Details of Public Law 118-167, Section 2 , Paperwork Burden Reduction Act

Under the Patient Protection and Affordable Care Act (also called the Affordable Care Act, or ACA, Public Law 111-148), individuals, including their dependents, must be covered by a health plan that provides at least minimum essential coverage (commonly referred to as the “individual mandate”) or be subject to a tax (also referred to as the Individual Shared Responsibility (ISR) penalty) for failure to maintain the coverage. Under the ACA, employers are required to provide the following forms to the Internal Revenue Service (IRS) and the individual:

Form 1095-B – Health Coverage, which reports information to the IRS and taxpayers who have minimum essential coverage.

Form 1095-C – Employer-Provided Health Insurance Offer and Coverage, which reports information to the IRS and full-time employees of a large employer who work for one month or more of the calendar year for the employer detailing their health coverage enrollment and offers for their employees.

The Tax Cuts and Jobs Act (TCJA, Public Law 115-97, section 11081) reduced the amount of the Individual Shared Responsibility (ISR) penalty to zero with respect to health coverage status for months beginning after December 31, 2018. When the TCJA removed the ISR penalty, federal regulations (Treasury Regulations section 1.6055-1(g)(4)(B)) were put in place for employers to provide an alternative employee notification for Form 1095-B, only for those employees whose minimum essential health care coverage is zero and if mailed to the employee’s last known permanent address, or temporary address if no permanent address is known. However, Form 1095-C was still required to be sent to employees.

This provision allows employers to provide alternate employee notification for copies of Forms 1095-B and 1095-C. It is codifying the federal regulations providing for Form 1095-B requirements and extending the same treatment to Form 1095-C. Notification is considered timely when the employer posts in a clear, conspicuous and accessible manner for the individual to know how they can request a copy of these forms. If a copy is requested, it must be provided to the individual no later than January 31 of the following year the information return is required to be filed with the IRS or 30 days after the request is made, whichever is later.

Employers continue to be required to file these forms with the IRS.

RTC section 18631(b) provides that a copy of certain federal information returns can be required to be filed with FTB at the time and in the manner as required by forms and instructions. As a result, California would conform to the changes requiring the information return related to Forms 1095-B and 1095-C.

Additionally, California has standalone sections imposing an Individual Shared Responsibility Penalty (Part 32 of the RTC) that is similar to the federal penalty. Under these rules, returns are required to be filed with the FTB, and written statements are required to be provided to individuals. Under RTC sections 61005(d) for returns filed with the FTB and (g) for written statements provided to individuals, a return that satisfies IRC section 6055 as in effect on December 15, 2017, meets the California reporting requirements. As a result, the new notification requirements under this provision would not be applicable for California purposes.

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