New Jersey Adopts ACA Provision to Lower Healthcare Costs
3 minute read:
Earlier this month, New Jersey signed into law a state version of an Affordable Care Act provision, the Health Insurance Assessment (HIA) program.
New Jersey is the first state to have implemented its own statewide HIA and is estimated to bring in over $224 million dollars during the 2021 tax year. The New Jersey HIA is actually an extension of the federal HIA, which is set to expire on January 21, 2021. The official HIA program works by charging a 2.5% tax fee to health insurers and insurance companies. The fee is not new, however, as the federal HIA was first instituted in 2014.
The revenue generated from the HIA is said to be allocated towards providing more affordable, quality health insurance options to New Jersey’s low- to middle-class residents.
“The subsidy program will be available to New Jerseyans with annual income up to 400% of the Federal Poverty Level, which allows an individual earning up to $51,040, and a family of four earning up to $104,800, to qualify for the subsidy program. The estimated average subsidy for an individual would be at least $564 a year, and at least $2,256 a year for a family of four,” according to a press release issued by the office of Governor Phil Murphy.
In short, the HIA will allow the state to provide health insurance subsidies to state residents purchasing coverage through the state’s health exchange.
Regarding the HIA, New Jersey State Senator Joe Vitale said it “will help to ensure that people are able to afford health insurance during this critical time when a global disease is not only threatening their health, but their financial security in unimaginable ways.”
New Jersey’s Governor Phil Murphy has followed with the trend of strengthening the Affordable Care Act amid the COVID-19 health pandemic.
Since COVID-19 first affected the U.S., two historically red states have expanded Medicaid under the ACA, special enrollment periods have been introduced by states all over the country, the Supreme Court ruled in favor of the law’s risk corridors, an ACA Enhancement Bill was proposed by House Democrats, and now, an introduction of the Health Insurance Assessment program on a state level.
All of these changes and adaptations point to one thing: the ACA is here to stay. The law has demonstrated time and time again how important it is to our healthcare ecosystem. And with the healthcare law continuing to engrain itself, and the 2020 election a few short months away, employers should recognize their part to play, as required by the Employer Shared Responsibility Provisions (ESRP), also known as the Employer Mandate.
As a reminder to employers in conjunction with the Employer Shared Responsibility Payment (ESRP), the ACA’s Employer Mandate, Applicable Large Employers (ALEs), organizations with 50 or more full-time employees and full-time equivalent employees, are required to offer Minimum Essential Coverage (MEC) to at least 95% of their full-time workforce (and their dependents) whereby such coverage meets Minimum Value (MV) and is affordable for the employee, or be subject to Internal Revenue Code (IRC) Section 4980H penalties.
If your ACA practices and filing are not tight-knit, it’s time to face the reality that the ACA may be here forever. With more legislation being proposed to enhance the ACA, the law is here to stay.
The IRS has announced that it will begin issuing ACA penalty letters such as Letter 226J after July 15. If your organization is unsure of where it stands in regards to ACA compliance, Trusaic will perform a free ACA Penalty Risk Assessment to diagnose risk areas in your compliance strategy and get you on track.
To learn more about ACA compliance in 2021, click here.
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