Federal Reporting

In early December, large employers (50+ employees in prior year) will need to once again gather data to complete their 2019 Forms 1095, which are due to full-time employees by January 31, 2020. (In prior years, the IRS has extended the due date by one month, but an extension for this year has not yet been announced.)

The IRS recently released draft instructions for the Forms 1095 and the forms have not significantly changed from prior years. Please note that although the federal penalty for individuals who do not have health coverage has been repealed, insurers and self-insured employers must still report monthly coverage by family member. This means that self-insured employers must continue to complete Part III of the Form 1095-C.

As part of the Form 1095 reporting, employers need to indicate which affordability safe harbor is used for the months that medical coverage was offered. In 2019, the medical plan offer is affordable as long as the employee contribution for single coverage in the lowest cost plan offered is no more than 9.86% of the employee’s income.

Employers can use one of three safe harbors to report affordable offers of medical coverage on the Forms 1095:

  • If the employee contribution in 2019 is no more than $99.75 per month for single coverage in the lowest cost plan, the employer can use the Federal Poverty Level (FPL) safe harbor. When using the FPL safe harbor, you do not need employee income information and reporting is simplified.
  • If the FPL safe harbor cannot be used, then either the Rate of Pay (recommended) or Form W-2 safe harbor can be used to report affordable offers. The offer is affordable for all employees as long as the employee contribution for single coverage in the lowest cost plan is no more than 9.86% of the lowest paid employee’s wages.

State Reporting

In 2006, Massachusetts instituted the first state mandate requiring individuals to maintain creditable health coverage, with coverage reported to the state annually by the employer or carrier. Following Congress’ repeal of the federal tax penalty for individuals who do not have health coverage, other states began working on enacting their own individual coverage mandates.

Starting with 2019, DC and New Jersey enacted laws requiring their residents to maintain qualifying health coverage or be subject to a tax penalty. Similar to MA, the DC and NJ laws include annual reporting requirements for employers. The employer reporting requirement applies based on the employee’s residence, not the employer’s office location. The DC and NJ reporting requirement will only apply to employers who are required to file Forms 1095 with the IRS.

For Washington, DC residents, the 2019 employer reports will be due by June 30, 2020. Employers, or their service providers, will upload Form 1095 data, formatted according to OTR’s instructions, which are expected sometime in January 2020.

For New Jersey residents, the 2019 employer reports will be due by March 31, 2020. Employers, or their service providers, must transmit electronically and may send the same Form 1095 data files to NJ that were sent to the IRS.

Coming in 2020

Starting with 2020, laws go into effect in California, Rhode Island, and Vermont to mandate their residents to maintain qualifying health coverage. Employers of CA and RI residents will be required to file annual reports. VT’s mandate does not currently include an employer reporting requirement.

Please contact your OneDigital account team with any questions regarding your reporting responsibilities.