The Federal Individual Mandate: Still the Law, $0 Penalty
The ACA’s individual mandate requires most people in the U.S. to have Minimum Essential Coverage (MEC) or qualify for an exemption. Starting with 2019, Congress reduced the federal penalty to $0, but the mandate itself is still part of the law.
Several states, including California, have their own individual mandates with penalties, many modeled on the original federal penalty.
Two Different Kinds of ACA Reporting
ACA reporting serves two separate purposes, and it’s easy to mix them up:
| Reporting on offers of coverage | Reporting on who was covered | |
|---|---|---|
| Purpose | The employer mandate | The individual mandate (federal and state where applicable) |
| Who reports | Applicable Large Employers (ALEs) | Insurance carriers (fully insured plans) and employers of any size with self-funded or level-funded plans |
| Forms | Form 1095-C (offer sections) | Form 1095-B, or Form 1095-C (coverage section) for self-funded ALEs |
| Filed with | IRS | IRS, and states with their own mandates as applicable |
Coverage reporting is still required federally even though the federal penalty is $0. And because states with their own mandates enforce penalties, they need to know who was covered, too. See Employer Reporting Overview for federal details.
States With Their Own Individual Mandates
In response to the federal penalty being set to $0, several states implemented their own individual mandates, complete with state-level penalties for residents who fail to maintain MEC. These states require separate reporting to state agencies to support enforcement.
| State | In effect since | State agency | Reporting Notes |
|---|---|---|---|
| California | 2020 | Franchise Tax Board (FTB) | Uses the federal 1095 forms. See below. |
| District of Columbia | 2016 | Office of Tax and Revenue | Uses the federal 1095 forms |
| Massachusetts | 2006 | Department of Revenue | Uses its own state form (MA 1099-HC) |
| New Jersey | 2019 | Division of Taxation | Uses the federal 1095 forms |
| Rhode Island | 2020 | Division of Taxation | Uses the federal 1095 forms |
Vermont also has an individual mandate, but currently without a penalty or a state reporting requirement.
Deadlines vary by state and can change, so check each state’s agency for current dates.
California’s Individual Mandate
Since January 1, 2020, California residents must have qualifying health coverage, qualify for an exemption, or pay a state penalty when they file their California tax return. The penalty is modeled on the original federal penalty. The California Franchise Tax Board (FTB) offers an Individual Shared Responsibility Penalty Estimator for individuals.
Short coverage gap: A gap in coverage of less than three consecutive months generally doesn’t trigger the penalty. A gap of three months or longer may.
California Coverage Reporting
Who reports to the California Franchise Tax Board (FTB):
- Fully insured plans: the insurance carrier
- Self-funded or level-funded plans: the employer (plan sponsor), whether or not it’s an ALE
Forms: California accepts the same federal forms (1094-B/1095-B and 1094-C/1095-C) filed with the IRS. There’s no separate state form.
Deadlines:
- Copies to covered individuals: January 31. This is earlier than the federal March 2 deadline, and California doesn’t grant an extension.
- Filing with the FTB: March 31. The FTB allows an automatic extension to May 31. After that, it may assess a penalty of $50 per covered individual.
Filings are submitted to the FTB electronically or on paper.
Important: This information is provided for general educational purposes and reflects the rules as of November 2026. It is not legal or tax advice. How these rules apply depends on each employer’s specific circumstances, so employers should review their situation with their own legal counsel, ERISA attorney, CPA or tax advisor.