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New Jersey Individual Mandate Requires State Filings in March 2020

The Affordable Care Act’s individual mandate (i.e., the requirement that most individuals obtain adequate health insurance or pay a penalty) is dead.  A side effect of the ACA mandate’s demise is that states are beginning to step-in and pass their own versions of the individual mandate.  Massachusetts, of course, has long had an individual mandate in place for its residents.  Since the ACA mandate’s repeal, California, the District of Columbia, New Jersey, Rhode Island, and Vermont have passed individual mandates.  Several other states are also considering enacting individual mandates.  As these state laws become more prevalent, employers and plan sponsors need to consider whether these states have reporting requirements similar to the ACA’s requirements under Sections 6055 and 6056 of the Internal Revenue Code.  This blog highlights the filing requirement in New Jersey, under which forms must be filed with the state by March 31, 2020.

Similar to the repealed ACA individual mandate, New Jersey requires its residents to obtain minimum essential health coverage (subject to various exemptions) or pay a penalty.  To assist the state in verifying enrollment information provided by taxpayers, employers and plan sponsors (whether or not domiciled in New Jersey) providing coverage to New Jersey residents will need to submit to the state the same forms required under Sections 6055 of 6056 of the Internal Revenue Code (i.e., Forms 1094/5-B and 1094/5-C).  The forms must be submitted electronically through the Division of Revenue and Enterprise Services’ MFT SecureTransport service, which is the same system for processing W-2 forms.

Currently, the existing IRS Forms 1094/5-B and 1094/5-C contain the information New Jersey needs to verify enrollment, and therefore, New Jersey is willing to accept those forms.  However, New Jersey notes that if the IRS changes the forms, it is possible that the state will develop its own forms.  This is an important point, because as of the date of this blog, the IRS has not issued draft Forms 1094/5-B or 1094/5-C for 2019.  Given that 2019 is the first year without the ACA’s individual mandate, it is possible that the IRS is developing significantly revised forms (and, hence, the delay).

Employers and plan sponsors providing coverage to New Jersey residents should consider contacting their reporting vendors to ensure that the vendors have the capability to submit forms to the state.  Employers and plan sponsors that handle reporting on their own should start working now to make sure current file submission programming is compatible with New Jersey’s filing system.  In a more perfect world, the IRS forms will continue to request enrollment information so that states with individual mandates can “piggy-back” on those forms.  If that is not the case, the rising tide of state individual mandates could because an administrative headache for employers and plan sponsors.

© 2020 Proskauer Rose LLP. National Law Review, Volume IX, Number 298


About this Author

Damian A Myers Labor and employment law attorney proskauer rose
Senior Counsel

Damian Myers is an Associate in the Employee Benefits, Executive Compensation and ERISA Litigation Practice Center, resident in the Washington, DC office.

Damian represents public and private companies on matters related to employee benefits and executive compensation including compliance with ERISA, tax, corporate and securities laws and regulations affecting employee benefit plans, programs and arrangements. He concentrates on all aspects of compensation and employee benefit programs, including the design, implementation, administration and funding of non-qualified retirement...

Annie Zhang Labor Employment Law Clerk
Law Clerk

Annie Zhang is a law clerk in the Labor & Employment Law Department and a member of the Employee Benefits & Executive Compensation Group.

Annie graduated cum laude from Washington University School of Law where she was executive articles editor for the Washington University Journal of Law and Policy and president of the Asian Pacific American Law School Association. Annie was also a Scholar in Law and earned CALI Awards in Employee Benefits: ERISA & Tax, Practical Legal Writing and Analysis, and Legal Practice. During law school, Annie was a legal intern at the Department of Justice in Washington, D.C.

Prior to law school, Annie was a project manager and implementation consultant in the healthcare industry.