State ACA Reporting: Why Filing Federally Does Not Mean You’re Done

Why Federal ACA Filing Doesn't Mean You're Done

Every applicable large employer knows — or should know — that federal ACA reporting requires filing Forms 1094-C and 1095-C through the IRS's AIR system each year. What many employers do not know is that federal filing is a floor, not a ceiling.

Several states have enacted their own individual health coverage mandates. Each requires separate employer reporting submitted to a state tax authority through a state-specific portal or filing process. Filing Forms 1094-C and 1095-C with the IRS satisfies the federal reporting obligation only.

An employer that files correctly with the IRS but has employees residing in California, New Jersey, Massachusetts, Rhode Island, or the District of Columbia and fails to make the required state reports is not fully compliant. The penalties covered in our ACA Penalty Calculator article are federal. State mandate penalties are administered separately and in some states have been actively issued to employers who simply didn't know the state obligation existed.

Which States Have Their Own ACA Reporting Requirements

As of the current filing cycle, the following jurisdictions have enacted individual health insurance mandates with employer or carrier reporting requirements: California, New Jersey, Massachusetts, Rhode Island, and the District of Columbia.

State-by-State Overview

Why Employers Commonly Miss State Reporting Requirements

Assuming federal filing covers state obligations. This is the most common failure. The federal ACA reporting framework is well-known. State mandates receive far less general coverage.

Confusing employer location with employee location. Many state mandates apply based on where employees reside, not where the employer is headquartered. A Texas-based employer with remote employees working from New Jersey may have a New Jersey state reporting obligation it doesn't realize.

Multi-state payroll configurations that don't flag state mandate obligation. Payroll systems are generally built to track state tax withholding. They are not always built to track ACA state mandate reporting obligations as a separate flag.

Vendor handoffs that drop state filings. When an employer transitions to a new payroll or benefits vendor, prior-year state ACA filing records may not transfer cleanly.

California: Employer or Carrier Reporting to the FTB

California's individual health coverage mandate has been in effect since January 1, 2020. For employer-sponsored group health plans, the employer or the carrier may fulfill the reporting requirement. For self-insured plans, the employer is generally the reporting entity. California generally accepts federal 1095-B and 1095-C data submitted through the FTB's reporting portal, but the employer must register with the FTB as an information reporter — federal AIRS transmission does not satisfy the California obligation.

California penalties for failure to report can be up to $750 per individual per year, depending on the nature of the failure.

New Jersey: Division of Taxation Reporting

New Jersey's individual mandate became effective January 1, 2019. For fully insured employer-sponsored plans, the insurance carrier typically handles the New Jersey reporting. Self-insured employers generally bear the reporting obligation themselves. Employers should confirm with their carrier or TPA whether New Jersey reporting is being handled — vendor assumptions here often turn out to be wrong.

Massachusetts: The Oldest State Mandate — and the Most Different

Massachusetts has had its own individual health coverage mandate since 2007 — predating the federal ACA by three years. It is not modeled on the federal 1095-C reporting structure. It requires Form MA 1099-HC — a state-specific form — to be furnished to covered individuals and filed with the Massachusetts Department of Revenue through MassTaxConnect.

Rhode Island: The Mandate With the Narrowest Profile

Rhode Island enacted its individual health insurance mandate effective January 1, 2020. The Rhode Island mandate generally follows the federal ACA framework more closely than Massachusetts, and reporting is handled through the Rhode Island Division of Taxation. For fully insured employer-sponsored plans, carrier reporting typically satisfies the obligation. Self-insured employers need to confirm their reporting is being handled directly or by their TPA.

District of Columbia: MyTax.DC.gov

The District of Columbia enacted its individual mandate effective January 1, 2019. The DC Office of Tax and Revenue (OTR) administers the reporting requirement, and submissions are made through MyTax.DC.gov. The DC framework generally accepts federal 1095-B and 1095-C data submitted through the DC portal, but requires separate registration as a DC information reporter.

Who Files the State Report: Employer or Carrier?

The answer varies by state, by plan type (fully insured vs. self-insured), and by the specific arrangement between the employer and their insurance carrier or TPA.

A general heuristic: for fully insured plans, the insurance carrier typically bears the primary reporting obligation in most states. For self-insured plans, the employer or the TPA is generally the reporting entity. In some states, the obligation can be satisfied by either party — with the risk that each assumes the other handled it.

What to Do If You Have Employees in Mandate States

Step 1 — Map your employee state of residence. Identify which states your employees reside in. For fully remote workforces, this may differ substantially from the states where the employer has office locations.

Step 2 — Identify mandate states in your population. Cross-reference your employee state map against the current list of individual mandate states.

Step 3 — Clarify carrier vs. employer obligation by state. For each mandate state identified, confirm in writing which entity is filing and through what system.

Step 4 — Verify prior-year filings. For employers who have had mandate-state employees in prior years, verify whether state filings were actually completed.

Step 5 — Register with state portals where required. Several states require employer registration as an information reporter before the first state filing can be submitted.

Key Takeaways