New California Law SB 1375 – Affects Many Small Firm’s Group Health Insurance

The new California Law, SB 1375, was signed by Governor Brown on September 22, 2018 and will affect many small firm’s group health insurance. SB 1375 changes the Health Insurance Code to reclassify certain small employer groups as individuals. The affected firms will have to obtain individual health insurance in 2019, rather than the small employer group plans they currently have. Individual health insurance is typically more expensive with less provider network and benefit plan choices than small group plan offerings.

Fortunately, for CalCPA members and their firms, CalCPA Health received certain exemptions from SB 1375, which generally allows us to treat the affected firms as groups, and not as individuals. Commercial carriers (Blue Shield, UnitedHealthcare, Anthem, etc.,) must comply with the new regulations and reclassify these groups as individuals.

SB 1375 defines groups that consist entirely of owners/partners, and/or W-2 employees that are spouses of owner/partners, as not eligible for group health coverage. Even though these entities may be classified as employer/employees by other regulations, (e.g. Workers’ Comp, payroll tax, etc.,) SB 1375 specifically states they do not qualify for group health coverage and may only purchase individual plans.

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Affordable Care Act (ACA) – Employer Reporting Updates

ACAUpdate – Employer Reporting Requirements for Forms 1094B/1095B

The latest – The Internal Revenue Service (IRS) issued Notice 2016-4 on December 28, 2015 which announced a filing extension for Forms 1094B/1095B. The revised deadline for employers to provide Form 1094B to employees is March 31, 2016; and filing Form1095B to the IRS is extended to May 31, 2016 for paper filing, and June 30, 2016 for e-filing.  Notice 2016-4 also extends the filing requirement for health insurance carriers to provide Form 1095C to covered employees to March 31, 2016

Background – Employers with 50 or more full-time (equivalent) employees in 2015, must file Forms 1094-C and 1095-C.  The purpose of this filing is enforcement of the employee and employer mandates of ACA. This information is required under sections 6055 and 6056 regarding offers of health coverage and enrollment in health coverage for employees.

According to the IRS, taxpayers are not required to attach Form 1095C as proof of health care coverage when filing their tax return, but note that employees should keep the 1095C they receive from their employer and 1095B they receive from their insurance carrier as proof of coverage.

For further information regarding Forms 1094B and 1094C, the IRS has provided a Questions and Answers to guide you through the process of filing these forms. Click below for the forms and instructions:

IRS Form 1094/5B