
- Form 1095-C must be filed annually by employers, with a copy provided to employees.
- Form 1094-C must also be filed to the IRS, but not employees.
What are the consequences of ACA noncompliance?If an employer fails to comply with ACA reporting requirements, they can face several consequences, including fees and penalties. For example, in 2023, ALEs who fail to provide 95 percent of their full-time employees with health insurance coverage can face a penalty of $2,880. Working with an ACA reporting service provider or ensuring in-house HR and payroll teams are trained with the right resources can help ensure compliance is met.
