NJ Adopts Individual Mandate

Author:Mr Eric D. Fader
Profession:Day Pitney LLP

On May 30, New Jersey Governor Phil Murphy signed into law the Health Insurance Market Preservation Act, making New Jersey the second state to adopt an individual health insurance mandate. Massachusetts' mandate has been in effect since 2006.

The New Jersey law will go into effect on January 1, 2019. The law is similar in many respects to the individual mandate under the Affordable Care Act (ACA) and refers back to the ACA for key definitions and concepts, including minimum essential coverage (MEC) and penalty amounts based on individual or family income. The new law also provides that the state mandate will not be enforced if federal premium tax credits under the ACA are repealed by Congress or are no longer funded.   The New Jersey law will require employers in the state that offer insurance coverage, insurers, and the State Department of Human Services to report data on individuals covered by insurance. This requirement is also similar to existing reporting requirements under the ACA.

Separate legislation, also signed by Governor Murphy on May 30, authorizes the establishment of a state-based reinsurance program to protect insurers who pay for care to the costliest patients. The program, to be known as the New Jersey Health Insurance Premium Security Fund, will be funded, in part, by penalties collected from those who do not maintain insurance. Such penalty revenues are expected to be $90-100 million per year.

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