New Jersey: Substantial Health Reforms

In July, New Jersey signed into law a health reform bill (S. 1557) described by legislative sponsors as the first phase in guaranteeing health coverage for all New Jersey residents. In sum, the law requires coverage for all residents 18 years old or younger, expands eligibility for subsidized health insurance for adults, and introduces health insurance reforms designed to make individual and small employer health insurance more affordable.^[i] The health care coverage reform law features the following components:

• “Kids First” Mandate for Health Insurance Coverage—All children 18 years of age and younger must have health insurance coverage through an employer-sponsored or an individual health benefits plan, Medicaid, the NJ FamilyCare (SCHIP) program, or the NJ FamilyCare Advantage buy-in program.
• Increased Health Insurance Accessibility for Low-Income Parents—Parents with incomes up to 200 percent FPL are eligible for the NJ FamilyCare program.
• Effective Use of State Charity Care Funds—Hospitals are prohibited from submitting charity care claims for children under age 19 who present at hospitals for emergency care and are eligible for NJ FamilyCare or Medicaid.
• Ongoing Enrollment Initiative—Individual taxpayers must indicate on their tax returns the health insurance coverage status of the taxpayer and dependents, if applicable, as of the filing date. The taxpayer will receive an application for the Medicaid or NJ FamilyCare program if the taxpayer or dependents may be eligible for either program based on reported income.

• Expanded Rating Band in the Individual Market—The difference in premium rates from one individual to the next will be expanded to 350 percent. With age as the only basis for a premium rating differential, plans will be more affordable for the young and healthy. As a consumer protection, rate increases for those already covered under an individual policies will be limited for the next five years to an amount no more than the lower of 15 percent or the medical trend assumption used by the carrier to project claims.
• Greater Carrier Participation in the Individual Market—A carrier must offer individual market policies as a condition of participating in the small employer market.
• Coverage for Dependents Age 30 or Younger—Changes were made to the eligibility criteria, terms, and administration of the law that had been enacted two years ago.
• Minimum Loss Ratio for Individual and Small Employer Plans—Premiums must be formulated such that the minimum loss ratio may be no less than 80 percent of the premium.
• Greater Transparency of Insurance Broker Fees—An insurance producer (agent or broker) must notify an insurance purchaser of the amount of any of the following: commission, service fee, brokerage, and whatever other valuable consideration the insurance producer will receive from the sale, solicitation, or negotiation of the health insurance policy or contract. A producer must also inform the Department of Banking and Insurance how carriers compensate the producer for the sale, solicitation, or negotiation of the health insurance policy or contract.^[ii]