On June 27, 2019, California Governor Gavin Newsom signed Senate Bill Number 78, making California the fourth state to enact an individual mandate for health insurance.
California joins Massachusetts, New Jersey, Vermont and the District of Columbia in putting in place requirements that individuals purchase minimum essential healthcare or pay a penalty.
Multiple other states, including Washington, Minnesota, Rhode Island, Hawaii, Oregon, Maryland and Connecticut are considering similar legislation designed to provide support to the individual healthcare marketplace. While proponents believe the individual mandates will help maintain lower healthcare premiums overall, critics claim this is an overreach of state authority designed to shift the cost of healthcare to younger, healthier populations.
Each state’s requirements are slightly different, although most states contain some level of employer reporting requirement designed to support the individual mandates. Additionally, many states are attempting to mirror their reporting after the federal 1094/1095 reporting. This could simplify some aspects of this reporting for employers.
What does this mean for employers? Additional reporting is now required. Massachusetts reporting has been around for a while, but New Jersey and Washington, DC’s reporting are due in February 2020, and Vermont and California add reporting in early 2021, for tax year 2020.
Here is a quick roundup of current state or municipality individual mandates:
- Massachusetts - Reinstated as of 2018
- Washington DC - Effective 1/1/2019
- New Jersey - Effective 1/1/2019
- Vermont - Effective 1/1/2020
- California - Effective 1/1/2020
Employers with populations in these states should be aware of these new or existing requirements – and consulting with their legal and tax counsels regarding reporting needs. As additional states enact such legislation, employers will need to ensure they are planning appropriately to support the employer reporting requirements, whether the reporting is required to be sent to the state, or directly to the employee.
We can help you navigate these updates.