By: HUB’s EB Compliance Team

While multi-state employers tend to focus (appropriately) on federal benefit requirements, there has also been a proliferation of additional state and local obligations. In particular, some states have adopted individual mandates requiring individuals to purchase health insurance or pay a penalty. To support these mandates, states have implemented health coverage reporting requirements similar to those required by the Affordable Care Act (“ACA”). These requirements dictate that employers and/or carriers report the health coverage offered to individuals in those states. Below is a summary of some of these requirements.

As a reminder, as of December 23, 2024, the federal reporting requirements no longer require providing Forms 1095-B or 1095-C to individuals. The updated federal requirements instead allow most employers to provide individuals with just a notice that a copy of the form may be requested. However, this new requirement does NOT apply to any of the notice requirements by the states detailed below. For more detail on the updated federal requirement, see our bulletin here.

California

  • Beginning in 2020, California required most individuals to obtain health insurance coverage or pay a penalty (an “individual mandate”).
  • Insurance carriers and self-insured employers (including those with level-funded plans and those that sponsor individual coverage HRAs or ICHRAs) must report to California about coverage they have provided to state residents. To meet this requirement, they must transmit the IRS Forms 1094/5-B or C that they use for federal reporting to the California Franchise Tax Board (FTB) by March 31 (although no penalties will apply if the returns are filed on or before May 31).
  • All covered employers must provide the applicable IRS Forms 1095-B and/or C that they would otherwise prepare to their employees by January 31 following the end of the plan year. While the federal ACA distribution deadline was permanently extended to March 1 (March 3 for 2025), the California distribution deadline has not changed. However, California will not impose penalties for failing to furnish statements to individuals by January 31.
  • If an organization files over 250 forms, they must file electronically. More information about registering to file forms electronically is available here.
  • Employers who fail to submit reports to the Franchise Tax Board as required are subject to a $50 penalty per unfiled return.

Massachusetts

  • To support its individual mandate (which pre-dates the ACA), Massachusetts employers are responsible for issuing Form MA 1099-HC annually to employees enrolled in their health plan (whether insured or self-funded, including level-funded and ICHRAs) no later than January 31 of the following year. However, this obligation is typically handled by carriers or third-party administrators or administrative-services-only providers.
    • Employers who fail to distribute the forms to employees or fail to file forms with the state could be subject to a penalty of $50 per individual, up to a maximum of $50,000.
    • If insurance carriers do not file on an employer’s behalf, the employer must submit the information that appears on its Form MA 1099-HCs electronically using a bulk filing process. This must be completed by January 31.
  • Additionally, employers with six or more employees in Massachusetts for whom they filed a quarterly wage report must file a health insurance responsibility disclosure (HIRD) form via the MassTaxConnect web portal.
    • The HIRD form is available on the portal starting November 15 and must be completed and submitted electronically by December 15 of the reporting year.
    • This form assists MassHealth in administering the MassHealth Premium Assistance Program by identifying members with access to qualified group coverage.

New Jersey

  • To support New Jersey’s individual mandate implemented in 2019, employers who employ New Jersey residents and provide group coverage, as well as carriers that provide group coverage, must report on their compliance with the New Jersey individual mandate reporting requirements by:
    • Completing IRS Forms 1094-C and 1095-C or 1094-B and 1095-B (as they would to meet applicable federal requirements). Note that New Jersey only requires that Parts I and III of Form 1095-C be completed.
    • Submitting these forms electronically by March 31 for the prior tax year to the New Jersey Division of Taxation.
    • If the federal ACA reporting forms are ever discontinued, covered employers would need to use New Jersey-approved forms.
  • Distribute by March 3 a Form 1095 to each primary enrollee who was a New Jersey resident and to whom the filer provided minimum essential coverage in all or part of the prior tax year.
  • New Jersey only allows electronic filing. Paper filing will not be accepted for groups of any size.
  • New Jersey has not specified any penalties for failure to furnish or file the applicable forms.

Rhode Island

  • Rhode Island’s individual mandate took effect in 2020. Employers and insurance carriers are required to report coverage they have provided to Rhode Island residents.
  • The federal forms will be sufficient to meet the Rhode Island reporting requirement.
  • The Division of Taxation has provided a webpage where employers will be able to upload file(s).
  • Additional information about the mandate is available on the Division of Taxation’s website.
  • The deadline to distribute to individuals is March 3. The deadline to file with the Division is March 31.
  • Penalties for failure to furnish or file the forms are reviewed on a case-by-case basis.

Vermont

  • The Vermont individual mandate began January 1, 2020.
  • Currently, there are no employer reporting or distribution requirements.
  • Instead, Vermont relies on individuals to file copies of the IRS Forms 1095-B that are provided by their employers or insurance carriers or otherwise attest that coverage was in place for the year on an individual’s annual tax return.
  • If the federal requirement to furnish the IRS Form 1095-B is ever suspended or eliminated, Vermont can create its own form.
    • To date, Vermont has not created its own form. Therefore, even though the IRS only requires reporting parties to provide Form 1095-B upon request, Vermont currently requires individuals to report on their own coverage.
  • Vermont has not specified any penalties for failure to maintain compliant health insurance coverage.

Washington, D.C.

  • Employers that provide minimum essential coverage to D.C. residents must submit returns to the District and distribute written statements to employees to support its individual mandate. The mandate went into effect in 2019.
  • Employers must submit their ACA reporting (IRS Forms 1094/5-B and 1094/5-C) to the District. The reporting deadline is 30 days after the IRS deadline for submitting 1095-B or 1095-C forms, including any extensions granted by the IRS. All forms must be filed electronically.
  • Washington, D.C. does not separately require covered employers to distribute written statements to covered employees, as they have determined that the federal distribution requirements are sufficient. The federal deadline to distribute to individuals is March 3.
  • Washington, D.C. has not specified any penalties for failure to furnish or file the applicable forms.
  • For additional information, see the District’s Employer FAQ on Reporting Requirements.

Takeaways

Many employers use third-party service providers to handle IRS Forms 1094 and 1095 reporting and distribution. However, smaller employers with fully-insured plans will primarily rely on their insurance carriers to provide the applicable forms to their employees and the government.

Other employers required to file should ensure their third-party providers are filing the necessary forms in the applicable states where the employer does business. Employers that are not using third-party providers should either register to file directly with each applicable state, if necessary, or consider engaging a third-party provider to assist.

If you have any questions, please contact your HUB Advisor. You can also view more compliance articles in our Compliance Directory.

NOTICE OF DISCLAIMER

Neither HUB International Limited nor any of its affiliated companies is a law or accounting firm, and therefore, they cannot provide legal or tax advice. The information herein is provided for general information only and is not intended to constitute legal or tax advice as to an organization’s or individual's specific circumstances. It is based on HUB International's understanding of the law as it exists on the date of this publication. Subsequent developments may result in this information becoming outdated or incorrect, and HUB International does not have an obligation to update this information. You should consult an attorney, accountant or other legal or tax professional regarding the application of the general information provided here to your organization’s specific situation in light of your or your organization’s particular needs.