ACA Compliance is Becoming a State Mandate – What you Need to Know

Timothy Lozier Affordable Care Act [ACA], Blog, Compliance Leave a Comment

While the Affordable Care Act (ACA) has long been a federal mandate, in recent months the requirements for reporting ACA Compliance has extended to the State level.  The question for many employers becomes one of what implication this has on their ability to manage and track benefits enrollment?


A Primer on ACA Compliance Reporting

Healthcare and medical coverage is a benefit for employees, provides them with the level of care they need, and give them affordable options when seeking medical care. With the Affordable Care Act (ACA) enacted in 2010, companies employing more than 50 Full Time Employees (FTE) are required to provide some form of medical insurance for employees. This was designed to ensure that employees have access to some level of healthcare from their employer. The provision also requires employers to report healthcare coverage to the Internal Revenue Service annually. While there are many other provisions to the law, these are the major areas that companies often fall into challenges with maintaining ACA Compliance.


For many companies, ACA Compliance is not usually top-of-mind – especially when you are busy running an operation on a daily basis. The majority of small business either didn’t meet the requirements for ACA Compliance, or failed to report – both can be problematic and can result in fines from the IRS. The reason for this? Many small businesses believe they are too small to be “noticed” or simply don’t have the resources and tools to report effectively. Even those companies that DO report, if they miss the proper calculations, deductions and itemization, they can STILL face fines.


New Jersey and Washington D.C. are now Requiring ACA Reporting

In recent news, several states are looking to implement similar reporting in addition to the federal reporting required for ACA.  For New Jersey, employers with employees who reside in the state will require state-level reporting as well as federal reporting.  As with the Federal reporting, employers are required to file the 1094-C and 1095-C forms to communicate health insurance information, in addition to their federal reporting responsibilities.  This reporting applies to the tax year 2019, with a filing deadline of February 15, 2020.


Similarly, Washington D.C. has enacted ACA Reporting at the district-level in addition to the federal level.  Employers with over 50 Full Time Employees (FTE) and at least one D.C. resident are required to file a 1095-C or 1094-C in compliance with the law.  For the 2019 coverage year, these filings are due on June 30, 2020.



Fines for non-Reporting – Both State and Federal implications

While the fines for Federal non-compliance have been previously outlined, now there is a state level (or district level) fine for failure to report or inaccurate reporting.  While the details of what these fine will be remains undecided, there will be some level of financial actions taken for failure to report, file, or improper filing.


This follows on top of the federal non-compliance guidelines, which can be up to $3000 per FTE for failure to offer coverage, over $250 for failure to file a 1094-C form per FTE, and over $1000 per FTE for failing to report ACA Compliance.  This all adds up – and it can be increased with the state/district level mandates.


ACA Compliance

Fines for ACA Compliance violations can be sweeping at the Federal Level. What the State Level will be is still uncertain, but fine will be imposed as more states follow.


More States are Following Suit on ACA Compliance Reporting

In addition to D.C. and New Jersey, four other states have implemented or enacted mandates for ACA reporting.  Massachusetts has already been in place, and now California, Rhode Island, and Vermont will take effect next year (2020).  Below is a timeline of State/District level reporting:


ACA State Timeline

The current timeline for the ACA Compliance State mandates include New Jersey and Washington D.C., with Vermont, Rhode Island, and California taking effect in 2020.


While there are still some questions as to the use and action taken on these state-level reporting requirements, the laws still require employers file in conjunction with the applicable laws in the states that require compliance.


What to do if you fall under this ACA Compliance mandate

The important thing to remember here is that, all employers that have over 50 FTE MUST file a report in conjunction with Federal ACA reporting regulations.  With the state mandates taking effect in New Jersey and Washington D.C., this means that employers that have employees within these states must additionally file at the state level (or district level).   Some key areas to consider:


  1. Work with an ACA Consultant to Follow Updates: While these mandates are enacted, there is a lot of litigation and changes that may result in modifications.  Rather than go it alone, consider working with an ACA consulting firm to help you determine when and how to file.
  2. Implement Tools to help gain Visibility and Control over Reporting: There are many solutions in the market that track eligibility and enrollment, to enable you to be alerted when and how you need to communicate benefits to your employees.  Many solutions in the market have intelligent business rules to flag and alert you on reporting, and will actually help you manage the filing themselves.
  3. Look into alternative benefit plans, such as Minimum Essential Coverage (MEC): Not all benefit options are equal, and having a strong and diverse portfolio of benefits, including both major medical and MEC, can alleviate the burden on your costs to insure employees, while ensuring compliance to ACA.
  4. Fines and Penalties Can be Resolved, with Help: Similar to working with firms to provide guidance on reporting and filing, those same firms are available to help in the event you are faced with fines.  With the right amount of knowledge and oversight, these fines can be reduced, or even eliminated, with the help of ACA Experts.


The ACA journey has been met with various ups and downs.  While it is unclear what the future holds for the Act, as congress continues to debate and litigate on the impact on the country, one thing is for sure – ACA Compliance is still very present and real for the foreseeable future.  Now, with State level mandates taking effect, this will only compound the level of effort on employers to comply with BOTH state and Federal requirements.  The important takeaway is to understand where you need to file, when you need to file, and seek the help of experts to help you navigate and mitigate compliance risk.

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