District of Columbia’s Employer Reporting Obligation
In 2018, the District of Columbia passed an ordinance requiring District residents to maintain minimum essential coverage beginning January 1, 2019, or be subject to a penalty. For this purpose, minimum essential coverage (MEC) is defined as health coverage that meets one of the following three definitions:
- Minimum essential coverage, as defined by the Affordable Care Act as of December 15, 2017. Generally, this means any comprehensive health coverage whether insured or self-funded and whether group or individual;
- The Immigrant Children’s Program; or
- Health coverage provided under a multiple employer welfare arrangement (MEWA), as long as such MEWA coverage existed on December 15, 2017.
If the individual and/or dependent fails to maintain MEC, then a District shared responsibility payment is due. The maximum amount of the District shared responsibility payment is determined using the District’s average premium for bronze-level plans.
While an employer is not responsible for offering MEC to its DC residents, it may have a reporting and disclosure obligation. Generally, according to recent guidance from the District of Columbia Office of Tax and Revenue (OTR), an applicable reporting entity can use the IRS Forms 1094/1095 B and C series, as applicable. An employer is deemed to be an ‘applicable reporting entity’ if it employs 50 or more full-time employees.
As a reminder, the IRS Form 1094/1095-B series is used to report MEC; it is generally used by insurers. Applicable large employers use the IRS Form 1094/1095-C series to report offers of coverage. Part three of the C series is used by self-funded plans to report MEC.
Additionally, the IRS Forms 1094/1095 B and C series are to be filed electronically with the OTR by uploading the files through MyTax.DC.gov. The filing due date is June 30, 2020 for the 2019 filing year. For tax years after December 31, 2019, the deadline is 30 days after the IRS deadline for submitting forms.
According to the guidance, the reporting entity is not obligated to send duplicate notices. In other words, satisfaction of the federal notice to participants on the Form 1095-B or 1095-C will suffice.
Employers who may be subject to this filing requirement will want to stay tuned for future developments. There are some outstanding questions such as, would an employer have a reporting obligation if the insurer is accomplishing the MEC reporting on its behalf?
The information contained in this article is provided as general guidance and may be affected by changes in law or regulation. This article is not intended to replace or substitute for accounting or other professional advice. Please consult a CBIZ professional. This information is provided as-is with no warranties of any kind. CBIZ shall not be liable for any damages whatsoever in connection with its use and assumes no obligation to inform the reader of any changes in laws or other factors that could affect the information contained herein.