IMPORTANT: Change to New Jersey Employer Requirements Affects Businesses Nationwide That Provide Health Insurance to State Residents

New Jersey regulators recently announced a change to their employer reporting policies that will affect businesses in all states and of any size that offer coverage to New Jersey residents. This policy stems back to 2018 when the state enacted an individual mandate requiring New Jersey residents to maintain health insurance coverage. This year, to help enforce the mandate, New Jersey will require all businesses that provided both fully-insured and self-funded health coverage to New Jersey residents in 2020 to file detailed coverage information with the state by March 31, 2021. These businesses will also need to make sure all covered state residents get paper copies of a statement documenting their coverage by March 2, 2021.

The requirement that all businesses provide detailed coverage information is a significant deviation from what New Jersey required last year.

In the past, the state just asked applicable large employers and companies that offered self-funded coverage to provide them with the same federal Form 1095 information they gave to the IRS and New Jersey-based employees. Now the state is asking all employers nationwide regardless of business size and health plan funding structure to provide them with coverage details about each NJ-based enrollee. In practice, what this means is every business in the country with New Jersey-based people on their group health plan must make sure that the state gets the equivalent of either a federal 1095-B statement for those individuals or a Form 1095-C with just parts one and three filled out. It also means that that each business that offers fully-insured coverage must verify that each New Jersey resident they cover gets a paper copy of Form 1095-B.

A fully-insured group health plan can ask their health insurance carrier to do the New Jersey state filing for them. Still, ultimately the employer retains the filing penalty liability, which is $50 per covered state resident, with a cap of $50,000. Last year, very few health insurance carriers did the New Jersey-specific filing for their employee groups. It was particularly an issue for groups whose carrier is located out-of-state. So far, we have confirmed that Aetna AFA and Horizon Blue Cross and Blue Shield of New Jersey will do the filings, and we are working to see if other local carriers will follow suit.

It’s also important to know that this requirement is separate from federal employer reporting obligations, and it doesn’t just impact New-Jersey based businesses. According to New Jersey officials, “If you are an out-of-state employer who provides health coverage, you must ensure we receive any required 1095 document for each New Jersey resident you employ.”

There are three issues all employer groups with New Jersey-based participants will need to address to stay in compliance with state law:

1. How they will obtain the necessary information;
2. How they will ensure the data gets to New Jersey on time, in compliance with both the state’s requirements and federal privacy requirements; and
3. How they will verify that New Jersey residents get the documentation they need to file their state income taxes.

Baring those three issues in mind, here’s what fully-insured and self-funded groups with New Jersey enrollees need to do to ensure full compliance with state requirements:

Obtain the Necessary Information

Fully-Insured Groups

Typically, fully-insured groups of all sizes normally do not collect the coverage details that New Jersey needs. The information that the state requires for every covered employee or dependent who is a full or part-time New Jersey resident includes:

1. Employer group contact information;
2. Each state resident’s full name;
3. Social security number or other tax identification number;
4. Date of birth if the tax identification number is not available; and
5. Each month the individual was enrolled in group coverage in 2020.

Companies with fully-insured group coverage will need to obtain this data from their health insurance carrier.

Self-Funded and Level-Funded Groups

The information New Jersey needs is included in parts one and three of the group’s Form 1095-C statements or on their Form 1095-B statements for New Jersey residents if the group is not an applicable large employer. Groups should use their normal channels for obtaining the coverage data to complete these forms.

Ensuring Compliant Delivery to the State of New Jersey

Fully-Insured Groups

The easiest way for a business that provides fully-insured coverage to get the appropriate coverage data to New Jersey is for their insurance carrier to file it on their behalf. However, no company, especially ones located out-of-state, can assume that their insurer will do this for them.

In 2020, very few insurers did. Not only were many unaware of the New Jersey requirements, but out-of-state insurers also are not under the state’s jurisdiction. Plus, New Jersey does not make it easy for anyone to submit their filings.

This year, business owners should ascertain if their insurance carrier plans to file coverage forms for their New Jersey-based enrollees. The employer should get written documentation that their insurer will file this data with the state by March 31, 2021. A business also needs to ensure that the carrier will only send the information for covered New Jersey residents to avoid HIPAA privacy concerns. Employers who elect this approach should be aware that they must do it themselves if their insurer does not file for them. They could also be subject to a filing penalty of $50 per covered individual (capped at $50,000) if their insurance carrier does not do this filing on their behalf as promised or if they do it incorrectly.

