Risk & Business Magazine JGS Insurance Magazine Spring 2019 | Page 6

HEALTH INSURANCE MANDATE
New Jersey Adds
Health Insurance
Mandate In 2019
T
he New Jersey Health Insurance
Market Preservation Act,
effective January 1, 2019, is
a continuation of the federal
Affordable Care Act (ACA)
provision. It requires every New Jersey
resident to either obtain health insurance
or make a Shared Responsibility Payment
(SRP). While the federal individual mandate
penalty will no longer be imposed on the
uninsured in 2019, New Jersey taxpayers
who are subject to the individual mandate
(and their dependents) must have minimum
essential coverage (MEC) during each
month of the year in 2019 under the new
state law. Those taxpayers without MEC
may be subject to a penalty that is equal
to the amount they would have paid if the
ACA’s mandate had not been repealed: $695
for adults ($347.50 per child) or 2.5 percent
of a taxpayer’s income, whichever is greater.
This amount is adjusted for inflation each
year.
Most basic health coverage satisfies the
requirement, including health insurance
plans through an employer, Medicare,
Medicaid, the Children’s Health Insurance
Program (CHIP), NJ FamilyCare, or another
source that provides MEC. Coverage
obtained through a Multiple Employer
Welfare Arrangement (MEWA) also
qualifies as MEC if that coverage complies
with certain state consumer protections.
These protections are the same benefit
standards that apply to individual, small
group, or large group coverage under New
Jersey law. This means that MEWAs must
comply with benefit mandates such as
maternity care; state community rating
standards, such as avoiding gender rating;
and regulatory requirements, such as form
6
filing. Two of the more popular MEWAs in
New Jersey are the Affiliated Physicians and
Employers Health Plan (APEHP) and the
Association Master Trust (AMT), both of
which qualify as MEC.
The revenue collected under New Jersey’s
individual mandate—expected to be
approximately $100 million annually—will
be used to fund a state-based reinsurance
program. This revenue estimate is based
on data from the Internal Revenue Service
that estimates about 189,000 New Jersey
income tax filers paid the federal penalty
in 2015 resulting in revenue of about
$93 million. By reinvesting the penalty
revenue into a reinsurance fund, New
Jersey’s mandate goes beyond the goal of
simply incentivizing coverage. Investment
in a state-based reinsurance program
is expected to bring New Jersey health
insurance premiums down, which could
bring additional young, healthy people
into the state’s marketplace and possibly
improve market stability.
The New Jersey law also has employer
reporting requirements. Employers that
offer job-based coverage, insurers, and the
New Jersey Department of Human Services
must comply with new reporting standards,
which are important for enabling the
state to collect enough information to
assess whether New Jersey taxpayers have
complied with the mandate. It will include
data on individuals covered under MEC,
such as names, Social Security numbers,
dates of coverage and other information
requested by the State. This requirement
may be satisfied by filing a return that is
currently required under the ACA or by
submitting at least the same information
required to be submitted under the ACA.
Like the federal ACA, the New Jersey law
also includes an “affordability” component.
Taxpayers will be exempt from the New
Jersey penalty if their coverage is considered
unaffordable. The State is directed to set
the affordability threshold that is similar
to the ACA.
New Jersey has taken a very innovative
approach to reducing costs and stabilizing
the individual insurance market. The
state-level mandate will likely incentivize
coverage among healthy individuals who
might not otherwise purchase insurance
following repeal of the federal ACA
penalty.
BY: BARRY E. FIELDS
VICE PRESIDENT OF EMPLOYEE BENEFITS
JGS INSURANCE
Barry Fields has over 29 years of employee
benefits experience advising clients in a
wide range of industries, professional and
industrial, public and private, throughout
the United States and worldwide.
Barry specializes in providing full-service
benefits consulting to clients including
program design, compliance, plan
funding, underwriting, wellness programs,
employee communications, benefits
administration, employee advocacy and
the use of effective strategies in benefits
management.