Risk & Business Magazine JGS Insurance Spring 2020 | Page 6

NJ MANDATES Individual Mandate Still Applies In New Jersey Under New State Law T he New Jersey Health Insurance Market Preservation Act became effective January 1, 2019. This was a continuation of the federal Affordable Care Act (ACA) provision requiring every New Jersey resident to obtain health insurance or pay a penalty. While the federal individual mandate penalty will no longer be imposed to the uninsured in 2019, under this new law, 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 or be subject to a penalty. WHAT IS CONSIDERED MEC? For purposes of the New Jersey individual mandate, minimum essential coverage has the same definition as under the ACA. MEC includes coverage under: • a government-sponsored program, such as coverage under the Medicare or Medicaid programs, the Children’s Health Insurance Program (CHIP), TRICARE, and certain types of veterans’ health coverage; 6 • an eligible employer-sponsored plan (including a self-funded plan, COBRA, and retiree coverage), defined as any plan offered by an employer to an employee that is a governmental plan or a plan or coverage offered in the small or large group market within a state; • a health plan purchased in the individual market; or • a grandfathered health plan. AFFECTED INDIVIDUALS The requirement to maintain minimum essential coverage applies to individuals of all ages (including children) unless that individual falls within a specific exception or is exempt. An individual is treated as having coverage for a month if he or she has coverage for any one day of that month. The following categories of individuals are exempt from the New Jersey individual mandate penalty: • individuals who cannot afford coverage; • taxpayers with income below the New Jersey tax filing threshold; • • • • • • nonresident taxpayers; religious conscience objectors; members of a health care sharing ministry; incarcerated individuals; individuals not lawfully present in the United States; and individuals who experience a hardship. An individual who is eligible for an exemption for any one day of a month is treated as exempt for the entire month. THE PENALTY New Jersey’s individual mandate penalty is calculated in the same manner as the ACA’s individual mandate. The penalty is the greater of two amounts—a flat dollar amount ($695) or a percentage of income amount (2.5 percent of income). For purposes of calculating the penalty, income is the taxpayer’s household income minus any exemption (or exemptions, for a married couple) and standard deductions. Families will pay half the penalty amount for children, up to a family cap of three times the annual