Beginning January 1, 2019, New Jersey required its residents to maintain health insurance or face a tax penalty.
This year employers must provide certification that employees are covered.
The law requires most people to have minimum essential health coverage throughout the year and beyond. Failure to have health coverage or to qualify for an exemption results in a tax penalty when New Jersey Income Tax returns are filed.
The tax penalty for the first year is $695 for adults, $347.50 per child or 2.5 percent of a taxpayer’s income, whichever is greater.
And like the federal health care law – the Affordable Care Act – employers are required to file proof that employees are covered by a health plan that provides minimal essential coverage.
Employers must submit 2019 coverage information electronically through New Jersey’s system for processing W-2 forms by March 31, 2020. Currently, the existing IRS Forms 1094/5-B and 1094/5-C contain the information to verify enrollment and can be used.
According to John Sarno, president of the Employers Association of New Jersey (EANJ), the New Jersey Health Insurance Market Preservation Act, as the law is officially named, is a gamechanger for the state.
“Regardless of what happens to the Affordable Care Act, whether in the courts or legislatively, New Jersey will require most residents to have health coverage” he says.
New Jersey is only the second state in the nation, after Massachusetts which enacted its law 2006, to impose an individual health insurance mandate.
Employers that do not offer employees with minimum essential health coverage essentially subject their employees to a tax penalty unless they are covered elsewhere, such as coverage under a spouse’s or parent’s plan, Medicaid or other suitable coverage.
Any health plan bought through the Health Insurance Marketplace - HealthCare.Gov - meets the minimum essential health coverage standards.
And, under the Affordable Care Act, small employer plans that cover between 2 – 49 employees must provide minimum essential health coverage, which includes hospitalization, ambulatory services, emergency services, maternity and newborn care, mental health services, prescription drugs, lab tests, chronic disease management, preventive care pediatric services for children, including dental and vision care and rehabilitative services.
“While the Affordable Care Act has done a great job in getting more people covered under Medicaid, it hasn’t done much in mitigating the cost of health insurance for employers, in part because the mandated coverages don’t come cheap” says Sarno.
Overall, costs increased an average of 8.5 percent for health insurance last year. One in four small businesses froze or limited wage increases and or delayed or reduced business investments to maintain their health coverage.
Other employers passed more of the costs onto their employees by hiking co-pays and deductibles. “I’m not sure whether small businesses know what they are doing when they buy healthcare. They are forcing employees to pay more for less. They would never treat a customer that way. If they did that, they would be out of business” says Sarno.
To help solve this dilemma for small and mid-sized employers, EANJ sponsors Members Health Plan N.J., a multiple employer, self-insured group benefits plan that allows small businesses to pool their medical risk among the membership, providing greater buying power, increased access to benefit options, better rate stability and cost control.
Over 2,000 EANJ members currently fund their health care costs with Members Health Plan N.J, providing minimum essential benefits to business owners, employees and their families.
Regulated by the U.S. Department of Insurance and the N.J. Department of Banking and Insurance. The not for profit health plan is actually owned by its members and governed by uncompensated fiduciary trustees.
Brokers receive a commission if they sell the coverage to their business clients.
Leading edge prevention and wellness tools are built into the plan such as enhanced, concierge-style health support dedicated to the membership. Licensed clinicians, nurses, social workers and other healthcare professionals are available to members 24/7.
“Escalating healthcare costs are obviously of great concern to employers. But evidence suggests that 80 percent of illnesses and disease in the United States is preventable. If employers want to be part of the solution, we provide the tools” says Sarno.
“We are also ready for the healthcare mandate” adds Sarno. The plan files the required documentation for each covered employee.
Click for more information about Members Health Plan NJ.