Does Your Company Have to File Forms 1094/1095 in New Jersey?
Last week, the IRS issued it updated Form 1094-C and 1095-C instructions for 2019. Employers that employ New Jersey residents, however, may have more reading to do. New Jersey responded to the federal repeal of the Affordable Care Act’s (ACA) individual mandate, by enacting a mandate of its own. The New Jersey Health Insurance Market Preservation Act (Act), which became effective on January 1, 2019, imposes a penalty on New Jersey taxpayers who do not have minimum essential coverage during each month of the year. But, the Act also imposes some obligations for employers.
Requirements for individuals
Beginning January 1, 2019, Garden State residents who fail to maintain coverage will be subject to a Shared Responsibility Payment (SRP) due with their 2019 New Jersey Income Tax return. The amount of the SRP is generally based on income and family size and is capped at the statewide average annual premium for Bronze Health Plans in New Jersey. For individual taxpayers, the penalty could be as little as $695 or as much as $3012, and it goes up from there for families. Find out more here.
Requirements for employers
In order to administer the penalty, New Jersey needs third parties to verify health coverage information supplied by individual taxpayers. Accordingly, the state is looking to employers (including out-of-state employers) and all other providers of minimum essential coverage to New Jersey residents to send health-care coverage returns to the state for the 2019 tax year. In short, this means that for 2019, employers that employed New Jersey residents may have to make a filing with the state. Employers will transmit these returns through New Jersey’s system for processing W-2 forms.
One question some employers have is whether they have a reporting requirement to New Jersey, even if they do not have Form 1094/1094 reporting requirements under the ACA to the IRS – such as if the employer is not an “applicable large employer” under the ACA and offers only fully-insured coverage. The Act generally provides that every employer sponsoring an employment-based health plan that provides minimum essential coverage to a New Jersey resident must file a return with the state concerning that resident’s coverage. In the absence of additional guidance from the state, employers with New Jersey residents should seek appropriate counsel concerning their reporting obligations.
If reporting is required, the state will permit employers to send the same Forms 1094/1095 that they transmit to the IRS to satisfy the Act’s requirements. However, the state encourages companies to send data pertaining only to New Jersey full-year and part-year residents as providing information on non-residents of New Jersey may raise privacy and other issues. Coverage returns must be filed with New Jersey no later than March 31, 2020.
Employers with New Jersey employees also may want to encourage their employees who receive Form 1094/1095 from them to provide those forms to the employees’ dependents for completion of their own NJ state tax returns, if applicable.