2 minute read:
The District of Columbia’s Office of Tax and Revenue (OTR) has issued new guidance on employer reporting requirements for the District’s Individual Taxpayer Health Insurance Responsibility Requirement Amendment Act of 2018. This state-level mandate mirrors the ACA’s individual mandate, requiring employers and plan sponsors with “at least 50 full-time employees, including at least one employee who was a District resident” to “maintain minimal essential health care coverage, qualify for a coverage exemption, or pay a tax penalty.”
The District law requires every “applicable entity that provides Minimum Essential Coverage to an individual during a calendar year” to submit an information return regarding such coverage to OTR. It also requires the applicable entity to submit a statement about the individual’s type of coverage.
Those that fail to comply with the mandate “may be subject to a penalty equal to 2.5% of their household income or a per person charge.” This amount is upwards of $695 per adult and $250 per child. It’s important to note that the D.C. mandate does not apply to individuals who commute to work in D.C. but do not reside there. An individual is considered a D.C. resident if his/her employer withholds wages and pays taxes to D.C. on their behalf or has a mailing address in D.C. for any period during the applicable calendar year.
Policy makers have used the ACA as a guide to implement reporting requirements previously in place before the 2017 Tax Cut and Jobs Act. Applicable entities should file forms 1094-B, 1095-B, 1094-C, or 1095-C with the IRS to comply with the OTR filing requirement. All information returns are required to be filed electronically through MyTaxDC.com, as paper filings will not be accepted. The new tax guidance requirements for annual reports are due beginning June 30, 2020. For more information, please visit https://otr.cfo.dc.gov/.
California, Rhode Island, Massachusetts, New Jersey, Vermont and D.C. have all approved individual mandates to replace the Affordable Care Act’s Individual Mandate in the wake of the federal government’s decision to zero out the individual mandate from the Affordable Care Act, starting this year, effectively eliminating the individual tax penalty. For most states, the individual penalty mirrors the federal individual mandate penalty that was in effect for 2018.
Of those government entities passing Individual Mandates, only D.C. and New Jersey have provided written guidance for employers on the reporting they will be required to provide as part of the new mandate. Expect more information from the other states as they get ready to implement their new individual mandates.
