NJ Health Insurance Individual Mandate Becomes Law

May 31, 2018 — Legislation that would preserve in New Jersey the individual mandate to purchase health insurance was signed into law on May 30, 2018, by Governor Murphy. The “New Jersey Health Insurance Market Preservation Act” will require most resident taxpayers to have health insurance or pay a prescribed penalty. The law takes effect January 1, 2019.

Background: The New Jersey legislation is designed to retain the individual mandate under the federal Affordable Care Act (ACA). The new federal tax reform law includes a provision removing the penalties for not having coverage as of January, 2019, effectively eliminating the individual mandate of the ACA. The Congressional Budget Office had previously predicted that repealing the individual mandate would result in an increase in the number of uninsured individuals, destabilize the insurance market, and increase insurance premiums.

In response, and similar to the original federal ACA, the New Jersey legislation will require most taxpayers to obtain health insurance or pay a penalty to the State.  Eligible coverage could include insurance obtained through an employer or independently, as long as the plan satisfies minimum coverage requirements.  The penalties will be the same as those under the ACA as of December 15, 2017: $695 per adult and $347.50 per child under age 18 (up to a family maximum of $2,085), or 2.5 percent of household income, whichever is higher. Exemptions to the coverage requirement or penalty will be available under certain specific circumstances.

The new law does not require employers provide health insurance, although new reports will be required of entities that do provide health insurance in order to track compliance.

Monies received from the penalties will go into a new Health Insurance Premium Security Fund, established under companion legislation also signed into law May 30 by the Governor.  The fund is designed to create a reinsurance program to stabilize the insurance marketplace in New Jersey. New Jersey will need to apply for a federal waiver in order to create the reinsurance program.


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