January 21, 2022

Group health plan sponsors’ state reporting obligations have grown over the past few years. While ERISA continues to preempt certain state regulation of private employers’ group health plans, some state reporting requirements for group health plan sponsors have moved forward. This GRIST reviews key state reporting mandates for group health plan sponsors and reflects recent changes.

Individual health coverage mandates

Effective beginning in 2019, Congress zeroed out the Affordable Care Act (ACA) assessment that individuals must pay if they don’t maintain health coverage that qualifies as minimum essential coverage (MEC). This requirement is commonly called the “individual mandate.” In response to this change, four states — California, New Jersey, Rhode Island and Vermont — along with Washington, DC, imposed their own individual mandates with penalties to ensure compliance. In addition, Massachusetts has its long-standing individual mandate, which took effect in 2007.
 

Coverage

States that instituted an individual mandate after the ACA’s individual-mandate assessment was set to $0 generally require state residents to maintain MEC as defined by the ACA, or pay a state tax penalty. Only Massachusetts differs in its coverage requirements, setting a more stringent minimum creditable coverage (MCC) standard. The other jurisdictions define MEC as any plan meeting the federal statutory definition (26 USC § 5000A(f)) and implementing regulations. These coverage options include:
 

  • Government-sponsored health programs, including Medicare, Medicaid, TRICARE, CHIP, Veterans Affairs, Peace Corps and other government plans
  •  Employer-sponsored health plans, including grandfathered health plans
  • Coverage under a health plan offered in the individual market

MEC excludes plans that offer only excepted benefits, such as stand-alone vision or dental plans, long-term care insurance, supplemental or specified-disease coverage, and accident or disability insurance. Certain other programs like short-term, limited-duration insurance and healthcare sharing ministries also do not count as MEC.
 

Reporting

Some reports due in 2022 for the 2021 coverage year will follow the same schedule as the IRS deadlines to file federal Forms 1094/1095. Some jurisdictions have indicated they will accept the federal forms that group health plan sponsors or other MEC providers must send to IRS and won’t require duplicative statements to residents.
 

California

By March 31 after the close of each coverage year, group health plan sponsors and other MEC providers must file coverage reports with the California Franchise Tax Board (FTB). However, according to California’s reporting guidance, penalties for failure to file won’t begin to accrue for forms filed with the FTP on or before May 31.
 

By Jan. 31 after the close of each coverage year, a coverage statement is due to individuals. The IRS has provided an automatic and permanent 30-day extension — to March 2 — of the Jan. 31 federal deadline for group health plan sponsors and other MEC providers to furnish ACA individual statements. However, the state has not extended its Jan. 31 due date for individual statements. Nonetheless, the FTB has informally indicated that California penalties for belatedly furnishing statements to covered individuals won’t apply. In addition, duplicative California statements aren’t necessary if individuals have received the federal coverage statement (IRS Form 1095-B or 1095-C).
 

The FTB requires MEC providers to submit the same information reported to IRS under Section 6055 of the Internal Revenue Code. Entities that have to file IRS Forms 1094/1095 may submit the same forms to the FTB. Entities submitting at least 250 returns in a year to the FTB must file electronically, unless granted a waiver due to technology constraints or undue hardship. Smaller entities may file either on paper or electronically.
 

Massachusetts

By Jan. 31 after the close of each coverage year, group health plan sponsors and other MEC providers (or their vendors) that provide minimum creditable coverage (MCC) to Massachusetts residents age 18 or older must distribute Form MA 1099-HC to covered Massachusetts residents and report this information to the state Department of Revenue (DOR).
 

Most self-funded group health plan sponsors rely on their vendors to determine MCC status, distribute the forms and file the DOR report. Insurers subject to Massachusetts regulation must determine MCC status and typically complete the reporting requirements. However, employers that sponsor self-funded group health plans or contract with more than one vendor for a single group health plan may need to complete an attestation form before their vendor will complete the annual reporting. Group health plans sponsors and other MEC providers whose plans don’t meet MCC standards may apply for MCC certification by Nov. 30 of the plan year.}
 

All reports to the DOR must be filed electronically. A group health plan sponsor whose insurer or third-party administrator (TPA) won’t file the Form MA 1099-HC can upload XML files through MassTaxConnect and distribute the forms to covered residents.
 

New Jersey

By March 31 after the close of each coverage year, group health plan sponsors and other MEC providers must transmit to the state Division of Taxation health-coverage information about covered employees and their dependents residing in the state during the prior year. These entities also must disclose this information to covered employees, unless they receive IRS Form 1095-B or 1095-C statements (duplicative statements aren’t required).
 

