New Jersey is one step closer to reinstating an individual health insurance mandate.
In early March, the state Senate Budget and Appropriations Committee voted 8-3 to approve S1877, which would allow New Jersey to impose an income tax penalty on residents who are able to afford health insurance but fail to purchase a policy. The penalty would amount to 2.5 percent of an individual’s household income or $695 per adult and $347.50 per child, whichever is greater. Those who cannot afford health insurance—determined by the New Jersey Treasurer—or don’t earn enough income to pay tax would be exempt from paying the penalty.
This provision—imposed at the federal level—was one of the most unpopular parts of the Affordable Care Act, and it is scheduled to be repealed, beginning in 2019, as part of the Tax Cuts and Jobs Act signed into law by President Trump in December 2017. However, proponents of the bill believe reinstating the mandate at the state level will help stabilize premiums in New Jersey. Without it, they believe young and healthy residents will forgo insurance, which will leave an older, less healthy insurance pool—and higher premiums.
And skyrocketing problems continue to a problem, which small business owners need addressed. The Asbury Park Press reported on a study from California that showed an expected 32 percent increase to health insurance premiums in New Jersey in 2019, plus 90 percent over the next three years—on top of the 22 percent average premium increase that has occurred in 2018. Plus, the cost of health insurance is still the no. 1 problem for small business owners, according to NFIB’s Problems and Priorities report.
“Anything that will level the playing field between the types of health insurance plans that are available to large companies and could conceivably lower the cost of premiums for small business would be welcomed,” said NFIB member Joe Olivo, president of Perfect Communications in Moorestown, New Jersey.
However, NFIB/NJ State Director Laurie Ehlbeck expressed many small business’ concerns about the proposal and says that imposing an individual mandate will be another blow to these small companies, who have already been knocked down on the mat by huge healthcare costs.
“The answer is not state government mandates to prop up what is clearly a failed policy on the national front,” she says. “Instead, open the insurance market to competition by getting rid of mandated coverage that many don’t need. Allow association plans to create larger pools to lead to competitive pricing. Small business owners want and need affordable, flexible, and predictable health insurance options.”
A second bill (S1878), approved 8-4 by the same committee, would create the new Jersey Health Insurance Premium Security Fund, into which the collected penalties would be deposited in order to help cover the insurance claims of people who are gravely sick and therefore help contain premium rates from skyrocketing for this insurance pool. This would essentially create a reinsurance program by which health insurers are reimbursed for customers who are costly to cover through the individual marketplace. In order to do this, however, the state must receive a waiver from the federal government.
If given final approval by the Legislature and signed into law by Gov. Phil Murphy, New Jersey would be the second state (after Massachusetts) to impose a state-level tax penalty for going without health insurance if financially able to buy it.
But for small business owners, this could be yet another in a lengthy list of mandates that make it harder to do business in the Garden State.
