By: HUB’s EB Compliance Team

Beginning January 1, 2020, all California residents must have qualifying health coverage (minimum essential coverage), qualify for an exemption, or pay the state an individual mandate penalty. This is similar to the federal individual mandate that was part of the Affordable Care Act, but at the state level.

To support California’s enforcement of the mandate, insurance providers and employers with self-funded plans will also be required to report who received coverage under their plans during the 2020 calendar year to the California Franchise Tax Board (FTB). The FTB released a draft of the 2020 Publication 3895C with California Instructions for filing Federal Forms 1094-C and 1095-C for the state Individual Mandate reporting. This publication is only a draft and is, therefore, subject to change.

Due Dates? For the 2020 calendar year, the Forms 1094-C and 1095-C must be provided to the FTB by March 31, 2021. However, the annual deadline for furnishing the 1095-C to covered individuals in California will be will be January 31, 2021. It does not appear California would apply any extension the federal government may provide for its reporting. The same federal Forms 1094-C and 1095-C that the employer files with the IRS may be provided to the California FTB.

Who/what plans? Any employer that offers minimum essential coverage through a self-insured health plan, including plans that cover only preventive care (“skinny MEC” plans) and Individual Coverage Reimbursement Accounts (ICHRAs), and medical insurance carriers must report information about the individuals enrolled in such coverage on Form 1095-C. This reporting requirement applies to major medical coverage, but not stand-alone dental plans, vision plans, or coverage offered under an integrated Health Reimbursement Account (HRA), or Health FSA plan.

Where? The FTB encourages all plans to file electronically, but requires electronic filing for employers that must file 250 or more information returns. Forms will need to be filed at the FTB File Exchange (FX) System which will launch on October 5, 2020 with the Minimum Essential Coverage Information Reporting (MEC IR) Program. Information about how to register and enroll in the system to meet California reporting requirements can be found here. For fully insured medical plans, the insurer files the information on the employer’s behalf.

Federal instructions regarding Authoritative Transmittal are not applicable for California purposes. Additionally, truncation of the first five digits of the employee Social Security Number and employer EIN is not allowed on forms filed with the FTB.

Next Steps? We recommend that clients touch base with their ACA reporting vendors to inquire whether they will satisfy the state reporting requirements on the client’s behalf. Otherwise, clients should prepare to submit returns electronically to the FTB at this link. For more information on the technical specifications of the new reporting requirements, visit the FTB site here.

If you have any questions, please contact your HUB Advisor. View more compliance articles in our Compliance Directory.

 

NOTICE OF DISCLAIMER

The information herein is intended to be educational only and is based on information that is generally available. HUB International makes no representation or warranty as to its accuracy and is not obligated to update the information should it change in the future. The information is not intended to be legal or tax advice. Consult your attorney and/or professional advisor as to your organization’s specific circumstances and legal, tax or other requirements.