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:
Send the appropriate 1095 health coverage verification form to each primary enrollee (usually the employee or purchaser of the policy) to whom they provided MEC in 2019. Deadline for sending to primary enrollees is March 2, 2020.
By March 31, 2020, provide NJ with a 1095 health coverage form for each primary enrollee (usually the employee or purchaser of the policy) to whom the filer provided MEC in 2019.
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:
Single-Company, Applicable Large Employers (ALEs). ALEs generally are companies that employed an average of at least 50 full-time-equivalent employees on business days during the preceding calendar year. Health coverage provider (the insurer) files 1095-B for each covered member of the plan. The employer or the insurer can send Form 1095-C forms in lieu of, or in addition to, 1095-B forms. NJ requires only Parts I and III of Form 1095-C be completed, but will accept fully completed forms as well.
Single-Company, Non-ALE. Non-ALEs generally are companies that employed an average of fewer than 50 full-time equivalent employees on business days during the preceding calendar year. In this case, the health coverage provider (the insurer) files 1095-B for each covered member of the plan.
Fully Insured Employer Participating in a Multiemployer Plan. A plan sponsor (generally a board of trustees) files 1095-Bs for enrolled individuals. The employer or the plan sponsor can also send Form 1095-C forms in lieu of, or in addition to, 1095-B forms. NJ requires only Parts I and III of Form 1095-C be completed, but will accept fully completed forms as well.
Single-Company, ALEs. ALEs generally are companies that employed an average of at least 50 or more full-time equivalent employees on business days during the preceding calendar year: Employer files 1095-C or 1095-B for each person who was a full-time employee for at least one month of the calendar year and for any employee who was enrolled in the self-insured plan. NJ requires only Parts I and III of Form 1095-C be completed, but will accept fully completed forms as well. ALE members that offer employer-sponsored, self-insured health coverage to non-employees may use Form 1095-B for these non-employees, or ALEs may file a 1095-C using Code 1G in Part II, to report for non-employees. For this purpose, a non-employee includes a non-employee director, an individual who was a retired employee during the entire year, or a non-employee COBRA beneficiary. This also applies to a former employee who terminated employment during a previous year.
Single Company, Non-ALE. Non-ALEs generally are companies that employed an average of fewer than 50 full-time equivalent employees on business days during the preceding calendar year. Here, an employer files a 1095-B for each covered employee.
Self-Insured Employer Participating in a Multiemployer Plan. A plan sponsor (generally a board of trustees) shall file a 1095-B for each covered employee. The employer or the plan sponsor can send Form 1095-C forms in lieu of or in addition to 1095-B forms. NJ requires only Parts I and III of Form 1095-C be completed, but will accept fully completed forms as well.
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.