By March 2 after the close of each coverage year, group health plan sponsors and other MEC providers must supply coverage statements to primary enrollees. This deadline (originally set at Jan. 31) now aligns with the permanent extension of federal deadlines for group health plans sponsors and other MEC providers to furnish ACA individual statements.
 

The state will accept NJ-1095 forms, fully completed federal Forms 1095-B and 1095-C, and/or Form 1095-C with parts I and III completed. Form 1095-C with only Parts I and II completed won’t meet New Jersey filing requirements. The state does not require Forms 1094 but will accept them as part of a larger file that includes Forms 1095.
 

MEC providers filing fewer than 100 forms can register to complete Form NJ-1095 online. MEC providers submitting 100 or more forms must file electronically using the system for W-2 submissions (Axway). Fully insured plan sponsors should file Forms 1095 with New Jersey only if their insurer does not. MEC providers can submit reporting questions to the state via its dedicated website. The filing requirement applies to not only businesses that withhold New Jersey payroll taxes, but also out-of-state plan sponsors that provide health coverage to New Jersey residents — including part-year residents who live in the state at least 15 days in any month.
 

Rhode Island

By Jan. 31 after the close of each coverage year, group health plan sponsors and other MEC providers that cover any Rhode Island resident generally must send reports to the Division of Taxation (DOT). However, recent state guidance (Advisory 2021-45) specifies that for the 2021 tax year the DOT extended that deadline to March 31, matching the federal deadline. The DOT will accept IRS Form 1095 returns. DOT’s health coverage mandate website provides a webpage for uploading files.
 

Group health plan sponsors and other MEC providers also must furnish statements by Jan. 31 after the close of each coverage year to covered individuals. To date, the DOT has not announced any extension of the state deadline for furnishing individual statements.
 

Vermont

Vermont’s individual mandate requires residents to maintain MEC and self-report compliance. When filing individual income tax returns, residents must indicate if they had MEC during the tax year and, if requested by the state, will have to submit their IRS Forms 1095 as proof. Vermont doesn’t require group health plan sponsor reporting, unless the federal ACA’s MEC reporting requirement is suspended or eliminated.
 

Washington, DC

Generally by April 30 (i.e., 30 days after the IRS’s March 31 deadline, including any extensions granted, for submitting Forms 1095-B or 1095-C) after the close of each coverage year, group health plan sponsors and other MEC providers covering at least 50 employees and at least one DC resident during the coverage year, must sign up with the Office of Tax and Revenue (OTR) to upload files through MyTax DC. MEC providers should electronically file with the OTR the same information filed with the IRS. However, no penalty applies for failing to file the city reports.
 

MEC providers may contract with third-party providers to complete the filing. Any filer that doesn’t currently have a MyTax DC account will have to obtain login credentials. Special bulk-filing accounts apply for filers that are not DC taxpayers.
 

By March 2 after the close of each coverage year, group health plan sponsors and other MEC providers must furnish coverage statements to individuals. However, MEC providers that furnish federal MEC statements to covered employees don’t have to provide duplicative statements for the city’s mandate. A notice (OTR 2020-04) published in 2020 hasn’t been updated for 2022, but includes FAQs and more reporting details. 

Other health plan sponsor reporting

Group health plan sponsors face other state reporting requirements, sometimes in conjunction with a covered-lives surcharge or employment benefit. While ERISA preempts state laws that regulate key facets of plan administration, including claims reporting, a state’s “innocuous and peripheral set of additional rules” may withstand preemption (Gobeille v. Liberty Mutual Ins. Co., 136 S. Ct. 936 (2016)). The US Supreme Court has upheld certain health assessments and related reporting that are incidental and indirectly apply to ERISA plans (New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645 (1995)).
 

In addition, ERISA (29 USC § 1181(f)(3)(B)(ii)) requires group health plan sponsors to disclose plan details if requested by state Medicaid premium-assistance programs. This allows state Medicaid regulators to evaluate the feasibility of providing premium assistance.
 

The following state and local reporting requirements generally fall into these categories and may be exempt from ERISA preemption.
 

California — San Francisco

The Health Care Security Ordinance (HCSO) requires employers with San Francisco employees to electronically submit by April 30 annual Health Care Expenditure (HCE) reports for the preceding year. That requirement was waived for the 2019 and 2020 forms due in 2020 and 2021, respectively, under COVID-19 relief. However, all HCSO requirements remain in place, and reporting for the 2021 plan year is expected to resume in 2022.
 

