NEW JERSEY: You could still be charged up to $3,000 if you DON'T #GetCovered!

"But the whole point of the doomsday machine is lost if you keep it a secret! Why didn't you tell the world, eh?

--Dr. Strangelove, 1964

No one applauded the New Jersey legislature and Governor Phil Murphy louder than I did when they swiftly passed several laws this past spring which cancelled out much of the Trump Administration's sabotage of the Affordable Care Act. As a reminder, the laws and waivers they put into effect included:

• Establishing a robust reinsurance program to significantly lower insurance premiums for individual market enrollees,
• Canceling out Trump's expansion of "Association Health Plans", and
• Reinstating the ACA's individual mandate penalty.

In addition, New Jersey had already effectively outlawed "Short-Term Plans" before the ACA was passed (they also passed a law protecting people from out-of-network "balance billing"; that's a major problem nationally which doesn't really have anything to do with the Trump Administration).

The good news is that the one-two punch combination of the reinsurance waiver and reinstating the mandate penalty has already proven extremely successful in terms of cutting unsubsidized premiums on the individual market down to size. Carriers originally filed for 12.6% increases, but these were knocked down 9.3% (around $1,000/year per enrollee) by the reinsurance program and another 5.8% (around $470/year per enrollee) thanks to the mandate penalty being reinstated.

There won't be any impact of NJ banning short-term plans since they were already banned to begin with, and the crackdown on association plans is expected to be fairly nominal. However, the reinsurance program and mandate penalty reinstatement are saving unsubsidized 2019 individual market enrollees a whopping $1,500 apiece on average compared to what they'd otherwise have to pay.

Bravo, New Jersey!

However, reinstating the mandate penalty only works if people know that they'll be penalized financially for not complying with the mandate.

Therefore, in the interest of improving the New Jersey risk pool and helping people avoid getting a nasty surprise when they fill out their 2019 state tax forms in early 2020, here's some information about how the New Jersey Shared Responsibility Payment law works:

Shared Responsibility Payment

Failure to have health coverage or qualify for an exemption may result in the assessment of a Shared Responsibility Payment (SRP) on your 2019 New Jersey Income Tax return.

You'll only be penalized for lacking insurance if you can afford to get health insurance but didn't. Individuals who are not required to file a New Jersey Income Tax return are automatically exempt from the SRP.

The amount of the SRP is generally based on your income and family size and is capped at the statewide average premium for Bronze Health Plans in New Jersey.

• Is it more beneficial to pay the SRP or buy health insurance?

You may think it is less expensive to go without health insurance and just make an SRP. However, there is something to consider before making your decision. The SRP is subject to the same penalties and interest as New Jersey Individual Income Tax.

• How Do I Calculate an Estimated Shared Responsibility Payment?

You are required to make a payment for the months that you and any family members do not have minimum essential coverage or a coverage exemption when you file your tax return.

The payment is set per criteria in the New Jersey Health Insurance Market Protection Act of 2018. Your payment amount is capped at the cost of the statewide average premium for Bronze Health Plans in New Jersey, as determined by the New Jersey Department of Banking and Insurance.

The following are examples of what the SRP could be::

• Individual taxpayer:
  • Minimum: $695
  • Maximum: $3,012
• Family with two adults and three dependents and household income of $200,000 or below:
  • Minimum: $2,085
  • Maximum: $4,500
• Family with two adults and three dependents and household income of $200,001 to $400,000:
  • Minimum: $2,085
  • Maximum: $9,500
• Family with two adults and three dependents and household income of $400,001 and above:
  • Minimum: $2,085
  • Maximum: $15,060

Note: Household income is the income of all members in a household, including dependents.

The actual amount is the greater of either $695/adult ($347.50/child) or 2.5% of the household income, capped at the maximum dollar amounts listed above. The actual wording of the law specifically references the ACA's penalty amount "as in effect on December 15, 2017" (i.e., just a few days before Congressional Republicans dropped it down to $0 / 0.0%).

Paying the penalty

Your penalty amount will be calculated and entered on your 2019 New Jersey Income Tax return (Form NJ-1040). If you owe more than you are getting back in refund, pay the amount of tax due on the tax return. We will send a bill if the amount of tax due is not paid with the return.

Here's who's exempt from paying the penalty:

Claim Exemptions

Some people are exempt from the health care coverage requirement for some or all of 2019. Exemptions are available for reasons such as having income below a certain level, having a short gap in coverage, having no affordable coverage options, or experiencing a hardship – (see Types of Coverage Exemptions below). If you qualify for an exemption, you can claim the exemption when you file your 2019 New Jersey Income Tax return (Form NJ-1040) using Schedule NJ-HC in early 2020. Exemptions that you may have received in the past from Healthcare.gov will be available to claim on Schedule NJ-HC of the NJ-1040.

Individuals who are not required to file a New Jersey Income Tax return are automatically exempt and do not need to file just to report coverage or claim the exemption.

Types of Coverage Exemptions

This chart shows all of the coverage exemptions available, including descriptions of each and the associated code that will be used to claim the exemption on Schedule NJ-HC of Form NJ-1040.

If you received a coverage exemption from the Health Insurance Marketplace for 2018, you will be able to claim this exemption for 2019. You will need to enter the Exemption Certificate Number (ECN) provided by the Marketplace on Schedule NJ-HC and Form NJ-1040.

NOTE: To see the details on each of the below, visit the official page and then click on each individual exemption code for further details on each:

• Income Related
  • Marketplace/Job Based Affordability (A-1)
  • Income Below Tax Filing Threshold (A-2)
• Health Coverage Related
  • Gap in Coverage Less than 2 Consecutive Months (B-1)
• Group Membership
  • Religious Sect (C-1)
  • Health Care Sharing Ministry (C-2)
  • Federally Recognized Tribe (C-3)
  • People Eligible for Indian Health Services (C-4)
• Incarcerated
  • Incarcerated (D-1)
• U.S. Citizen Living Abroad and Certain Non-U.S. Citizens
  • U.S. Citizen Abroad/Non-U.S. Citizen (E-1)
• Hardships
  • Child Medically Supported by Another Party (F-1)
  • Homeless (F-2)
  • Evicted or Facing Eviction/Foreclosure (F-3)
  • Utility Shut-Off (F-4)
  • Domestic Violence (F-5)
  • Death of Close Family Member (F-6)
  • Fire, Flood, or Other Disaster (F-7)
  • Filed for Bankruptcy (F-8)
  • Unpaid Medical Expenses (F-9)
  • Increased Expenses Caring for a Family Member (F-10)
  • Uncovered Waiting for a Successful Appeal (F-11)
  • You Had Another Hardship (Not Listed) (F-12)