We are asking for your input and comments on the two bills below.
Background: These bills are intended to prevent significant premium increases in, and help stabilize, New Jersey’s individual health insurance market now that the federal tax reform law has repealed the IRS penalties for those not covered by insurance starting in 2019, which had been required under the Affordable Care Act (ACA). However, to accomplish this goal, all health insurance carriers and third-party administrators (TPA) would be assessed an as yet undetermined amount based on the total dollar amount of their claims for insured and self-funded coverage to fund a reinsurance pool. This assessment is a new cost to insurers and TPAs, which could be passed through in the form of higher premiums for small and large group health plans and higher costs for self-funded arrangements.
A-3380 establishes a state “individual mandate” and requires all resident taxpayers to obtain health insurance coverage that qualifies as minimum essential coverage – which includes coverage under health plans provided by employers, government programs such Medicare & Medicaid, and plans sold in the state’s individual health insurance market. The penalty for not obtaining coverage is the same as that under the ACA prior to the repeal (approximately $695 per adult, up to a family maximum of $2,085, or 2.5 percent of household income, whichever is greater). There are exemptions from the tax penalty for individuals who cannot afford coverage. Tax penalty monies collected will be deposited in the Health Insurance Premium Security Fund established under A-3379. The bill would take effect January 1, 2019, the same time as the repeal of federal individual mandate.
A-3379 permits the state to apply for a federal waiver under the ACA to create a reinsurance program to reimburse health insurance carriers in the individual market for claims incurred that exceed a certain threshold amount. Approval of the waiver by the federal government would allow New Jersey to apply for and draw down federal funds for the reinsurance program. In addition, health insurance carriers and third-party administrators that contract to oversee, manage, deliver or provide health care services in the large and small group health insurance market would be assessed. These monies together with the federal funds would then be used to reimburse the carriers in the individual market for high-cost claims. The bill would take effect immediately.
Status: Both bills were scheduled in the Assembly Appropriations Committee for Thursday, March 22, 2018, but were held . NJBIA has relayed its concerns to the Senate and Assembly bill sponsors because it is not yet known (1) how much will be collected under the state individual mandate and (2) it is very likely that any assessments of health insurance carriers to fully fund the reinsurance program will result in premium increases for both small and large employer health benefits plans in its attempt to help the individual market.