When the federal Affordable Care Act tax penalty for not maintaining health coverage was reduced to $0, many states implemented their own mandates for residents to carry appropriate insurance. California was one of those states. Starting this year, most California residents (and their dependents) must have individual, Marketplace or employer-provided health coverage or pay a state tax penalty.
With limited exceptions, the California law imposes a penalty tax on any resident who files California income tax returns and does not have coverage for themselves and their spouses, dependent children and resident domestic partners.
Employers that sponsor self-funded health plans along with other providers of health coverage must report offers of coverage to the California Franchise Tax Board by March 31 of the year following the coverage year. Additional notices must be sent to the covered individuals by January 31. An employer that does not properly report may be subject to fines per individual per tax year.
California released its specifications and instructions for the 2020 state ACA filing due March 31, 2021. California is following federal ACA rules and employers may satisfy their California ACA reporting requirements with the federal Form 1094/1095. This means employers providing coverage statements to individuals using IRS Forms 1095-B or C will not be required to provide a separate state notice. It also means the IRS Form 1094 may be submitted to the California State Franchise Board in satisfaction of the employer reporting requirement.
Information about the California ACA reporting requirement may be accessed by clicking here.
Employers that engage BAS for ACA data collection and reporting services may contract with BAS for California state reporting compliance.