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Both the Senate Commerce Committee and the Assembly Financial Institutions and Insurance Committee this week released legislation that would impose would impose a new 2.75% state excise tax on fully-insured health insurance premiums for health benefits plans, MEWAs, and dental and vision coverage.

NJBIA has been leading the fight against these measures, arguing that businesses decimated by the coronavirus pandemic simply cannot afford any increases in the cost of doing business, especially in an area where businesses were already struggling with excessive costs when the state’s economy was growing.

NJBIA is encouraging members to reach out to their elected state representatives and ask them to oppose S-2676 and A-4389, which has been scheduled for a hearing in the Assembly Appropriations Committee on Monday.

“Anything that will increase costs for small businesses should be avoided during this time,” NJBIA Chief Government Affairs Officer Chrissy Buteas told the Senate Commerce Committee on Thursday.  “At best, increasing the cost of health insurance could make small businesses slower to rehire. At worst, this could trigger cost-cutting behavior whereby small businesses must choose between retaining/hiring workers and providing health benefits.

“In a crisis such as we are in, NJBIA believes that enacting a tax on healthcare benefit plans will ultimately make healthcare less affordable for New Jerseyans and further harm the state’s business climate,” she said.

The tax would increase premium costs by an estimated $300 million, forcing some employers to stop offering health benefits to employees all together. If the tax increase is passed solely onto the employee, which is a real possibility given the financial hardships businesses face, a standard family health insurance plan could experience an average increase of about $600.

That would come on top of two decades of premium increases that have been two and three times the rate of inflation.  According to NJBIA’s 2018 Health Benefits Survey, member companies reported that average spending for employee-only plans increased from $7,044 in 2016 to $8,292 in 2018. For family plans, the cost went from $17,580 to $19,764.

Both Senate Budget & Appropriations Committee Chairman Paul Sarlo and Assembly Budget Committee Chairwoman Eliana Pintor Marin have indicated in recent public remarks that they are opposed to new taxes on businesses. The bills have been referred to these two committees for consideration.

Ironically, proponents of the tax claim the money is necessary to make health insurance more affordable. Under the bill, the money would be used to establish a “Health Insurance Affordability Fund” to increase affordability in the individual and small group markets. As Buteas pointed out, though, the bill merely suggests ideas for increasing affordability rather than providing an actual strategy. Moreover, the bill focuses on those 400% below the poverty line, which means that those who would wind up paying for this bill will not be the focus of cost-decreasing measures.