Last week, New Jersey (“NJ”) Governor Phil Murphy signed into law two bills in response to the repeal of the Federal Individual Shared Responsibility mandate under the Affordable Care Act (effective January 1, 2019). The bills are intended to stabilize the state’s individual health insurance market.
This legislation will directly impact residents of NJ and indirectly employers with employees residing in the state.
State Individual Mandate
The New Jersey Health Insurance Market Preservation Act will require all New Jersey residents to have Minimum Essential Coverage (“MEC”) beginning January 1, 2019, or pay a penalty. This makes NJ the second state, after Massachusetts, to enact an individual mandate.
The mandate includes an annual penalty of 2.5% of a household’s income or $695 per adult and $347 per child—whichever is higher. A “hardship exemption” will be available for individuals who cannot afford coverage, determined by the State Treasurer. NJ expects to collect between $90 million and $100 million in penalties. This money, along with additional federal funding, will be used on a reinsurance program, which Murphy also signed into law (The New Jersey Health Insurance Premium Security Act).
Next Steps for Employers
While the new bills do not directly affect employer-sponsored plans, the individual mandate requirement for NJ residents will likely require education for your employees.
Contact your USI Consultant if you have any questions or would like further information about the new legislation.