Updated 1/10/20 with additional guidance on the employer reporting and distribution requirements.
The New Jersey Health Insurance Market Preservation Act (“NJ Individual Mandate”) requires NJ residents to maintain minimum essential health coverage (“MEC”) or face a tax penalty. Starting in 2020, the NJ Individual Mandate imposes obligations on employers who provide MEC to employees who are NJ residents.
Employers who provide MEC to employees who are NJ residents must:
- Distribute IRS Forms 1095-B/C to NJ residents. The first distribution deadline in March 2, 2020.
- Submit coverage information to the state through MFT Secure. The first reporting deadline is March 31, 2020.
Background
Effective January 1, 2019, the NJ Individual Mandate requires residents to maintain MEC or qualify for an exemption. If a resident does not maintain coverage, they will be liable for a Shared Responsibility Payment. The NJ Individual Mandate serves as a state replacement for the now-repealed federal individual mandate under the Affordable Care Act (“ACA”).
Employer Obligations
In order to verify whether an individual maintains MEC, the NJ Individual Mandate requires employers who provide MEC to residents to report health care coverage to the state and distribute a copy of their ACA reporting forms to those residents.
Who do employer obligations apply to?
NJ employers and out-of-state employers that provide MEC to employees who are NJ residents are subject to the employer obligations. Employer obligations are not limited to businesses that withhold NJ payroll taxes.
Important Note for Fully Insured Employers: If carriers submit reporting to the state, employers do not need to file separate reporting. Employers should ensure that carriers are submitting the required reporting, as the state can hold employers and carriers jointly liable for failing to submit reporting. Additional details are discussed below.
What forms do employers need to submit to the State?
Employers must submit 1095 forms for each primary enrollee (employees who are either part-year or full-year NJ residents) that the employer provided MEC. Employers must provide the state with the same 1095 forms that they provide to the IRS as a part of their ACA Reporting. The forms that must be submitted depend on whether an employer is an Applicable Large Employer or “ALE” (those with 50+ full time and equivalent employees in the prior calendar year) and whether they are fully or self-insured. Fully-insured employers whose carrier submits Form 1095-B to the state (for each covered employee who is a resident of New Jersey) do not need to submit separate reporting.
For the required forms, see the grid below:
| Fully Insured Plans | Self-Insured Plans | |
| Non-ALE | Insurer will file a 1095-B for enrolled individuals. | File 1095-B |
| ALE | Insurer will file a 1095-B for covered individuals. If insurer does not file 1095-B, employers must file 1095-Cs (Parts I and II completed). | File 1095-C (Parts I and III completed) |
Fully-Insured Employers: For employers with fully-insured plans, carriers are required to submit Forms 1095-B to the state for each covered employee who is a resident of New Jersey. Employers with fully insured plans should ensure that their carrier is submitting these forms to the state. If no forms are filed, the state can hold employers and insurers jointly liable for the failure to file forms.
- If the carrier submits these forms, fully-insured employers do not need to submit additional reporting.
- If the carrier does not submit Forms 1095-B to the state, employers should submit Forms 1095-B or 1095-C to the state for each covered employee who is a resident of New Jersey.
Self-Insured Employers:
- Non-ALE: Employers are required to submit Forms 1095-B for each covered employee.
- ALE: Employers are required to submit Forms 1095-B or 1095-C for each individual who was a full-time employee for at least one month of the calendar year, each covered employee, and each covered non-employee (non-employee director, non-employee retiree, or non-employee COBRA beneficiary).
If in the future, the federal government no longer requires ACA reporting, the state will devise similar forms for employers to submit to comply with the NJ Individual Mandate.
When must employers submit their reporting?
Employers must provide coverage information electronically by March 31st following the end of the plan year. The first reporting is due March 31, 2020.
How do employers complete their NJ Individual Mandate reporting?
Employers must file health coverage forms electronically through the State’s system for filing W-2 forms.
To whom do employers need to send 1095 forms?
Employers must send the forms to both part-year and full-year NJ residents who primary enrollees on their plans. A part-year resident is a primary enrollee who lived in NJ for at least 15 days in a month.
Do employers who distribute 1095 forms to employees as a part of their federal ACA obligation need to distribute another form to NJ residents?
No, employers who distribute Form 1095-B or 1095-C to NJ residents as a part of their ACA obligations do not need to send an additional form.
Important Note: The IRS rule that allows non-ALE self-insured employers to post employees’ 1095-B on a website instead of distributing 1095-B forms to employees for 2019 ACA reporting does not apply to the NJ individual mandate. These employers must still distribute 1095-B Forms to their NJ employees.
When is the deadline to distribute forms?
The first distribution is due March 2, 2020, which is the same deadline for 2019 ACA distribution. For subsequent years, it is unclear whether the NJ Individual Mandate distribution deadline will track the federal deadline and include any deadline extensions by the IRS.
Additional Resources
The information and materials on this blog are provided for informational purposes only and are not intended to constitute legal or tax advice. Information provided in this blog may not reflect the most current legal developments and may vary by jurisdiction. The content on this blog is for general informational purposes only and does not apply to any particular facts or circumstances. The use of this blog does not in any way establish an attorney-client relationship, nor should any such relationship be implied, and the contents do not constitute legal or tax advice. If you require legal or tax advice, please consult with a licensed attorney or tax professional in your jurisdiction. The contributing authors expressly disclaim all liability to any persons or entities with respect to any action or inaction based on the contents of this blog.
