N.J. Budget Calls for Penalizing Larger Employers that Don’t Offer Health Plans

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Gov. Phil Murphy’s 2020 budget issued on March 5th calls for a “corporate responsibility fee” of $150 for businesses with 50 employees, whose workers are enrolled in Medicaid. Roughly 1 million New Jersey residents receive Medicaid benefits. The law would most likely apply to about 1,000 employers which encompass 451,000 private workers, and their families, that receive Medicaid.

Based on an analysis by John Sarno, president of the Employers Association of N.J., the state’s 2012 Medicaid expansion under the Affordable Care Act extended health coverage to individuals up to 138 percent of the federal poverty level, or an approximate annual income of $15,800 for an individual and $23,800 for a single parent with two children. With the expansion, many small employers have not offered health coverage in favor of their lower wage workers being covered by the federal-state program.  

According to EANJ, 528,000 adult workers are covered by expanded Medicaid. Workers are employed in 7 of 10 Census-defined job categories across 21 industries in the state. Most work for an employer with fewer than 50 employees.    

Employers would have to pay $150 for every person they employ, as long as their workers are enrolled in Medicaid. But based on the 50-employee threshold and the penalty calculation, it is unclear whether employers will opt to sponsor a healthcare plan rather than pay the penalty.