— Overview —
The New Jersey Health Insurance Market Preservation Act, which took effect Jan. 1, 2019, is a continuation on the state level of a now-repealed provision of the federal Affordable Care Act, requiring every taxpayer to obtain health insurance or pay a shared responsibility tax. This Fast Fact explains the requirements under the state law.
— Background —
The law, P.L.2018, c.31, is intended to ensure that health insurance markets in New Jersey remain affordable by mandating that individuals who can afford to purchase health insurance participate in the market. The law requires most individuals, other than those who qualify for an exemption, to obtain at least minimum essential coverage health insurance or pay a penalty when filing their state income tax return.
What Are the Requirements?
Minimum Essential Coverage
New Jersey taxpayers must ensure that they and their dependents maintain minimum essential health coverage each month. Those who fail to meet this requirement must pay a state shared responsibility tax equal to what the taxpayer’s federal penalty would have been for the taxable year under section 5000A of the Internal Revenue Code of 1986, as in effect on Dec. 15, 2017. (As of 2019, taxpayers no longer face a penalty on their federal tax returns for failing to maintain health insurance. The so-called “individual mandate” was repealed by Congress under a provision of the federal Tax Cuts & Jobs Act).
Exemptions are available for New Jersey taxpayers who don’t meet the income requirements, experience a short gap in coverage, have no affordable coverage options, or experience a hardship. A full list of coverage exemptions can be found here.
Eligible taxpayers can claim the exemption when filing their New Jersey Income Tax return (Form NJ-1040) using Schedule NJ-HC. Exemptions previously received from Healthcare.gov will be available to claim on Schedule NJ-HC of the NJ-1040.
Under New Jersey’s Health Insurance Market Preservation Act, insurers, self-insured employers, government agencies, multi-employer plans and other entities that provide health insurance must submit information returns to New Jersey reporting on individuals’ health insurance coverage. There is no paper filing option available.
Coverage returns must contain the information specified by the federal Internal Revenue Service (IRS) rules and regulations for 1094 and 1095 filings. Companies are encouraged to send data pertaining only to New Jersey full-year and part-year residents. However, for ease of filing, New Jersey will accept the same 1094/1095 data files sent to the IRS, even if that includes data about individuals who are not residents of New Jersey. Out-of-state filers who provide information on non-residents of New Jersey should consult privacy and other laws pertaining to residents of other states before sending any sensitive or personal data to the state of New Jersey. A 1095 form must be provided to for each primary enrollee by March 2, 2021, and forms must be submitted to the NJ Division of Taxation by March 31, 2021.
Out-of-State Employers of New Jersey Residents
Out-of-state employers who employ New Jersey residents have the same filing requirements as in-state businesses. These requirements are not limited to businesses that withhold New Jersey payroll taxes. If you are an out-of-state employer, you must file a 1095 document for each New Jersey resident you employ. Insurers, government agencies, multi-employer plans, and all others responsible for reporting Minimum Essential Coverage to New Jersey residents also must file the required information with the state.
Guidance on Forms Sent to New Jersey:
Requirements for these filings vary depending on whether an employer is fully insured, self-insured, or a participant in a multi-employer plan. The size of a company also affects reporting requirements, as detailed below.
- Single-Company, Applicable Large Employers (ALEs). ALEs generally are companies that employed an average of at least 50 full-time-equivalent employees on business days during the preceding calendar year. Health coverage provider (the insurer) files 1095-B for each covered member of the plan. Employer files 1095-C (Parts I and II) for each person who was a full-time employee of the employer for at least one month of the calendar year.
- Single-Company, Not an Applicable Large Employer (Non-ALE). Non-ALEs generally are companies that employed an average of fewer than 50 full-time equivalent employees on business days during the preceding calendar year. Health coverage provider (the insurer) files 1095-B for each covered member of the plan. Employer does not file a 1095-C.
- Fully Insured Employer Participating in a Multi-employer Plan. Plan sponsor (generally a board of trustees) files 1095-B for enrolled individuals. Applicable Large Employers also file 1095-C (Parts I and II) for each person who was a full-time employee for at least one month of the calendar year.
- Single-Company, Applicable Large Employers (ALEs). ALEs generally are companies that employed an average of at least 50 or more full-time equivalent employees on business days during the preceding calendar year. Employer files 1095-C for each person who was a full-time employee for at least one month of the calendar year and for any employee who was enrolled in the self-insured plan. ALE members that offer employer-sponsored, self-insured health coverage to non-employeesmay use Forms 1094-B and 1095-B for these non-employees, or ALEs may file a 1095-C using Code 1G in Part II, to report for non-employees. For this purpose, a non-employee includes a non-employee director, an individual who was a retired employee during the entire year, or a non-employee COBRA beneficiary. This also applies to a former employee who terminated employment during a previous year.
- Single Company, not an Applicable Large Employer (Non-ALE). Non-ALEs generally are companies that employed an average of fewer than 50 full-time equivalent employees on business days during the preceding calendar year. Employer files a 1095-B for each covered employee.
- Self-Insured Employer Participating in a Multi-employer Plan. Plan sponsor (generally a board of trustees) files 1095-B for each covered employee. Applicable Large Employers also file Parts I and II of 1095-C for each covered employee.
As per the New Jersey Division of Treasury, taxpayers who have MFT Secure Transport service user credentials can now use them to submit the required health insurance coverage returns.
— For More Information —
If you need additional information, please contact NJBIA’s Member Action Center at 1-800-499-4419, ext. 3 or email@example.com.
This information should not be construed as constituting specific legal advice. It is intended to provide general information about this subject and general compliance strategies. For specific legal advice, NJBIA strongly recommends members consult with their attorney.