Gov. Phil Murphy recently signed legislation to create state-level subsidies to lower the cost of health insurance for residents purchasing coverage on the Affordable Care Act (ACA)’s Marketplace this fall.
“As the federal government continues to attack critical provisions of the Affordable Care Act, our administration remains committed to lowering the cost of coverage, expanding access to care, and improving health equity for our most vulnerable,” said Murphy in a press statement.
The legislation establishes the New Jersey Health Insurer Assessment (HIA), which is a continuation of a federal assessment on health insurance companies that will sunset at the end of the year.
Revenue generated will be used by residents and families purchasing policies on the individual market, allowing the state to provide state-level subsidies, in addition to federal subsidies, for the majority of consumers purchasing insurance on the State-Based Marketplace when the ACA Open Enrollment Period begins on Nov. 1.
“This action could not come at a more critical juncture, and will directly benefit our uninsured and underinsured populations at a time when many New Jerseyans have lost health coverage as a result of the COVID-19 pandemic,” stated Murphy.
New Jerseyans must have an 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.
Replacing Federal Aid
Assemblyman John McKeon (D-27) decried the Trump administration attempts to dismantle the ACA, resulting in New Jersey implementing its own state-based exchange that mirrors what was available to people at the federal level.
“By replacing what stood at the federal level, this legislation simply serves as a state level continuation of a soon-to-expire assessment that insurers were already paying,” said McKeon. “Ultimately, this bill is a critical piece in our plan to safeguard access to affordable healthcare so that every New Jersey resident is insured.”
The law sets the state HIA rate at 2.5% of net written premiums and applies it to certain fully insured health insurance markets. The assessment is expected to bring in more than $200 million in revenue starting in calendar year 2021.
Under the law, this revenue can only be used to increase affordability in the individual market and provide greater access to the uninsured through a number of means including subsidies, reinsurance, and other efforts. An estimated $77 million will be dedicated to the reinsurance program to address high cost claims and lower premium costs in the individual market.
State Sen. Joe Vitale (D-19) said the bill will help to ensure residents are able to afford health insurance as a global disease threatens the health and financial security in “unimaginable ways.”
“Of the many fissures exposed by COVID-19, the deficiencies in a system that relies on employer-based coverage is one that can’t be ignored,” said Vitale, chair of the Senate Health, Human Services and Senior Citizens Committee. “These subsidies could not come at a more critical time, in the midst of a pandemic, when health insurance is more vital than ever.”