The individual mandate under the Affordable Care Act (ACA) was the cornerstone of much litigation challenging the ACA. In the tax reform legislation passed in December of 2017, Congress reduced the federal individual mandate penalty under the ACA to $0, effective in 2019.
Without the mandate, certain states were concerned that enrollment in the exchanges will drop and the risk pool will worsen, leading to premium increases and issuer exits. As a result, states began to pass individual mandates with the intention of using the penalties to subsidize the exchanges and continue to encourage enrollment.
Currently, New Jersey, Washington D.C., California, Rhode Island, and Vermont are the states with individual mandates which require residents of those states to maintain minimum essential healthcare coverage or pay a tax penalty. These laws impose additional reporting obligations (state filings) on employers with employees who are residents of one of the listed states which include the following:
- Submit Returns to the State: Employers must submit their ACA reporting (IRS Forms 1094/5-B and 1094/5-C) to the state for the 2020 tax year.
- Distribute Statements to Employees: Employers must distribute written statements to individuals whose names appear on the above submitted returns. Employers can satisfy this requirement by distributing statements (Form 1095-B or Form 1095-C) to employees as required under the ACA. No additional distribution is required.
To ensure BASIC ACA Elevate clients are compliant with the New Jersey, Washington D.C., California, Rhode Island, and Vermont state filing mandates, BASIC compliance will handle this reporting on behalf of our ACA Elevate clients*.
*additional fees apply
In addition to state individual mandates, BASIC ACA Elevate gives employers the support they need to comply with the rest of the ACA’s complex regulations. Each ACA Elevate client receives their own dedicated ACA Compliance Specialist, as well as access to our 24/7 secure online ACA portal and a variety of ACA training materials. Whether your ACA obligations are simple or complicated, BASIC can provide a solution that saves you thousands in potential noncompliance penalties. If your business wants ACA compliance peace of mind, request a proposal (at no cost) for BASIC ACA Elevate and let us handle it for you. It’s what we do!