Fully-insured groups could also take responsibility for filing with the state themselves. There is no paper filing option for employers reporting New Jersey coverage information. However, there are three ways that employers may file electronically.

1. New Jersey will provide employers who need to file less than 100 forms with a manual system to enter the information directly for each plan enrollee. This system is not available yet but will be closer to the filing deadline. Last year, the state utilizer a .pdf filer application and labeled the form employers utilized for this process Form NJ-1095. We expect they will use a similar process this year and open it up closer to March. To use this process, an employer will need to get the appropriate information from their carrier and then only enter in information specific to NJ-based enrollees to avoid a HIPAA violation.
2. If an employer needs to file 100 or more forms and already has an account with the state’s MFT/Axway system (which is the same system an employer would use if they directly file Forms W-2), then they can use that login to file directly. There are data standards attached to this method that an employer needs to meet, and the employer will need to get the appropriate information from their carrier. It’s important to only submit data for New Jersey-based enrollees to avoid a HIPAA violation.
3. An employer can contract with a vendor to do their New Jersey filings for them. If an employer chooses this route, particularly if they are already required to file Forms 1094 and 1095 C with the Internal Revenue Service, then they need to verify that their vendor can meet this year’s New Jersey filing requirements and deliver the files to the state on the group’s behalf. Some vendors would not perform this service last year, and that was before the state wanted detailed coverage data! Since fully-insured plans that are also applicable large employers do not complete part three of Form 1095 typically, but that’s the data New Jersey needs this year, it’s critical for businesses to find out if their vendor can complete Part III for them or not. If the vendor can do it, they will definitely need more data than what is required of a fully-insured group typically. Another crucial stipulation for vendors is that they only send New Jersey-specific data, not all of the group’s data, because disclosing non-New Jersey resident data to the state would be a HIPAA violation.

Self-Funded (and Level-Funded) Groups

Self-funded groups of all sizes will need to take responsibility for filing with the state themselves. There is no paper filing option for employers reporting New Jersey coverage information. However, there are three ways that employers may file electronically.

1. New Jersey will provide employers who need to file less than 100 forms with the state with a manual system to enter the information directly for each plan enrollee. While not available yet, we expect it will be PDF filer application similar to what the state made available last year. Each employer will need to get coverage data from their third-party administrator and take care to only enter in information specific to NJ-based enrollees to avoid a HIPAA violation.
2. If an employer needs to file 100 or more forms and already has an account with the state’s MFT/Axway system (which is the same system an employer would use if they directly file Forms W-2), they can use their login to file. There are data standards attached to this method that an employer needs to meet, and the employer probably will require coverage information from their third-party administrator. Group plans should only enter information specific to New Jersey-based enrollees to prevent a HIPAA violation.
3. An employer can contract with a vendor to do their New Jersey filings for them. If an employer chooses this route, they need to verify that their vendor can meet this year’s New Jersey filing requirements and deliver the files to the state on their behalf. Some vendors would not perform this service last year at all, and that was before the state wanted detailed coverage data. Groups also need to confirm that a vendor will send just the New Jersey-specific data, not all of the group’s data. Disclosing non-New Jersey resident data to the state would be a HIPAA violation.

Delivering Coverage Statements to Covered Participants

Besides all of the state filing particulars, New Jersey requires all businesses covering any enrollees who live in New Jersey to send the primary enrollee a paper statement documenting their coverage by March 2, 2021. In most cases, the Form 1095-B that fully-insured health plans send to covered individuals should suffice, as should Part III of the 1095-C that self-funded plans distribute to their New-Jersey based employees. However, the IRS allows health insurance carriers and self-funded plans that are not also applicable large employers to skip sending paper statements to all enrollees. It is permissible to notify enrollees that a Form 1095-B form is available on request.

Unfortunately, that IRS standard does not work in New Jersey. The Garden State requires that all primary enrollees automatically get a paper or printable copy of Form 1095-B for tax purposes. Suppose an employer group’s health insurance carrier does not automatically send a Form 1095-B out. In that case, the group will need to make sure primary enrollees based in the state get a statement from the employer directly by March 2, 2021. Employers can prepare and deliver the statements themselves. Some reporting vendors are willing to issue Form 1095-Bs to New Jersey based enrollees on a stand-alone basis.

We expect New Jersey to provide employers with more information about their reporting obligations as the filing deadlines grow closer. We will continue to monitor the situation and let you know if anything changes.