As the Affordable Care Act’s (ACA) requirement for individuals to have health insurance coverage, known as the individual mandate, has faced challenges over the last few years, a growing number of states have stepped in to enact their own health care coverage mandates.
When the Tax Cuts and Jobs Act (TCJA) was passed at the end of 2017, the law reduced the individual penalty for failing to have health insurance coverage to zero dollars starting in 2019. Although not technically considered a repeal of the individual mandate, it had a similar effect.
The individual mandate has also faced court cases. A 2018 lawsuit, known as Texas v. United States, challenged the constitutionality of the individual mandate. On December 18, 2019, the U.S. Court of Appeals for the Fifth Circuit issued its long-awaited decision, concluding that the ACA individual mandate is unconstitutional. The court did not fully resolve all the questions in the case and sent it back to the lower court. There is still the potential for Texas v. United States to be heard at the Supreme Court, although the Supreme Court declined this case during the current term that ends in June.
During these last several years of uncertainty about the ACA, several states passed their own individual mandates. This results in more reporting requirements and complexity for employers and plan sponsors, especially those with employees in multiple states. The January 2020 issue of Benefits Magazine published by the International Foundation of Employee Benefit Plans details employer reporting requirements in the article “State-by-State Individual Mandate Reporting Compliance: A Cautionary Tale.” Generally, the state reporting requirements use the Internal Revenue Service (IRS) reporting forms 1094 and 1095 with the exception of Massachusetts, which continues using its state form MA 1099-HC.
There are five additional states considering individual mandates: Connecticut, Hawaii, Maryland, Minnesota and Washington.
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