Employers Not Prepared For NJ Reporting Requirements Face Legal Risk

by David Mordo
hcex-nj-reporting-requirements

We have learned that many national ACA reporting providers are not planning to file health coverage information with the state of New Jersey on behalf of their employer clients for 2019. Instead, depending on the vendor, many businesses from all over the country will need to self-report employee health coverage data to New Jersey by March 31, 2020. However, due to New Jersey’s unique data formatting and transmission requirements, many affected business owners will not be able to complete their filings independently. Furthermore, unless the data sent to New Jersey only covers state residents and not any other employees, a business owner risks violating federal and state privacy and data security requirements that protect health information.

New Jersey requires employers to use the state’s Division of Revenue and Enterprise Services’ (DORES) MFT SecureTransport service to send Form 1095-B and 1095-C to the state. Unlike with federal employer reporting, the DORES MFT SecureTransport system is the only option business owners have - there is no paper filing option. In order to use the service, business owners or the employer reporting vendor need to obtain credentials, and it is not easy to meet New Jersey’s technical specifications for use.

If a business owner does obtain DORES MFT SecureTransport credentials, there is still another hurdle to face. New Jersey requires affected businesses to submit their IRS 1095-B or 1095-C forms to the state using strictly defined XML format files. Business owners may be able to obtain an XML file of all 1095 reporting statements from their national vendors. However, this file may include reporting statements for every employee, no matter where the employee lives. In theory, New Jersey will accept combined XML files from employers, even if they include protected health and financial data about individuals who are not residents of New Jersey. Unfortunately, this type of transmission would violate HIPAA and HITECH privacy and data security requirements and could violate state privacy statutes too.

The only way an employer, or their reporting vendor, can meet both the New Jersey reporting requirements and ensure compliance with privacy obligations, is to separate all 1095 statements by the employee’s state of residency. Unfortunately, it will be tough, if not impossible, for most employers to extract out just the New Jersey resident data from the mass XML file they may receive from a vendor. The business will also need to send a scrubbed file back using the state-prescribed and strictly defined XML data file formatting requirements.

If you represent a business with 2019 health coverage information reporting obligations in New Jersey, here's what you need to do, as soon as you can:

  • Reach out to your ACA reporting vendor and verify if they plan to fully file 1095 statements with the State of New Jersey’s Division of Revenue and Enterprise, using the state’s Division of Revenue and Enterprise Services’ DORES MFT SecureTransport service.
  • If they are, confirm that the vendor will be transmitting redacted files that ONLY include the 1095 statement data for New Jersey resident employees.
  • If the vendor does not do the direct transmission of data to New Jersey, then determine if the business has the technical capability in-house to edit the XML files provided by the vendor. Additionally, the company will need to obtain DORES MFT SecureTransport service credentials and submit the data to the state by March 31, 2020.
  • If the business cannot edit, format, and transmit the appropriate data files to New Jersey independently, then they need to find a vendor who can do it for them ASAP. Filings are due by March 31, 2020, so there is not much time left.

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