Recent New Jersey Policy Actions That May Impact Your Employees and Benefit Plan

Recent New Jersey Policy Actions That May Impact Your Employees and Benefit Plan

Employers located in New Jersey and businesses with employees that live in the Garden State need to know about some recent state-level policy actions that affect employee benefits.  Last year, New Jersey lawmakers adopted a state-specific individual mandate, acted on a measure to help resolve surprise medical bills, and passed new sick leave requirements, all of which are effective now.  Already this year, Governor Murphy has signed legislation that will significantly expand the state’s existing family leave program. There is also legislation pending that could prevent small employers from offering self-funded major medical plans in the state, as well as another proposal to fine employers that don’t provide health insurance to employees who then later enroll in Medicaid.

Given that the individual states are the primary regulators of the business of insurance, Kistler Tiffany Benefits keeps close tabs on the actions of legislatures and insurance commissioners in our service area.  We’ve summarized all of the various recent health policy actions from New Jersey lawmakers for your information.  If you have any questions about how a specific measure might impact your business or your employees, please reach out to your Kistler Tiffany Benefit Consultant.

NEW LAWS ON THE BOOKS

Earned Sick Leave

The New Jersey’s Earned Sick Leave Law, enacted in 2018, is now wholly in effect.  The new law applies to employers of all sizes and establishes that most employees in the state have a right to accrue up to 40 hours of earned sick leave per year.  New Jersey employers need to provide new hires with written notice about the law when they begin employment, and all existing New Jersey employees should have received written notice of their rights under the new legislation as of November 29, 2018.  Furthermore, all New Jersey employers should be displaying this poster in a prominent location in all worksites and must provide employees copies upon request.

Individual Mandate

When the federal government nullified the penalties associated with the requirement for individuals to maintain health insurance coverage last year, New Jersey lawmakers decided to adopt a state mandate to maintain qualified health insurance.  Beginning on January 1, 2019, all New Jersey residents have to maintain minimum essential health coverage throughout 2019 and beyond, unless they qualify for an exemption. People who do not meet this requirement will have to pay a Shared Responsibility Payment when they file their 2019 New Jersey Income Tax return.

The new law only applies to people who have to file and pay income taxes in New Jersey, but for employers, any business that withholds and remits New Jersey Gross Income Tax for New Jersey residents may have responsibilities under the law.  According to the state, these employers will have to file forms with the state each year beginning in 2020 to help the state enforce the individual mandate.  Any business that operates a self-funded major medical plan that covers employees who live in New Jersey will need to provide information to the New Jersey Division of Taxation annually too.

Employers and self-funded health plans will need to give the New Jersey Division of Taxation copies of the same Forms 1094 and 1095 B and/or C that they are already required to send to employees and IRS.  The annual reporting deadline for New Jersey will be on or before February 15th following the close of each calendar year, beginning in 2020.  Since under the federal Affordable Care Act reporting requirements, employers with fewer than 50 full-time equivalent employees are not required to submit Forms 1095-B or 1095-C to the IRS, New Jersey will not require these smaller employers to provide copies of Forms 1095-B or 1095-C to the state, but the state is encouraging them to file these forms voluntarily.

Surprise Medical Bills

The New Jersey Out-of-Network Consumer Protection, Transparency, Cost Containment and Accountability Act became effective on August 30, 2018.  This law addresses the surprise out-of-network bills consumers can get when they go to an in-network medical facility but unknowingly see an out-of-network provider.  For New Jersey-based employers covered by a fully insured health benefit plan, there are no compliance responsibilities associated with the new law, and hopefully, employees will benefit from quicker resolution to surprise medical bills.  However, any business that operates a self-funded health plan in the state needs to be aware of the implementation requirements.

Right now, self-funded businesses need to follow Bulletin No. 18-14: Implementation of the Out-of-Network Consumer Protection, Transparency, Cost Containment and Accountability Act.  Kistler Tiffany anticipates that the New Jersey Department of Banking and Insurance will propose formal regulations to supersede this initial bulletin soon, and we will be watching for those documents so that we can alert any clients who might want to weigh in with public comments.

Paid Family Leave

Earlier this month, Governor Murphy signed a measure that will significantly expand the state’s existing family leave program and make it more accessible to workers.  The new law will apply to companies that employ 30 or more employees during at least 20 weeks of the current or past calendar year and their eligible employees, and it will take effect on July 1, 2019.

New Jersey was the second state to pass paid family leave legislation back in 2008, and over the past ten years, about 31,000 employees a year have taken advantage of the Family Leave Insurance (FLI) program, which is financed through worker payroll deductions.  While affected employers do not contribute financially to the FLI program, they do have to protect the jobs of those who are eligible to receive FLI benefits. The new law doubles the length of leave time available to eligible employees from six to 12 weeks and increases the maximum weekly paid leave benefit from 66% of the person’s weekly wage to up to 90 percent of that wage, with a benefit cap of 100 percent of the state average weekly wage, or $842 in 2019.

Beyond those changes, the new measure extends the scope of the program so that parents of foster children and children born through the use of a surrogate or gestational carrier can participate.  It also expands the types of family members that program participants can be caring for to include siblings, grandparents, grandchildren, parents-in-law, and others that can be considered family members due to either bloodlines or personal relationships.  Furthermore, the legislation expands the number of days that new parents and other family caretakers can take intermittent leave from 42 days to 52 days.  The program’s intermittent leave provisions are intended to facilitate more part-time work arrangements for people who are caring for a sick family member or newborn baby.

PENDING PROPOSALS

Limits on Self-Funded Small Group Plans

New Jersey legislators are working on legislation that could prevent small employers from offering a self-funded major medical plan, including a level-funded health benefit arrangement.  Introduced on February 14, 2019, A.B.5095/S. 3270 would prohibit insurers from offering, issuing, or renewing any stop-loss insurance policy of any kind to small employers operating group health plans in the state.  If enacted as currently drafted, the bill would require the termination of all existing small-employer stop-loss policies within 90 days and ban new ones.  For the purposes of this legislation, a small employer is a business that employed an average of at least two but not more than 50 eligible employees on business days during the preceding calendar year and who employs at least two employees on the first day of the plan year, and the majority of which are employed in New Jersey.  The bill would impact any small group self-funded or level-funded major medical plan, but other kinds of self-funded health plan arrangements, like flexible spending accounts and health reimbursement arrangements and those issued as part of a multiple employer welfare arrangements would be unaffected.

Kistler Tiffany Benefits plans to monitor the progress of A.B.5095/S. 3270 carefully, and we are also watching other states to see if they engage in similar action.  We will keep our clients fully apprised of any developments on legislation that will impact the small group self-funded market in New Jersey or any other state.

Employer Penalties for Failing to Provide Coverage

Finally, when Governor Murphy unveiled his 2019 proposed budget earlier this month, he included a proposal to level fines on employers that don’t provide health insurance to employees and later see their employees enroll in Medicaid.  However, this is just Governor Murphy’s proposed blueprint for state revenue and is not the final policy.  Even within the budget document, there appears to be inconsistencies as to whether or not the policy would apply to employers with 50 or more employees or employers with 50 or more employees on Medicaid.  It is also unclear how tracking employee coverage status or enforcement would work, so this issue bears watching.

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