The HCE is the minimum amount employers must spend on healthcare for each hour worked by a covered employee. Covered employees include anyone employed for more than 90 days who regularly works at least eight hours a week in San Francisco. Minimum HCE amounts are adjusted annually and vary by employer size. To determine workforce size, employers must count all employees, no matter where they live or work. However, the expenditure applies only for hours worked in San Francisco.
 

Hawaii

The Hawaii Prepaid Health Care Act requires employers to offer health coverage to all eligible employees in the state. The act, which is exempt from ERISA preemption, strictly limits employee contributions and requires minimum benefit levels and certain plan provisions. The state’s Department of Labor and Industrial Relations (DLIR) must approve all employer health plans before they are offered to employees. Approval also is required before an employer makes any plan changes, including changes to deductibles and out-of-pocket maximums. Plans are typically approved only if they are at least actuarially equivalent to the two most prevalent plans offered in the state, commonly called plans 7a and 7b.
 

An employee can waive coverage under the employer’s health plan if certain conditions are met, including having other health coverage. To claim an exemption, the employee must complete and submit a notice (Form HC-5) to the employer. The notice is binding for one year and must be renewed every Dec. 31. If employees waive employer-sponsored coverage because they have other health coverage, they must include name of plan and health plan contractor on Form HC-5, which the employer must forward to the DLIR. ACA public exchange plans for individuals apparently don’t qualify as other health coverage. The employer must keep this form on file. If an employee who works two jobs waives coverage of the second employer, that employer must file the notification with state regulators.
 

Illinois

Employers must compare the health benefits covered by each group health plan offered to Illinois employees against the essential health benefits (EHBs) detailed in a chart provided by state regulators. The disclosure must indicate which EHBs are or aren’t covered by the employer plan. Employers don’t have to use the specific Excel spreadsheet provided by state regulators. However, the disclosure must include clear information about the EHBs covered or not covered by the employer-provided group health plan.
 

Disclosure method. Employers may provide the written disclosure by email or post it on a website that employees regularly access. Employers must maintain disclosure records for at least one year.
 

Timing. The law requires employers to provide this information to Illinois employees at hire, annually and on request. While the law itself effect Aug. 27, 2021, when employers must first provide this disclosure is unclear.
 

Penalties. Noncompliance penalties can range from $500 to $5,000, depending on employer size and the number of offenses. However, employers first receive 30 days’ notice to correct any noncompliance.
 

Massachusetts

In addition to the state’s individual mandate reports due each January, Massachusetts requires every employer with six or more employees in the state to submit an annual Health Insurance Responsibility Disclosure (HIRD). The HIRD Form is due by Dec. 15 but is available to complete online starting Nov. 15. Employers must complete the HIRD form if they included six or more employees in any Department of Unemployment Assistance wage report during the 12 months before the HIRD due date.
 

Required data may include the availability of coverage, eligibility requirements, employment-based classifications, plan description, MCC status, wellness plan credits, employee contributions per tier, deductibles and out-of-pocket maximums. Employers must file a separate form for each covered entity that has its own federal employer identification number, even if all other information is the same. Employers with multiple plans or substantive variations must report information about each plan offered in Massachusetts. A payroll vendor can file forms on behalf of client employers if it has the relevant information. Employers complete the form by logging into their withholding account on MassTaxConnect.
 

New York

The New York Health Care Reform Act (NYHCRA) imposes two separate surcharges on health claim payors, including self-funded employer-sponsored group health plans:
 

  • One surcharge, which subsidizes indigent care and state healthcare initiatives, applies to payments for New York hospital inpatient and outpatient services, comprehensive diagnostic and treatment centers, and ambulatory surgery centers. For this surcharge, nonelecting payors must pay an additional amount — essentially a penalty for not electing direct payment to the state Public Goods Pool administrator.
  • The other surcharge, which funds a graduate medical education (GME) pool, applies to health claim payors that cover New York residents. For this surcharge, electing payors pay an annual covered-lives assessment directly to the state pool administrator, while nonelecting payors instead incur a surcharge on direct payments to in-state hospital expenses for covered services.

The two surcharges are subject to slightly different operating guidelines. Monthly online reports on covered charges are due to the NYHCRA pool administrator for the first year after claim payor becomes an electing payor. The pool administrator may notify payors that subsequent reports will be due annually, which is the typical schedule for out-of-state health plan sponsors with few or no New York employees. Reports must be filed electronically within 30 days after the end of the reporting month or year, even if a payor has no activity to report. Self-funded health plan sponsors commonly rely on TPAs to file the monthly or annual report. However, the ultimate responsibility falls to the plan sponsor.
 

