Insights

New Jersey Enacts Individual Health Insurance Mandate


On May 30, 2018, Gov. Murphy signed into law A 3380, the Health Insurance Market Preservation Act, which requires all New Jersey residents to have health coverage or pay a penalty. New Jersey's mandate mirrors the former federal requirement under the ACA and refers back to the ACA for key terms, including definitions, minimum essential coverage (MEC) and penalty amounts based on individual or family income. The annual penalty is 2.5 percent of the household's income or a per-person charge, whichever is higher. Interestingly enough, the Act provides that should Congress repeal the federal premium tax credits under the ACA or stop funding to the program, then the state mandate will not be enforced.

The New Jersey law is scheduled to take effect Jan. 1, 2019, making New Jersey the second state to enact such a state-wide individual health insurance mandate. The proceeds from the annual penalty are slated to fund a reinsurance program to help insurers cover the cost of the most expensive patients.

Because this is an individual mandate, employers don't need to take any action, but they should be mindful of potential tax implications for employees residing in New Jersey.

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