On July 8, New Jersey Governor Jon S. Corzine signed into law a health reform bill (S. 1557) which legislative sponsors describe as the first phase in guaranteeing health coverage for all New Jersey residents. The measure becomes effective one year after enactment. In sum, the bill requires all residents 18 years old or younger to have health insurance coverage, expands eligibility for subsidized health insurance for adults, and introduces health insurance reforms designed to make individual and small employer health insurance more affordable. The health care coverage reform bill:
- Introduces a child mandate for health insurance coverage—All children 18 years and younger must have health insurance coverage through an employer-sponsored or individual health benefits plan, Medicaid, the NJ FamilyCare program, or the NJ FamilyCare Advantage buy-in program.
- Increases health insurance accessibility for low income parents—Parents whose income is up to 200 percent of the federal poverty level (FPL) are eligible for the NJ FamilyCare program.
- Promotes effective use of state’s charity care funds—Hospitals are prohibited from submitting charity care claims for children who present at hospitals for emergency care and are eligible for NJ FamilyCare or Medicaid.
- Establishes an ongoing enrollment initiative—Individual taxpayers are required to indicate on their tax returns the health insurance coverage status of the taxpayer and dependents, if applicable, on the filing date. The taxpayer will be sent an application for the Medicaid or NJ FamilyCare program if the taxpayer or dependents may be eligible for either program based on reported income.
The health reform bill also includes a number of reforms to the individual and small employer markets. Key provisions will:
- Make individual health benefits plans more affordable to the young—The difference in premium rates from one individual to the next can now be up to 350 percent. Age, in a minimum of five-year increments, is the only factor that the premium rating differential may be based on. As a consumer protection, rate increases for those already covered under an individual health benefits plan 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.
- Ensure greater carrier participation in the individual market—A carrier must offer individual market policies as a condition of participation in the small employer market.
- Revise the minimum loss ratio for individual and small employer plans—Rates must be formulated to reflect that the minimum loss ratio cannot be less than 80 percent of the premium.
- Establish greater transparency of insurance broker fees—An insurance producer (agent or broker) is required to 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 make public to the Department of Banking and Insurance how carriers compensate the producer for the sale, solicitation, or negotiation of the health insurance policy or contract.