Vermont

Vermont requires certain employers to pay a quarterly fee for “uncovered employees” who don’t have qualifying health coverage. Employers must file their “uncovered” employee report with any required payment on Form WHT-436, Quarterly Withholding Reconciliation and Health Care Contribution. Employers can file through myVTax.vermont.gov or by paper, using the most recent forms and information on the department's website. All employers with Vermont employees must complete and submit the report within 25 calendar days after the end of each calendar quarter, even if no payment is due.
 

Washington

Washington imposes a covered-lives assessment with reporting obligations on health plan payers. Quarterly reports are due within 45 calendar days after the end of each calendar quarter and must contain information on covered individuals who reside in the state. Though reports and assessments are due quarterly, assessments are computed on a monthly basis. Reporting for the Washington Partnership Access Lines  (WAPAL) fund is in three age bands:
 

  1. Child covered lives (ages 0-18)
  2. Adult band 1 (ages 19-64)
  3. Adult band 2 (ages 65 and above).

Washington regulators have announced an initial monthly assessment of $0.13 per covered life for quarterly payments due beginning Nov. 15, 2021. This rate applies to Washington covered lives of all ages. The WAPAL fund applies to any healthcare insurer or other entity, including a self-funded ERISA plan that contracts or offers to provide, deliver, arrange, pay for, or reimburse any costs of health services.
 

Looking ahead

States may begin requiring more reporting for individual mandates, assessments and Medicaid premium-assistance information. Group health plan sponsors in states with reporting laws will need to work with the appropriate vendor, such as a TPA or payroll processor, to clarify which report supply and ensure compliance.

Chart: State/city reporting and disclosure schedules and due dates for group health plans

This chart identifies state reporting schedules for group health plan sponsors.

State

Covered entities

Report schedule

Report due to individual / state

California

Plan sponsors providing MEC to California residents

IRS Forms 1094/1095 or equivalent state form

Individual: Annually by Jan. 31 (but late penalties may not apply)

State: Annually by March 31

San Francisco, CA

Employers with 20 or more employees and at least one in San Francisco

Employer Annual Reporting Form

City: Annually by April 30

Hawaii

Employers with a Hawaii employee who waives health plan participation due to other coverage

Form HC-5

State: Annually by Dec. 31

Illinois

All employers with Illinois employees

Model comparison chart

Individual: Annually and at hire

State: None

Massachusetts

 

 

Plan sponsors providing MCC to Massachusetts residents

Form MA 1099-HC

Individual: Annually by Jan. 31

State: Annually by Jan. 31

Plan sponsors seeking MCC certification for health plan

MCC Certification Application

State: Nov. 30 of reporting year

Employers with six or more Massachusetts employees

HIRD Form

State: Annually by Dec. 15

New Jersey

Plan sponsors providing MEC to New Jersey residents

IRS Forms 1094/1095 (or Form NJ-1095 for coverage providers filing fewer than 100 forms)

Individual: Annually by March 2

State: Annually by March 31

New York

Self-funded employers that elect to participate for lower NYHCRA surcharge

Public Goods Pool report

State: 30 days after end of reporting month or year

Rhode Island

Plan sponsors providing MEC to Rhode Island residents

IRS Forms 1094/1095 or equivalent state form

Individual: Annually by Jan. 31

State: Annually by Jan. 31, but for 2021 reporting, the extended due date is March 31

Vermont

Employers paying Vermont wages

Form WHT-436

State: 25 days after end of each calendar quarter

Washington

Plan sponsors covering Washington residents

WAPAL Fund Online Assessment Tool

State: 45 days after end of each calendar quarter

Washington, DC

Plan sponsors providing MEC to Washington, DC, residents

IRS Forms 1094/1095

Individual: Annually by March 2

City: Generally April 30 (i.e., 30 days after IRS deadline — including any extensions granted — to file Form 1095-B or 1095-C)

Related resources

Non-Mercer resources

Mercer Law & Policy resources

Catherine Stamm
by Catherine Stamm

Principal, Mercer’s Law & Policy Group

Dorian Z. Smith
by Dorian Z. Smith

Partner, Mercer’s Law & Policy Group

Rich Glass
by Rich Glass

Principal, Mercer’s Law & Policy Group


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