Submitted by Two River Benefits Consultants, LLC
The Affordable Care Act’s individual mandate (i.e., the requirement that most individuals obtain adequate health insurance or pay a penalty) is dead. A side effect of the ACA mandate’s demise is that states are beginning to step-in and pass their own versions of the individual mandate. Massachusetts, of course, has long had an individual mandate in place for its residents. Since the ACA mandate’s repeal, California, the District of Columbia, New Jersey, Rhode Island, and Vermont have passed individual mandates. Several other states are also considering enacting individual mandates. As these state laws become more prevalent, employers and plan sponsors need to consider whether these states have reporting requirements similar to the ACA’s requirements under Sections 6055 and 6056 of the Internal Revenue Code.
Similar to the repealed ACA individual mandate, New Jersey requires its residents to obtain minimum essential health coverage (subject to various exemptions) or pay a penalty. To assist the state in verifying enrollment information provided by taxpayers, employers and plan sponsors (whether or not domiciled in New Jersey) providing coverage to New Jersey residents will need to submit to the state the same forms required under Sections 6055 of 6056 of the Internal Revenue Code (i.e., Forms 1094/5-B and 1094/5-C). The forms must be submitted electronically through the Division of Revenue and Enterprise Services’ MFT SecureTransport service, which is the same system for processing W-2 forms.
Currently, the existing IRS Forms 1094/5-B and 1094/5-C contain the information New Jersey needs to verify enrollment, and therefore, New Jersey is willing to accept those forms
Employers and plan sponsors providing coverage to New Jersey residents should consider contacting their reporting vendors to ensure that the vendors have the capability to submit forms to the state. Employers and plan sponsors that handle reporting on their own should start working now to make sure current file submission programming is compatible with New Jersey’s filing system. In a more perfect world, the IRS forms will continue to request enrollment information so that states with individual mandates can “piggy-back” on those forms. If that is not the case, the rising tide of state individual mandates could because an administrative headache for employers and plan sponsors.
Updated Guidance for Health Coverage Filings
(Posted NJ Website December 13, 2019)
Starting with Tax Year 2019, the New Jersey Health Insurance Market Preservation Act (HIMPA) requires third-party reporting to verify health coverage information supplied by individual payers of New Jersey’s Income Tax.
Under HIMPA, employers and all other providers of minimum essential coverage must file information with the Division of Taxation on or before March 31, 2020. The State has no plans to offer filing extensions.
Send the appropriate 1095 health coverage verification form to each primary enrollee (usually the employee or purchaser of the policy) to whom they provided minimum essential coverage in 2019. Deadline for sending to primary enrollees is March 2, 2020.
- NOTE: This requirement is different from Federal practice as modified in December 2019. New Jersey’s Health Insurance Mandate requires 1095s be provided to primary enrollees.
- This applies to both part-year and full-year New Jersey residents. For 1095 filing purposes, a part-year resident is a primary enrollee who lived in New Jersey for at least 15 days in any month.
- By March 31, 2020, provide New Jersey with a 1095 health coverage form for each primary enrollee (usually the employee or purchaser of the policy) to whom the filer provided minimum essential coverage in 2019. This applies to both part-year and full-year New Jersey residents. For 1095 filing purposes, a part-year resident is a primary enrollee who lived in New Jersey for at least 15 days in any month.
Meeting these requirements requires that filers or their representatives register and use MFT SecureTransport services – the same system that employers use to file W-2 payroll tax forms with the State. New Jersey will not accept mailed forms.
Out-of-State Employers Who Employ New Jersey Residents Have the Same Filing Requirements as in-State Businesses.
These requirements are not limited to businesses that withhold New Jersey payroll taxes. If you are an out-of-State employer, you must ensure that NJ receive any required 1095 document for each New Jersey resident you employ. Insurers, government agencies, exchanges, multiemployer plans, and all others responsible for reporting Minimum Essential Coverage on behalf of New Jersey residents also must file the required information with the State.
Privacy concerns for non-New Jersey residents
The allowance of filings that include non-New Jersey residents raises significant privacy and legal concerns for employers who employ across the country. The State of New Jersey’s website cautions, “Out-of-state filers who provide information on non-residents of New Jersey should consult privacy and other laws pertaining to residents of other States before sending any sensitive or personal data to New Jersey.”
