In late January, the state of New Jersey posted new information about its individual health insurance mandate that went into effect on January 1 of this year. Of interest to most impacted employers are the tactics and mechanics associated with how this mandate will be enforced. Here is what we know about its impact upon the annual reporting process:
- Beginning with calendar year 2019, employers must provide the “same” Forms 1094-C and 1095-C to the State of New Jersey as they provide to individuals and the Internal Revenue Service today under the Affordable Care Act (ACA). While the forms are the “same”, we expect the information to be provided to be different in that an employer would not reasonably be expected to submit information to this state on individuals not subject to this mandate.
- The reporting obligations will be felt by any employer that employs New Jersey residents. Out-of-state employers that withhold and remit New Jersey Gross Income Tax for New Jersey residents have the same filing requirements as businesses located in New Jersey. Federal reporting gives little, if any, regard to state-specific considerations. As a result, reporting processes and systems will now require this specific population to be isolated or “carved out” from the collective whole associated with each Applicable Large Employer.
- The first forms are to be sent to the New Jersey Division of Taxation by February 15, 2020. This deadline sits roughly two weeks in advance of the regularly extended IRS issuance deadline and well in advance of the IRS submittal deadline, which typically runs until the end of March. Those supporting form-related processes will likely need to isolate impacted employers and expedite handling in order to comply with this more ambitious deadline.
- The 1095-C form content will continue to be shaped by plan funding arrangements (fully insured vs. self-insured).
- It does not appear at the moment that any electronic submission method will be available. The state website says employers will be required to “remit copies of these documents”.
Of course, the potential game changer to all this would come with a decision by the federal government to alter its reporting requirements in response to the discontinuation of its individual mandate. Should this happen, the state of New Jersey has very generally stated that it will “deploy similar New Jersey forms”.
The Bottom Line
New Jersey’s recent posting gives us enough to go on for now, yet is generally light on details. Without question and as outlined, this mandate and its reporting requirements will add to the federal reporting process. We will continue to monitor developments in this area throughout 2019 and be prepared to introduce more specific considerations as both this state’s and the future federal reporting landscapes take shape.
The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.