This article was originally published on 8/28/20. It has been updated and revised on 9/30/20 with additional guidance and clarification from the California Franchise Tax Board. Most notably, all self-insured employers are required to submit California mandate reporting, regardless of their Applicable Large Employer (ALE) status.

After the Affordable Care Act (ACA) individual mandate penalty was reduced to $0 in 2019, states began passing their own individual mandates that penalized residents for failing to maintain healthcare coverage. California was among the states that passed an individual mandate (California Mandate) that required residents to maintain minimum essential coverage (MEC) starting January 1, 2020.

To help identify which residents complied with the individual mandate, the mandate requires certain employers who provide MEC to California residents to submit annual reporting to the California Franchise Tax Board (FTB) and to distribute statements to residents. Recently, the FTB released a draft of 2020 Publication 3895C, which provides additional guidance on these employer obligations.

Compliance Snapshot

  • All self-insured employers who provided coverage to California residents in 2020 are required to submit copies of their ACA reporting forms to the FTB by March 31, 2021 and distribute copies of Forms 1095 to those residents by January 31, 2021 (this distribution is already required under the ACA).
  • Fully insured employers are not required to submit California Mandate reporting as long as their insurer reports to the FTB, which insurers are required to do.

Frequently Asked Questions

Which employers must submit California Mandate reporting?

All employers who offer coverage to California residents through a self-insured plan are required to submit reporting to the FTB. All self-insured employers are required to report, regardless of their Applicable Large Employer (ALE) status under the federal Affordable Care Act (ACA) rules. This means that employers are required to submit reporting to the FTB by March 31, 2021 if they covered California residents through a self-insured plan in 2020.

Employers who offer coverage only through fully insured plans are not required to submit reporting to the FTB as long as their carrier submits Forms 1095-B to the FTB (which they are required to do).

How do employers complete the California Mandate reporting?

To complete the California Mandate reporting, employers can submit copies of their ACA reporting to the FTB.

  • Self-Insured ALEs: Employers can submit copies of Forms 1095-C prepared for covered California employees, which should already be completed as a part of the employer’s ACA reporting.
  • Self-Insured Non-ALEs: Employers can submit copies of Forms 1095-B prepared for covered California employees, which should already be completed as a part of the employer’s ACA reporting.

Employers must submit forms for all covered California employees, whether or not they are full-time employee. However, employers do not need to submit forms for employees who were offered coverage but chose not to enroll.

When is California Mandate reporting due?

Employers must submit returns to the FTB by March 31st following the end of the plan year. For the 2020 calendar year, returns will be due to FTB by March 31, 2021.

How can employers submit California Mandate reporting?

Employers who file more than 250 forms are required to file electronically, though the FTB encourages all employers to file electronically. Employers can register to submit reporting electronically starting October 5, 2020. For additional information on how to submit reporting, see the FTB webpage for employers.

What are the penalties for failing to submit reporting?

Employers who fail to submit reporting as required, will be subject to $50 penalty per individual.

What are the employer distribution requirements under the California Mandate?

Employers must provide 1095 forms (1095-B or 1095-C) to employees by January 31st following the end of the plan year. Employers should already be distributing 1095 forms to employees pursuant their obligations under the ACA. A single distribution will fulfill both obligations.

It is important to note that the California Mandate requires this distribution to be completed by January 31st following the end of the plan year. Although January 31st is the same distribution deadline for ACA purposes, the IRS frequently extends this deadline to early March. The California Mandate distribution deadline will not automatically be extended to mirror the federal deadline. This means that employers must furnish forms to California employees by January 31, 2020, regardless of whether the IRS extends the federal distribution deadline. Employers should work with their ACA reporting vendor to ensure that forms are distributed in a timely manner.

Comparison of Employer Obligations under the ACA and the California Individual Mandate

Are the same employers that are required to submit ACA reporting also required to submit California individual mandate reporting?

No, only self-insured employers are required to submit reporting under the California individual mandate (carriers are required to complete reporting for fully insured employers). A comparison of employer obligations under the ACA and the California individual mandate is outlined below:

 ACA Reporting CA Mandate Reporting  

Non-ALE (Fully Insured) 

Employer: No reporting required

Insurer: 1095-B provided to employees

Employer: No reporting required

Insurer: Must submit Forms 1095-B to the FTB

Non-ALE (Self-Insured)

Employer:

  • Forms 1094-B and 1095-B are filed with the IRS
  • 1095-B provided to employees

Insurer: None

Employer:

  • For California employees, Forms 1094-B and 1095-B are filed with FTB
  • 1095-B provided to employees (completed as a part of ACA obligation)

Insurer: None

ALE (Fully Insured)

Employer:

  • Forms 1094-C and 1095-C are filed with the IRS (Part III will not be completed)
  • 1095-C provided to employees

Insurer: 1095-B provided to employees

Employer: No reporting required as long as carrier submits Forms 1095-B to the FTB

Insurer: Must submit Forms 1095-B to the FTB

ALE (Self-Insured)

Employer:

  • Forms 1094-C and 1095-C (Parts I, II, and III are completed) are filed with the IRS;
  • 1095-C provided to employees

Insurer: None

Employer:

  • For California employees, Forms 1094-C and 1095-C are filed with FTB
  • 1095-C provided to employees (completed as a part of ACA obligation)

Insurer: None

Can employers submit copies of their ACA reporting to complete their California Mandate reporting?

Yes, employers can submit copies of Forms 1094/5-C or 1094/5-B that they submitted to the IRS for ACA reporting.

Additional Resources

Disclaimer: This content is intended for informational purposes only and should not be construed as legal, medical or tax advice. It provides general information and is not intended to encompass all compliance and legal obligations that may be applicable. This information and any questions as to your specific circumstances should be reviewed with your respective legal counsel and/or tax advisor as we do not provide legal or tax advice. Please note that this information may be subject to change based on legislative changes. © 2020 Sequoia Benefits & Insurance Services, LLC. All Rights Reserved

Emerald Law – Emerald is a Client Compliance Consultant for Sequoia, where she works with our clients to optimize and streamline benefits compliance. In her free time, Emerald enjoys stand-up comedy, live music and writing non-fiction.