Employers in California will need to get ready for the new reporting requirements that come with the recently-enacted statewide individual mandate. Governor Gavin Newsom signed the individual mandate bill AB414 into law on July 2, 2019, and the legislation will take effect on January 1, 2020. The new law, also known as the California Health Care Coverage Shared Responsibility Act requires all California residents to have qualifying health insurance for themselves, their spouses and their dependents and requires employers to follow specific reporting requirements for each employee.
For residents who earn less than 600% of the federal poverty level, California will offer subsidies to assist with premiums. The legislation currently will allow up to 850,000 lower-income residents to receive financial assistance and also includes state-funded programs for advertising the new changes and helping residents navigate the state health insurance marketplace. The state expects the individual and employer penalties to help cover most of the budget needed for the California Health Care Coverage Shared Responsibility Act. Residents who do not maintain qualifying health insurance coverage will owe a penalty to the state, equal to 2.5% of salary, $695 per adult, $347.50 per child or up to $2,085 per family – whichever is greater.
Employers are subject to penalties as well, if they don’t comply with the reporting requirements by March 31st of every year. The employer requirements begin in 2021, which gives business owners a little more time to adjust to the new reporting. The penalty for employers who fail to comply is $50 per individual employee not reported to the State.
Partnering with a Professional Employer Organization (PEO) can help California business owners relieve themselves of the burden of mandated reporting while still remaining compliant with new and changing state laws. A PEO package like Emplicity’s PrimeHR™, relieves business owners of all of the confusing administration tasks and allows them the peace of mind to focus on growing their business and bottom line.
Since 1995, Emplicity has provided a smarter, more secure, and integrated platform of employer services to its 300 business clients and their 8,500 employees. As a Professional Employer Organization, or PEO, the California-based HR outsourcing firm simplifies the compliance, administration, and support businesses need in the areas of employee benefits, payroll, and human resources technology.
NOTICE: Emplicity provides HR advice and recommendations. Information provided by Emplicity is not intended as a substitute for employment law counsel. At no time will Emplicity have the authority or right to make decisions on behalf of its clients.