Important Employee References and Compliance Considerations in 2020

2020 is here! The New Year brings us change, hope, and prosperity – and some employee benefits compliance considerations (and confusion) for employers and employees.

While many of the new year responsibilities relating to employee benefits/insurance fall on employers, 2020, in particular,  brings an extra call of attention to employees across the country, especially those in California.

Affordable Care Act (ACA) IRS reporting

January marks the beginning of the prime reporting season for employers considered Applicable Large Employers (ALEs) under the ACA in 2019. ALEs are required to comply with the ACA’s employer mandate, and, per the law, must offer all eligible Full Time (FT) employees at least Minimum Essential Coverage (MEC) that is affordable and meets a Minimum Value standard (a Bronze plan or better). At a minimum, MEC must also be offered to those FT employees’ dependents.

ALEs in 2019 must now demonstrate their offers of coverage, in accordance with the mandate, to the Internal Revenue Service (IRS) using IRS Forms 1094-C and 1095-C. Health insurance carriers are also required to file similar IRS Forms 1095-B with the IRS, which demonstrate the coverage held by a person for the year. Most employees who worked for an ALE in 2019 will be receiving at least two IRS Forms 1095 – one from their employer and another from their insurance carrier. Others who worked for multiple ALEs in 2019 will likely receive more. Employees who worked for a small, non-ALE in 2019 will receive at least one IRS Form 1095 from their health insurance carrier.

Employees should be advised that these forthcoming IRS Forms 1095 are for informational purposes; they do not need to be filed with tax returns. The carriers’ Form 1095-B informs the recipient whether a person and his/her family members held MEC for the year, to help them complete their tax returns. The ALE’s Form 1095-C helps an employee who enrolled in individual coverage on the federal or state Exchanges (e.g., Covered California, Nevada Health Link, etc.) to determine eligibility for a Premium Tax Credit (PTC).

Word & Brown has created a reference that explains what the varying IRS Forms 1095 are and what to do with them, in languages employees can easily understand. Employees will find information on the forms, who they are sent to, who they are sent by, when they are sent, and what to do with the forms. Check out the references in: English, Spanish, Vietnamese, Korean, and Chinese.

Employers considered ALEs in 2019 have until March 2, 2020, to release completed copies of IRS Forms 1095 to employees. They must also submit copies of the forms to the IRS by March 2, 2020, if submitting by paper, or March 31, 2020, if submitting electronically. Check out this reference to get a clearer look at these deadlines and responsibilities for ALEs. Please also revisit our previous column for more details on employers’ additional ACA responsibilities in January 2020: New Year Compliance Responsibilities for Employers with Group Benefits Plans.

Information for employees who waive coverage in 2020

Employees should also be advised of the ramifications of waiving employer-sponsored coverage in 2020, before making an enrollment decision for the year.

If an employee has been made an offer of affordable health insurance coverage by his/her employer of any size, that employee is ineligible for premium assistance/Premium Tax Credits (PTCs) on his or her state Exchange. Affordability for individuals on the Exchange is based on Modified Adjusted Gross Income (MAGI), which is sometimes referred to simply as household income. Employees could be required to pay back a significant portion of the monies advanced for payment of their premium on the individual Exchange if they claim/receive (claimed/received) an advanced PTC for which they are/were not truly eligible.

California also has a new state individual mandate, which requires all Californians to have MEC for all months of 2020. Non-compliance penalties will be assessed to those Californians who do not secure adequate health coverage, unless a valid exemption is attained. The penalty is a minimum $695/adult plus $347.50/underage dependent – all the way up to 2.5% of a person’s taxable household income. It will vary by each taxpayer’s specific tax situation.

Word & Brown has developed resources to explain such details to employees in 2020, so they may make informed benefit decisions. Check out the Important Considerations for Employees before Deciding to Waive Coverage references in:

For a refresher on the new 2020 California Individual Mandate, we invite you to revisit our previous column: California’s Individual Mandate 2020: What You Need to Know. Nevada, along with many other states, does not have a state mandate. The federal mandate is still in place; however, the penalty was reduced to $0.00 beginning in January 2019.

Word & Brown is by your side for all of 2020 and beyond – committed to your success, and the success of your employer clients and their employees. For additional compliance support, contact the WBCompliance team at or call 866.375.2039.

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