Effective January 1, 2019, New Jersey (NJ) required its residents to maintain health insurance (minimum essential health coverage) throughout 2019 and beyond, unless an exemption applies. See this NJ website for more on this mandate. Failure to have health coverage or qualify for an exemption will result in an Individual Shared Responsibility Payment to be paid with the individual’s 2019 NJ Income Tax Return. Penalties imposed by the NJ Health Insurance Market Preservation Act (HIMPA mandate) will be used to stabilize and subsidize a NJ state insurance program. The HIMPA effectively adopts the individual mandate rules under the Affordable Care Act (ACA), including the tax penalties that were in effect for individuals before the federal individual mandate penalties were reduced to zero effective as of January 1, 2019. The HIMPA does not include an employer mandate, so the law does not currently require employers to provide health coverage options to their employees. The HIMPA does include an employer reporting requirement.
Employer Reporting Requirement
Employers, regardless of size, who offer minimum essential coverage (MEC) to employees will need to adhere to a new ACA information filing requirement with NJ. This NJ filing requirement is in addition to the ACA filing requirement for Applicable Large Employers (ALEs). Specifically, the HIMPA includes an employer reporting requirement that closely tracks federal ACA reporting requirements, although there are some notable differences. To help employers comply, NJ has now launched an official website which addresses the reporting requirement as well as the application of the rules to out-of-state employers of NJ residents, employers with fewer than 50 employees, insured vs. self-insured employers, and adult children. Under the law, reporting entities are required to send a return to the NJ State Treasurer as well as to the individual. The below reflects updated guidance (posted December 13, 2019) for NJ health coverage filings.
Under HIMPA, employers and all other providers of MEC must file information with the NJ Division of Taxation on or before March 31, 2020. NJ has no plans to offer filing extensions. Filers must:
The above applies to both part-year and full-year NJ residents. For 1095 filing purposes, a part-year resident is a primary enrollee who lived in NJ for at least 15 days in any month. Filers or their representatives register and use MFT SecureTransport services – the same system that employers use to file W-2 payroll tax forms with the State (NJ will not accept mailed forms).
Out-of-State Employers Who Employ NJ Residents Have the Same Filing Requirements as in-State Businesses
These requirements are not limited to businesses that withhold NJ payroll taxes. An out-of-state employer must ensure that NJ receives any required 1095 document for each employed NJ resident. Insurers, government agencies, exchanges, multiemployer plans, and all others responsible for reporting MEC on behalf of NJ residents also must file the required information with the State.
Updated Guidance on What Forms Are Required From Whom
NJ will not require 1094 forms for 2019, although they will accept them if a coverage provider sends them. NJ expects to receive filings of Form 1095-C, Employer-Provided Health Insurance Offer and Coverage. Filers of Form 1095-B, Health Coverage, should use that form for NJ filings.
Guidance on Forms Sent to NJ
Coverage providers can send 1095 files containing data pertaining only to part-year and full-year residents of NJ, or, for ease of filing, NJ will accept the exact same 1095 data files sent to the federal IRS, even if the files include data about individuals who are not residents of NJ. Filers who provide information on non-residents of NJ should consult privacy and other laws pertaining to residents of other States before sending any sensitive or personal data to NJ.
Requirements for filings vary depending on whether an employer is fully insured, self-insured, or a participant in a multiemployer plan. The size of a company also affects reporting requirements:
Adult Children: Under the federal ACA, adult children up to the age of 26 may be covered by their parents’ health plan. HIMPA does not require Forms 1095-B or 1095-C be provided separately to children covered by their parents’ health plans. It is recommended that employers advise employees to provide a copy of any Form 1095-B or 1095-C containing coverage information to their children residing in NJ.
We will continue to provide updates on the NJ reporting rules as further information becomes available. Contact your Conner Strong & Buckelew account representative toll-free at 1-877-861-3220 should you have any questions. For a complete list of Legislative Updates issued by Conner Strong & Buckelew, visit our online Resource Center.