The 1095-C form includes the following protected information and HIPAA data:
- Social Security number
- Taxpayer name and dependent names
- Date of birth
- Health insurance enrollment dates
Employers who use this short-cut option could face sharp scrutiny from employees who do not reside in New Jersey. There may also be privacy concerns if their HIPPA protected data is provided to New Jersey without their consent.
Updated Guidance on What Forms Are Required From Whom
New Jersey will not require 1094 forms for 2019, though it will accept them if a coverage provider sends them.
The State expects to receive filings of Form 1095-C, Employer-Provided Health Insurance Offer and Coverage. Filers of Form 1095-B, Health Coverage, should use that form for New Jersey filings.
If the federal government discontinues, substantially alters, or makes unavailable Forms 1095-A, 1095-B, or 1095-C, New Jersey will deploy similar forms and require they be sent to the State and to New Jersey taxpayers.
Forms for Insurance Bought on Healthcare.gov or Any Other Exchange
Insurers who provide coverage through policies sold on the federal Healthcare.gov exchange or any other exchange must provide a 1095-B for any primary enrollee who purchases coverage. See below for more guidance on what form to use.
Guidance on Forms Sent to New Jersey:
Coverage providers can send 1095 files containing data pertaining only to part-year and full-year residents of New Jersey, or, for ease of filing, New Jersey will accept the exact same 1095 data files sent to the federal Internal Revenue Service, even if the files include data about individuals who are not residents of New Jersey. Filers who provide information on non-residents of New Jersey should consult privacy and other laws pertaining to residents of other States before sending any sensitive or personal data to New Jersey.
Requirements for filings vary depending on whether an employer is fully insured, self-insured, or a participant in a multiemployer plan. The size of a company also affects reporting requirements, as detailed below:
Fully Insured: filed by the insurer on behalf of the employer
- Single-Company, Applicable Large Employers (ALEs). ALEs generally are companies that employed an average of at least 50 or more full-time equivalent employees on business days during the preceding calendar year: Employer files 1095-C or 1095-B for each person who was a full-time employee for at least one month of the calendar year and for any employee who was enrolled in the self-insured plan. New Jersey requires only Parts I and III of Form 1095-C be completed, but will accept fully completed forms as well. ALE members that offer employer-sponsored, self-insured health coverage to non-employees may use Form 1095-B for these non-employees, or ALEs may file a 1095-C using Code 1G in Part II, to report for non-employees. For this purpose, a non-employee includes a non-employee director, an individual who was a retired employee during the entire year, or a non-employee COBRA beneficiary. This also applies to a former employee who terminated employment during a previous year.
- Single Company, Not an Applicable Large Employer (Non-ALE). Non-ALEs generally are companies that employed an average of fewer than 50 full-time equivalent employees on business days during the preceding calendar year. Here, an employer files a 1095-B for each covered employee.
- New Jersey requires only Parts I and III of Form 1095-C be completed, but will accept fully completed forms as well.
Transmitting 1095 Returns
Under New Jersey’s Health Insurance Market Preservation Act, insurers, employers, government agencies, multiemployer plans and other entities that provide health insurance must submit required information returns to New Jersey reporting on individuals’ health insurance coverage. There is no paper filing option available.
Insurers or Employers are able to provide confidential or sensitive data to the State of New Jersey using the Division of Revenue and Enterprise Services' (DORES) MFT SecureTransport service.
Taxpayers who have MFT SecureTransport service user credentials can now use them to submit the required health insurance coverage returns. Test scenarios are available.
New Jersey will accept returns submitted in bulk filing. A company responsible for submitting files for multiple companies can establish a single MFT SecureTransport Account and submit a single file containing the information for the various companies. NJ will not accept files in a zipped file format.
You will receive a submission receipt upon successful transmission which will serve as the acknowledgement. This receipt will be sent to the email associated with the MFT SecureTransport Account.
If you are required to submit a correction file to the IRS, New Jersey will also require you to submit the correction file.