With NJ Deadline Approaching BenefitScape finds Many Employers Are Unprepared and Face Penalty Risk

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Recent New Jersey legislation requires employers, who provide New Jersey residents with health coverage, to report coverage details to the state by the March 31, 2020 deadline. This information is essentially the same Form 1095B and 1095C health-care coverage information they send to the IRS in connection with their responsibilities under the Affordable Care Act (ACA). BenefitScape works with many employers, HCM software vendors and payroll services who were caught unprepared and their compliance options are now limited.

Keep Calm NJ Mandate

Keep Calm NJ eFile

"BenefitScape has been providing state specific filing since 2005 under the precursor to the ACA, that was established in Massachusetts. We have both the technical platform and the required credentials to handle all state-mandated filings, including New Jersey." Kim Phillips President

Recent New Jersey legislation requires employers, who provide New Jersey residents with health coverage, to report coverage details to the state by the March 31, 2020 deadline. This information is essentially the same Form 1095B and 1095C health-care coverage information they send to the IRS in connection with their responsibilities under the Affordable Care Act (ACA).

Here is a Guide to help you. Find out what to do to get ready.

Many employers have voiced concern that these NJ filing requirements are difficult for them to complete. In particular, smaller employers may not have the capacity for electronic filing of information in the very specific data format (XML) which is required. This puts them at risk for potential penalties for both the company and possibly the employee.

Larger employers are often no better off since many vendors and software systems that produce federal filings are not supporting this New Jersey filing. Here is a guide to help you determine your organization’s readiness and options.

NJ has reacted to these concerns of smaller filers and updated its guidance and reporting requirements on February 11, 2020, providing needed assistance to smaller employers and coverage providers with under 100 forms. These filers can use the Fillable Form NJ-1095 to file one form at a time. While this process is time-consuming and requires setting up an account with the states Central Forms Repository website. To get an idea of whether this solution works for you, read these instructions from NJ.

The state is still requiring all filers with over 100 Forms, employers, carriers and self-funded plans providing coverage to submit their 1095B and 1095C Forms using the DORES MFT Secure Transport. The data must be formatted in strictly defined XML files. This requirement is also not without its hazards and difficulties. Even for larger employers the use of the DORES MFT Secure Transport requires credentialing and adherence to a number of technical guidelines that may be difficult for some to implement.

Because filing with New Jersey is a very new requirement many ACA federal filers have notified their clients that they will not be filing in New Jersey for tax year 2019. This presents a problem for many clients who will now have to find a way to comply. Adding to this issue is that the New Jersey requirements are different in many ways than the federal. While New Jersey will accept all employees on the federal filing most employers hesitate sending any data on non-New Jersey residents in their filing. They see this as a violation of various privacy and possibly HIPAA regulations. In addition certain federal ACA regulations that have changed the furnishing requirements for form 1095B are not compatible with New Jersey requirements that all affected employees received this form.

The only solution an employer, or their reporting and filing vendor, that can meet both the New Jersey reporting requirements and ensure compliance with privacy and PII obligations, is to separate all 1095 forms by the employee’s state of residency. Then the employer must only transmit the statements that pertain to New Jersey residents by the state’s March 31, 2020 reporting deadline.

New Jersey is clear in its guidance that these tasks for e-filing can be handled by external vendors. BenefitScape and other national vendors have taken this task on and are providing customized solutions to their clients with New Jersey residents.

In conclusion, employers large and small with only a few employees, as well as employers not domiciled in New Jersey, are faced with an emerging requirement that will under most circumstances be difficult to manage. Since New Jersey will be using this filing to verify information provided on individual tax returns, the impact will not only be on the company but many New Jersey tax filers may find they will be subject to unwarranted and unneeded penalty payments. Fortunately there are resources available to New Jersey filers from either their payroll, HRIS or benefits management vendors.

Employers should also be aware that the so-called "state mandates" are not unique to New Jersey and are already in play in many other jurisdictions such as Massachusetts, the District of Columbia, Vermont, Rhode Island, California etc...More on State Mandates

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Kim Phillips
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