Smart Benefits: RI Requires Residents to Carry Health Insurance in 2020

Smart Benefits: RI Requires Residents to Carry Health Insurance in 2020

As part of its fiscal year 2020 budget legislation, Rhode Island enacted an individual mandate. The legislation was modeled after the federal Affordable Care Act (ACA), and generally requires Rhode Island residents to carry health insurance for themselves, their spouse, and their dependents or owe a penalty. The mandate is effective on January 1, 2020. Beginning in 2021, employers will have reporting obligations under the Rhode Island mandate.  

Summary of Rhode Island Legislation

The legislation requires all Rhode Island residents to carry minimum essential coverage (MEC) for themselves, their spouse, and their dependents for every month beginning on or after January 1, 2020. The mandate excludes individuals for hardship or religious conscience reasons.
 
The penalty for not having minimum essential coverage mirrors the ACA’s individual mandate, before the federal penalty was reduced to $0 beginning in 2019. The Rhode Island penalty will be calculated either as 2.5% of the taxpayer’s household income or $695 per adult and $347 per child under age 18, whichever is greater. Those amounts will increase annually with inflation, and will be paid through an individual’s Rhode Island personal income tax return. The first time the penalty will be assessed is in early 2021, on tax returns covering the 2020 tax year. The Rhode Island state penalty will not apply for any year in which the federal penalty applies.
 
Employer Reporting Implications

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Like the ACA, the Rhode Island legislation requires employers to report offers of, and enrollment in, employer-sponsored health coverage. 
 
The law specifies that furnishing the federal forms and filing them with the state will fulfill the reporting requirements. Accordingly, employers and insurers should be able to satisfy the new state reporting requirement by submitting their federal Forms 1095-B and 1095-C, which currently require information on which employees have been offered, or were covered by, employer-sponsored health insurance. Satisfying Rhode Island’s reporting requirement could become more complicated, however, if federal reporting requirements change. 

 

 

Rob Calise is the Managing Director, Employee Benefits of The Hilb Group of New England, where he helps clients control the costs of employee benefits by focusing on consumer-driven strategies and on how to best utilize the tax savings tools the government provides. Rob serves as Chairman of the Board of United Benefit Advisors, and is a board member of the Blue Cross & Blue Shield of RI Broker Advisory Board, United HealthCare of New England Broker Advisory Board and Rhode Island Business Healthcare Advisors Council. He is also a member of the National Association of Health Underwriters (NAHU), American Health Insurance Association (AHIA) and the Employers Council on Flexible Compensation (ECFC), as well as various human resource associations. Rob is a graduate of Bryant University with a BS in Finance