On January 1, 2020, California (CA) enacted its own individual mandate similar to the repealed federal individual mandate that requires residents and their dependents to obtain and maintain minimum essential coverage.
The CA mandate also brings along a reporting requirement for employers which is necessary because the state of CA needs to be able to reconcile which individuals were covered for purposes of assessing a penalty to its residents.
Additionally, Applicable Large Employers (ALEs) who offer medical coverage to CA residents must provide 1095-C statements to employees by January 31st which does not coincide with the federal extension. At this time, CA has not issued plans to provide an extension on this date.
Breaking news: The CA Franchise Tax Board (FTB) has indicated on its website that while the 1095C statements remain due to individuals by January 31, 2022, the FTB will not impose penalties for failure to provide statements by this date.
The reporting element of the new mandate requires certain employers to submit 1095Cs to the CA Franchise Tax Board (FTB) by March 31, but there is an automatic extension until May 31 in effect.
The below information is related to the CA FTB reporting requirements for certain employers.
Employers with fully insured medical plans can rely on their carriers to report the appropriate information to the state of CA via the 1095-B form. There is no action needed for employers that sponsor fully insured medical plans.
Employers with self-insured medical plans or MECs offered to CA residents must report annually to the CA FTB. Employers that sponsor self-insured medical plans or MECs must take action to ensure compliance with the January 31 deadline.
Who must comply? Employers with self-funded medical plans or MECs covering CA residents. This includes non-CA employers that employ CA residents.
Who will report on behalf of the self-insured medical plans? Generally, it is the employer’s responsibility. However, employers may partner with their payroll vendors to transmit this information.
Are there any exceptions? Non-ALE employers that sponsor a self-insured medical plan.
How does my organization report? Click on the link here to get started.
What information is my organization reporting to the CA FTB? The employer will use the same 1094/1095-C forms used to report information to the IRS.
What is the deadline to report? Forms must be filed with the FTB or postmarked if mailed by March 31. An automatic two month extension is granted for filing forms with the FTB, making the final deadline May 31st.
The penalty for failure to file a correct information return is $50 per individual included on a return for which the failure occurs.
Summary:
ALEs offering medical coverage to CA residents should ensure 1095-C statements are provided to employees by the CA reporting deadline of January 31, 2022.
Additionally, employers that sponsor self-insured medical plans or MECs will need to comply with the CA state reporting mandate by May 31, 2022.
Written by: Michelle Cammayo
IMA will continue to monitor regulator guidance and offer meaningful, practical, timely information.
This material should not be considered as a substitute for legal, tax and/or actuarial advice. Contact the appropriate professional counsel for such matters. These materials are not exhaustive and are subject to possible changes in applicable laws, rules, and regulations and their interpretations.