While state individual mandate reporting is not new this year, it just became more important to pay attention to.
When a major event happens that poses a threat, like the COVID-19 pandemic, many of our life norms change. Some short term and some for the long term. Over the last few months, companies—even those that were not the biggest proponents of having a virtual workforce—have been forced to become more flexible. Some companies across the nation are even questioning whether they still need their extensive — and expensive — corporate locations.
If workplace flexibility becomes the next expected employee perk, then employers will need to continue to offer this benefit as they hire and retain quality people. And by breaking out of rigid job location constraints could allow new doors to open that match the right talent to critical company needs.
Yet, as HR hiring strategies change, so does an employer’s compliance reporting needs. By opening your talent pool to top-notch employees nationwide, you open new potential hurdles, especially pertaining to state-based individual mandates.
Common misconception: Individual mandates don’t apply to companies if they don’t operate in that state
As a company, complying with your individual state mandate requirements are judged not by the state in which you operate in, but by the state(s) in which your employees live.
For example, Massachusetts, California, New Jersey, Rhode Island, and D.C have employer reporting requirements for their covered individuals who reside in these states.
This means as you hire remote employees nationwide, you would be responsible for following the state-based individual mandates and meeting the necessary reporting requirements for every state in which you have employees. It would also apply to traditional in-office hires if your company is located near the state’s boundary line and you have employees that come over the border to work each day.
For example, if your company has a national sales team, you are required to report on any sales staff that live in a state with an individual mandate.
All of this is in sharp contrast to many other laws and regulations your company may be following that are solely tied to the state where you are situated. However, when it comes to individual mandate adherence, your company is expected to follow each state’s unique mandate guidelines.
What does it mean to be a “resident?”
Now that we’ve pointed out you need to be mindful of where your employees live, your next step is to determine their residency as it applies to each state’s individual mandate.
Unfortunately, this process is not as simple as following the state guidelines that coincide with your employee’s home address. This is because different states define “resident” in different ways as it applies to their individual mandate. Some states qualify a person as a resident if they live in the state as little as 15 days in any given month. Others deem a person as a resident if they simply own property — or have a physical address — in the state. This could include a seasonal cabin or other recreational use property.
Finally, some states may use different parameters altogether to determine residency for their reporting purposes. These parameters can even be different from those used to determine domicile or marriage matters in the state.
All this underscores why it is so important for your HR team to truly understand what is expected of you, not only in your state but in the states where your employees work and thrive. Start by reviewing state legislation — including applicable regulations and sub-regulatory guidelines for every state where you have employees. The associated state agency responsible for overseeing your employer requirements should have the information you need. And, as always, if you have any questions, reach out. We’re always here to help.
Learning more about common individual mandate misconceptions
Recognizing your responsibility to employees who live outside your state is an important misconception to overcome but it is only one of several many companies face when it comes to meeting their reporting obligations. To help companies navigate this and other challenges, we’ve created our latest eBook , “Six Misconceptions Employers Have Around State-Based Reporting.”
Inside you’ll find detailed information on the most common mistakes employers make surrounding their reporting requirements and how your company can use this information to maintain your compliance and simplify your process. This eBook is a treasure trove of information no matter where your company resides or does business, so don’t delay, download the eBook today.