Alert / Employee Benefits
New Jersey gives employers first peek at reporting requirements for state’s individual mandate

Last year, New Jersey enacted a law imposing an Affordable Care Act-like individual health insurance coverage mandate on New Jersey taxpayers, beginning in 2019. As explained in our Alert, the law is in response to Congress’s cancellation of the ACA’s individual mandate penalty. It is designed to continue to provide an incentive for New Jersey’s uninsured to obtain health insurance coverage through an employer, an ACA online marketplace or FamilyCare, the state’s Medicaid program.

Lockton comment: New Jersey became the second state, after Massachusetts, to impose an individual health insurance coverage mandate. The District of Columbia followed suit by including an individual mandate for the District’s taxpayers, also effective in 2019. As noted in our Alert, Vermont has laid the groundwork for an individual mandate to apply there in 2020.

New Jersey has created a new website to help employers comply with the state’s individual mandate reporting requirements. Fortunately, the New Jersey law imposes the same obligation on New Jersey residents that the ACA’s individual mandate did (i.e., have at least “minimum essential coverage,” or MEC) and levies the same penalties for noncompliance, except the penalties are payable to the state.

Lockton comment: Why would an employer with employees living in in New Jersey be concerned about the state’s individual mandate? New Jersey employees will expect their employment-based health coverage to satisfy the MEC requirement. If an employer does not provide that coverage or does not properly report that coverage to the state, its employees will face penalties when they file their 2019 New Jersey tax returns next year. While that does not raise direct penalties for the employees, employers will likely not want to put their employees in that position.

New Jersey will require employers to report to the state that their health plan coverage for employees provides at least MEC insurance. According to the state website, “Employers who already use Form 1094-C …  and Form 1095-C … to report health coverage information federally, will be required to remit copies of these documents to the New Jersey Division of Taxation on or before February 15th following the close of each calendar year, beginning in 2020.”

The website indicates, “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.” Similarly, the website indicates that insurance companies that provide fully insured coverage will be required to submit Forms 1095-B.

New Jersey will have to issue administrative guidance to implement the new reporting requirements. For now, affected employers should be aware of the impending obligation to share their ACA filings with New Jersey, and should confirm their insurer or ACA reporting vendor is willing to assist. Keep in mind the insurer or reporting vendor may insist on additional fees for their efforts.

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