States Implement ACA and Require Employer Reporting

The Affordable Care Act requires virtually all Americans to have health insurance coverage or pay a tax penalty. The requirement to have health insurance is referred to as the “individual mandate” and the tax penalty is referred to as the “shared responsibility payment.” Starting with the 2019 plan year, the shared responsibility payment is reduced to $0, thereby effectively eliminating the individual mandate.

Some states, worried about only the sickest residents enrolling in their health care exchanges, responded by implementing their own state-based individual mandates. These states require their residents to have qualifying health coverage or pay a fee with their state taxes. States that have implemented an individual mandate include New Jersey (2019), California (2020), Massachusetts (2006), Vermont (2020), Rhode Island (2020) and District of Columbia (2019).

Some of the states that require individuals to have health coverage also impose reporting responsibilities on employers who employ residents of the state. BAS is following state health care reform initiatives closely and will be prepared to help you with state ACA reporting requirements as they become effective. This is a continuously changing area, and BAS will keep up-to-date on state developments.

State Effective Date of Individual Mandate Individual Mandate Penalty Amount Employer Reporting Obligation
Massachusetts 2006 $264-$1,524 per taxpayer Yes. Insurers report for insured coverage. Employers for self-funded coverage.
New Jersey 2019 2.5% of salary/$695 per taxpayer Yes, starting in 2020. Based on Federal 1095/1094 forms, filed through state W-2 system
District of Columbia 2019 2.5% of salary/$700 per taxpayer Yes, method not communicated
Vermont 2020 Not determined Not communicated
California 2020 2.5% of salary/ $695 per adult/ $347.50/child Yes, to Franchise Tax Board and individuals, forms to be developed
Rhode Island 2020 2.5% of salary/ $695 per adult/ $347 per child Yes, method not communicated
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