Effective in 2019, the federal penalty for individuals not carrying health insurance was reduced to $0. Now, add California to the list of states enacting their own individual mandate options. The mandate, signed into law this summer, will take effect Jan. 1, 2020. In many ways the law is similar to the mandates passed in other states, including New Jersey. But there is one clause all employers with employees who reside in California certainly will want to be mindful of.
Let’s take a look.
Basic components of the California Individual Mandate Employer Reporting
To start, let’s look at how the California mandate affects employers’ compliance requirements. Based on early indications, California will require employers with employees or COBRA participants who have resided in the state at any time during the year to provide information on insurance coverage. Similar to IRS federal requirements, employers will be required to submit Forms 1094 and 1095 to the State. California has indicated the deadline for submission will be the same as the federal requirement (March 31).
Submission of these forms can be done through the State of California’s Swift System and be filed in an XML format. At this time, there is no plan to assess a filing fee.
Employer penalty risk
While many aspects of California’s individual mandate mirror those of New Jersey and Washington D.C., there is one important differentiator that employers need to be aware of: Expect the Golden State to be active in enforcing applicable employer penalties.
Employers will be fined $50 per unreported individual and that these fines will grow on a case-by-case basis without a maximum ceiling. If this aspect is carried through, it would make California only the second state (Massachusetts was the first) to enforce both an individual and employer filing penalty.
More information surrounding requirements is expected to be flushed out at tax time, but given the size of the state economy and the potential for associated penalties, the California individual mandate is certainly one companies across the country will be keeping a close eye on.
Keeping up with individual mandate changes
As the expectations surrounding compliance change from state to state, companies need a dependable partner they can count on to guide them toward their plan goals.
Health e(fx) can help. Offering a leading compliance, analytics and workforce solution, Health e(fx) allows companies to track their compliance considerations and coverage options no matter where they do business.
Health e(fx) can support companies trying to navigate the California state mandate by offering:
- State configuration and setup
- Employee filing message on all forms
- Form audit and approval
- Employer filing and submission
- Corrections process
- State ledger reports