New Jersey Sitused Health Insurance Plans May Be Subject to an Annual 2.5% State Tax on Net Premiums
Published: 08.04.2020
When: Effective January 1, 2021; signed by Governor Murphy on July 31, 2020.Who: Individual plans and fully-insured large group health insurance plans (51+) issued for delivery in the State of New Jersey.
Why: To assist low-income households with health insurance costs and the state’s reinsurance pool.
What: The legislation establishes the New Jersey Health Insurer Assessment (HIA), which is purportedly replacing a federal assessment on health plans scheduled to sunset at the end of this year. HIA imposes a 2.5% tax on the net premiums earned on the entity’s insurance group and individual business.
To Do: Health insurance companies will be required to annually report by April 1st to the New Jersey Department of Banking and Insurance (NJDOBI) the net value of the premiums they wrote during the past year for individual and large business plans. The commission will calculate a 2.5% assessment of the entity’s net written premiums with payment due no later than May 1st of each year.
Premiums from small business plans, Medicaid and Medicare policies, nonprofit dental plans, disability plans, long-term care plans and certain self-funded group employer coverage are not included in this assessment.
Monies collected will be deposited into the Health Insurance Affordability Fund to be used for the purposes of increasing affordability in the individual and small group markets, and to provide the uninsured greater access to health insurance including minors with a primary focus on households with an income below 400% of the federal poverty level. Money would be used to fund the state’s reinsurance program with remaining monies set aside for subsidies for individual market consumers, enrollment support and other initiatives designed to boost participation and control costs. Specific spending allocations will be determined by leaders from the NJDOBI and the state departments of health and human services, which oversee Medicaid.
For additional details, visit:
New Jersey Assembly Bill Number A 4389 – Requires certain entities authorized to issue health benefits to pay annual assessments
New Jersey Governor Murphy Press Release – Governor Murphy Signs Legislation to Restore a Key Provision of the Affordable Care Act and Lower the Cost of Health Care in New Jersey
