In parallel to the now-being-challenged federal individual mandate to carry health insurance, California has passed a Health Care Mandate. The tax penalty that California residents face for not carrying health insurance is $695 per adult and $347.50 per child or 2.5% of gross income above the filing threshold, whichever is higher.
California Minimum Essential Coverage Information Reporting (MEC IR) essentially means that copies of the federal 1095-B/C and 1094-B/C forms must be submitted to the State of California (as well as to the IRS) so that the state is able to confirm health coverage for individuals.
What are the Filing Requirements?
Insurance providers are required to report health coverage information to the California Franchise Tax Board (FTB) annually. Employers are similarly required to report health insurance information, but only if their insurance providers do not report to FTB. The deadline for both insurance carrier and employer filings is March 31st.
What is the Penalty?
The penalty for not reporting is $50 per individual who was provided health coverage.
When are Carriers Responsible?
Carriers are responsible for health coverage information reporting when a plan is fully insured. This means if coverage is fully insured, there is no direct action to take for employers relative to reporting for the California Mandate.
Self-Funded Employers Must File
Employers are responsible for health coverage information reporting when a plan is self-funded. This means for self-funded plans (and for level-funded plans) employers are required to take steps to complete the required reporting.
Timeline
- FTB starts accepting MEC IR registration/enrollment: October 5, 2020
- FTB starts accepting test files: October 5, 2020
- FTB starts accepting production files: January 4, 2021
- Deadline for MEC IR submission: March 31, 2021
How to File Electronically
Employers who need to file can submit information either electronically or by paper. The FTB has created an easy-to-follow Getting Started wizard. There are three steps to the process:
- Register Online: A Responsible Official completes the registration on behalf of the organization.
- Enroll in the MEC IR Program: After logging into the MEC FX Portal, submit a MEC IR enrollment form online.
- Submit MEC Information: This step includes a test cycle and the ability to manage enrollment, transmit data, and get acknowledgements.
How to File by Mail
You can send MEC IRs directly to the FTB by mail. The FTB has provided resources and instructions for direct mail filing. Although currently in draft form, the instructions are outlined in the MEC IR Publications page of the FTB website.
Helpful Resource
The FTB has a very helpful and detailed Registration and Enrollment Guide. It offers a step-by-step guide for filing as well as helpful comparisons between the federal and state processes.
