Compliance Q&A: State Individual Mandate Reporting Requirements

Summary

While health insurance is no longer required at the federal level, an increasing number of jurisdictions, including California, Massachusetts, New Jersey, Rhode Island and Washington, D.C., have enacted their own individual mandates requiring residents to maintain qualifying health coverage or face a state tax penalty. What this means for employers is that besides any federal reporting obligations you may have under the Affordable Care Act, you may have state reporting requirements as well.

Detail

The ACA created a number of federal reporting requirements for employers and health plans, which (among other things) provide the government with the information necessary to administer the ACA mandates, such as the large employer shared responsibility penalty and the individual mandate.

The ACAs’ individual mandate became effective in 2014 and requires individuals to obtain minimum essential health coverage (MEC) each month of the year (unless an exception applies) or pay a penalty. However, as of Jan. 1, 2019, the Tax Cuts and Jobs Act reduced the applicable penalty for failing to have coverage to zero. While individuals are still technically required by federal law to have MEC or qualify for a coverage exemption, they are no longer required to pay a penalty if they do not have MEC for part or all of the year, effectively abolishing the federal individual mandate.

While health insurance is no longer practically required at the federal level, an increasing number of states have enacted their own individual mandates, which largely mirror federal requirements and come with their own state tax reporting requirements and penalties. Many of the state health coverage reporting requirements are similar to the ACA’s reporting requirements under Internal Revenue Code Sections 6055 and 6056 but have their own state-enforced deadlines as outlined in the table below: