As an employer, managing your ACA requirements isn’t always easy. However, if your company operates in several states, the challenges you face associated with your ACA compliance considerations could become much more difficult.
Today we’re providing you a primer on what you need to know about how state requirements will affect your company’s compliance.
Why the change?
A short question with a tremendously long answer. At its highest level, the influx of state regulation can be tied to a relaxation of federal rules and exemptions, all tied to the ACA’s individual mandate. With the removal of the individual mandate penalty, states have been left looking for ways to stabilize their healthcare markets and to continue to provide affordable healthcare to their constituents.
These “ways” naturally vary from state to state, but many are adopting their own version of the individual mandate. While requiring individuals to have health insurance certainly can add some political pressure, many states feel such initiatives are worth it and that the absence of such a policy is more problematic.
The industry — or state — leaders
Massachusetts was the first out of the gate to enact its own individual mandate — which officially took effect in 2006. This mandate was actually the model for the federal provision included in the ACA. Under the Massachusetts mandate, adults who do not have healthcare coverage are subject to penalty. Data from 2016 shows that more than 97 percent of all Massachusetts residents have health insurance, the highest percentage in the country.
Following Massachusetts’ lead, the state of New Jersey passed its own individual mandate law with Gov. Phil Murphy signing the bill into law on May 30, 2019. The second state to adopt its own individual mandate, the New Jersey law requires residents to secure health insurance or pay a fine of either 2.5 percent of their household income or $695 per adult and $347.50 per child, whichever is greater. The maximum penalty possible — based on household income — equates to the average yearly premium of a bronze plan — a powerful motivator to comply with the state’s mandate.
Nevertheless, the state expects to collect between $90 million and $100 million in penalties and the money collected will be used to fund the New Jersey Health Insurance Premium Security Fund. The fund — also recently signed into law — will help pay the claims of people who are catastrophically ill. The money will also provide stability to the pool of people with catastrophic claims, so their medical premium rates don’t rise dramatically.
While Massachusetts and New Jersey were the first states to adopt their own individual mandates, they aren’t alone. Washington, D.C.’s, own individual mandate went into effect this year and Vermont’s mandate is slated to go into effect in 2020. Other states, including Connecticut, Maryland, Hawaii, Minnesota and Washington, have also indicated interest in developing individual mandate options.
What do state individual mandates mean for your company?
If your company operates in numerous states, each new individual mandate enacted adds a new level of complexity and penalty risk. Instead of complying with one individual mandate across the country, you will now be tasked with complying with each individual mandate as it applies to your employees in those states.
This naturally ups the difficulty level of maintaining compliance, particularly if your company does not have a compliance and reporting technology solution that updates to handle different state form regulations. If this latter situation sounds like your company, don’t delay; penalties administered for non-compliance certainly won’t.
Finding the right partner for your 2019 reporting
Unknowns still remain, but it is expected that states adopting an individual mandate requiring individuals to carry coverage will need a way to validate that the employee has coverage either on the exchange or through their employer. This latter validation would likely come through a state tax form.
At Health e(fx) we are committed to helping companies like yours comply with state individual mandates. That’s why we’re expanding the functionality currently offered through our solution to support Washington D.C. and New Jersey needs for individual and employer filing and submissions.
To learn more about how we can help your company become better prepared for healthcare reform changes, contact us today at email@example.com and/or follow us on LinkedIn or Twitter. We’re here to work for you, because even as state-based mandates change, our commitment to your compliance remains the same.
*Preliminary product information, subject to change.
August 26, 2019