The Massachusetts individual mandate requires most residents over the age of 18 to have minimum creditable health care coverage (MCC) or pay a penalty through their state tax returns. Employers who provide MCC to Massachusetts residents are required to distribute Forms MA 1099-HC to those residents and submit reporting to the Department of Revenue by January 31st following the end of the plan year. This year’s deadline is January 31, 2021.
Insurers subject to Massachusetts regulations (i.e. insurers sitused in Massachusetts) usually complete the distribution and reporting requirements on behalf of employers. However, employers with plans sitused outside of Massachusetts or with self-insured plans must still complete the reporting and distribution requirements or ensure their third-party administrator (TPA) is fulfilling these obligations on their behalf.
What are the employer obligations under the Massachusetts individual mandate?
Employers who provide minimum creditable health care coverage (MCC) to Massachusetts employees must:
- Distribute Forms 1099-HC to those Massachusetts employees; and
- Submit Form 1099-HC information to the Department of Revenue (DOR) through their MassTaxConnect (MTC) account.
For employers with fully insured plans, most carriers will distribute Forms 1099-HC on behalf of employers and submit reporting to the state. If a carrier does not do this, employers have the above submission and distribution requirements.
Employers with self-insured plans and plans sitused outside of Massachusetts must annually distribute Forms 1099-HC to employees and report to the state by January 31st following the plan year. Some vendors and TPAs distribute the 1099-HC forms and report to the DOR; however, it is ultimately the employer’s responsibility to fulfill these obligations. Employers should check in with their TPAs to determine what action (if any) must be taken.
Distributing Forms 1099-HC
What is the Form 1099-HC?
Massachusetts residents are required to fill out a form called a Schedule HC, Health Care Information, when filing their state taxes. Residents use the Schedule HC to report whether they were insured. Forms 1099-HC have the necessary information to complete Schedule HC forms.
Is there a model Form 1099-HC that employers can use?
There is no standardized format for the Form 1099-HC; however, the Form 1099-HC must contain specific information that residents need to fill out the Schedule HC. Employers with self-insured health care plans can obtain draft copies of the Form 1099-HC on the DOR website.
Who must receive a Form 1099-HC?
Employers must send Forms 1099-HC to employees who are residents of Massachusetts. Forms 1099-HC only need to be sent to primary subscribers. Employers do not need to send MA Forms 1099-HC to dependents.
Are there employer penalties for not distributing Form 1099-HC as required?
Employers who are required to distribute Forms 1099-HC but fail to do so, may be subject to a penalty of $50 per individual, up to a maximum of $50,000.
Reporting to the Department of Revenue
What is included in the reporting to the state?
The reporting to the state must contain information about the carrier or employer, the covered individual and covered dependents, the insurance policy, and the dates of coverage.
How do employers submit Forms 1099-HC to the DOR?
Employer Action Items
- Fully insured employers should ensure that their carrier is reporting to the state and distributing forms to employees that reside in Massachusetts.
- Employers with self-insured plans or plans sitused outside of Massachusetts should ensure that their carrier or third-party administrator (TPA) is distributing forms and reporting before January 31, 2021.
- Employer FAQs: MA Form 1099-HC and file transmission
- Employer Individual Mandate Distribution and Reporting Regulation
- Health Care Reform for Employers
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