State Individual Mandate and Reinsurance Program enacted by New Jersey
On May 30, 2018, New Jersey Governor Phil Murphy signed into law the New Jersey Health Insurance Market Preservation Act.¬† This is a state individual mandate requiring individuals in New Jersey to maintain acceptable health coverage or pay a penalty, effective in 2019.¬† New Jersey is the second state to enact its own individual mandate penalty – the other state, Massachusetts has its own individual state mandate through their state health care laws. Also signed into law is the New Jersey Health Insurance Premium Security Act.
The New Jersey Health Insurance Market Preservation Act
This state individual mandate closely mimics the federal individual mandate required under the ACA (Affordable Care Act), which has been eliminated effective 2019 by the Tax Cuts and Jobs Act.¬† The state mandate does not directly impact businesses required to offer health benefits (those with over 50 employees), however, there will be a reporting requirement for those employers.
Highlights of the New Jersey Health Insurance Market Preservation Act:
- Requires most individuals* in the state, and their families, to be covered under ‚Äúminimum essential coverage‚ÄĚ (MEC) for each month of the year
- ‚ÄúMinimum essential coverage‚ÄĚ includes coverage under: government-sponsored programs, eligible employer-sponsored plans, health plans purchased in the individual market, or grandfathered health plans.
- Individuals that don‚Äôt obtain health insurance coverage will be penalized
- The penalty will be calculated as the greater of the flat dollar amount ($695), or the percentage of income amount (2.5%)
- Reporting requirement on every entity the provides MEC to an individual during a calendar year (similar to the ACA‚Äôs reporting requirement under Internal Revenue Code Section 6055)
- Employers or other sponsors of employment-based health plans
- The New Jersey Department of Human Services for the NJ FamilyCare Program
- Carriers licensed or otherwise authorized to offer health coverage, for coverage they provide that is not described above
To enforce this individual state mandate, each November taxpayers who filed a gross income tax return will receive a notification from the New Jersey state treasurer indicating whether the taxpayer (or one of the taxpayer‚Äôs dependents) is not enrolled in a required MEC plan.¬† Penalties will be assessed and collected in the same manner as New Jersey state taxes
*The following categories of individuals are exempt from the New Jersey individual mandate penalty:
- Individuals who cannot afford coverage
- Members of a health care sharing ministry
- Taxpayers with income below the NJ tax filing threshold
- Incarcerated individuals
- Nonresident taxpayers
- Individuals not lawfully present in the United States
- Religious conscience objectors
- Individuals who experience hardship
New Jersey Health Insurance Premium Security Act
With the signing of this bill, New Jersey established a health insurance reinsurance plan with the intention to stabilize or reduce premiums in the individual health insurance market.¬† This reinsurance plan replaces the ACA‚Äôs expired federal reinsurance program. The state intends to seek federal funding to implement this program through a Section 1332 State Innovation Waiver made available under the ACA.
The state reinsurance program will allow carriers in the state to apply for reimbursement of a portion of their claims costs for the year – the calculation is based on an eligible carrier’s incurred claims costs for an individual enrollee’s covered benefits during the year. Any reinsurance payments will be paid to carriers by Aug. 15 of the following year.
It is important for individuals to ensure that they are in compliance with the New Jersey state individual mandate beginning in 2019, as well as businesses with over 50 employees offering employment-base health care programs need to prepare for the required reporting.
For more information regarding an Employee Benefits program for your organization or business, contact Jason Della Penna, Senior Vice President at Brown & Brown Benefit Advisors, firstname.lastname@example.org.