Obamacare-style Individual Mandate is Back Jan. 1 — in NJ
Effective Jan. 1, most New Jersey residents must carry health insurance or face a penalty — a rule that in effect brings back the individual mandate provision of the Affordable Health Care Act that the U.S. Congress repealed in 2017.
On May 30, Gov. Phil Murphy signed the “New Jersey Health Insurance Market Preservation Act,” reinstituting a measure the state calls a “shared responsibility" tax payment — largely mirroring the rules once in place under the ACA, popularly known as Obamacare.
Anyone who does not have health insurance in the new year and does not qualify for an exemption will have to include a Shared Responsibility Payment in his or her 2019 tax return, based on income, family size and how many months the person was without coverage in 2019.
The minimum payment for someone who is not covered for the entire year is $695, and a maximum of $3,265, according to the state. A family of two adults and two children with an income of $200,000 or less would pay a minimum a maximum of $4,500.
Open enrollment in ACA exchanges — which continued to operate even after the federal individual mandate repeat and even in light of an on-hold federal court ruling that found Obamacare would be unconstitutional without the mandate — closed out on Dec. 15.
State officials are aiming to see New Jersey residents pay less in the new year under a reinsurance program approved in conjunction with reinstating the mandate on the state level.
New Jersey will reimburse insurers for high-risk enrollees – 60 percent of claims, for costs between $40,000 and $215,000. The state estimates that it will trim individual health insurance premiums by 15 percent.
“By defraying the cost for those high-cost individuals, it creates a level of certainty for the insurers,” Raymond Castro, director of health policy for New Jersey Policy Perspective, told the Townsquare News Network earlier this year. “They know that they don’t have to compensate for those higher costs, so they keep the rates down low for everyone. It basically reduces the risk in the market for them.”
Rates for individual health coverage went up 19 percent this year and had been on track to increase 13 percent next year, Castro said. That had already been trimmed to around 6 percent in the initial rate filings from health insurers.
Castro said the benefits will be felt most notably by individuals whose income is too high to receive federal health insurance subsidies, around $95,000 for a family of four.
The cost of the program is expected to be $324 million next year, with two-thirds of it paid for by the federal government. The $218 million in federal aid requested by the state equals what the program is expected to save the federal government by lowering premiums.
The state’s share should come mostly from "individual mandate" penalties on people without health insurance that the state will begin charging next year, as the federal government stops collecting it. The state refers to it as a ‘shared responsibility tax.’
The state’s total share next year is expected to be $106 million. If the individual mandate revenues don’t cover it, the difference will come from the general state budget.
The federal share is projected to increase $244 million, $265 million, $287 million and $310 million in the four years from 2020 to 2023. The state cost is projected to rise to $130 million by 2023.
The state expects that the lowered insurance premiums will increase enrollment in the individual health insurance market by 2.7 percent, or around 9,000 people.