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A 5324

Establishes fee on certain employers that employ individuals who receive health benefits coverage through State Medicaid program.

2026-2027 Regular Session Introduced by Rosy Bagolie and 2 co-sponsors

New NJ law imposes an annual per-employee/per-dependent fee on certain employers to fund Medicaid costs, with tiers, exemptions, and future exclusions.

Approved P.L.2026, c.23.
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WeVote Research Nonpartisan
Bill Summary · A 5324

Summary of Bill A 5324 (Session 222) – New Jersey

Purpose and Intent

  • Establishes a new annual fee on certain employers to offset State Medicaid costs.
  • Targets employers with 50 or more employees who have at least some employees or dependents receiving health benefits through the State Medicaid program (Medicaid benefits under P.L.1968, c.413).
  • Aims to supplement Medicaid funding by raising revenue from employers based on the Medicaid-covered population they employ.

Main Provisions

  • Definitions (Section 1a):

    • Clarifies roles (Commissioner of Labor and Workforce Development, Department, Division) and terms:
    • Employee: someone employed by an employer; independent contractors are excluded.
    • Employer: includes individuals, partnerships, corporations, and various other business forms that employed 50+ employees in the previous calendar year who receive Medicaid benefits.
    • Dependent: a covered individual (spouse/partner or eligible child) who receives Medicaid benefits and is dependent on the employee.

  • Fee Imposition (Section 1b–c):

    • Employers must pay an annual fee to the Division for each employee and each dependent who receives Medicaid benefits.
    • Fee tiers (based on the employer’s total number of employees who receive Medicaid benefits as of Dec. 31 prior to notification):
    • 50–<250 employees: $325 per employee and per dependent.
    • 250–<500 employees: $525 per employee and per dependent.
    • 500+ employees: $725 per employee and per dependent.
    • Purpose: defray State Medicaid costs.

  • Exclusions from Fee (Section 1d):

    • No fee for employees or dependents with certain disabilities (developmental, intellectual, permanent physical disability) as defined by state law.

  • Notification and Payment (Section 1e):

    • By March 1 each year, Division notifies employers of liability and provides counts of impacted employees/dependents.
    • Employers must file and pay via electronic methods by April 15.
    • Filing and payment conducted through the Internet or other approved electronic methods.

  • Penalties and Appeals (Section 1f–g):

    • Penalty up to $500 per day for nonpayment.
    • Employers can appeal determinations; payment required pending appeal. If the appeal succeeds, refunds are issued (penalties do not get refunded).

  • Audits and Compliance (Section 1h–i):

    • Commissioner may audit employer records to ensure proper classification and accurate fee payment.
    • Penalties may be assessed for misclassification to avoid the fee.

  • Exclusions Effective Date (Section 1j):

    • Beginning July 1, 2027, certain categories of employees will be excluded from the fee:
    • Employees employed for fewer than 90 days at the time the fee is determined.
    • Part-time, per diem, temporary, or seasonal employees.
    • If an employee later falls into an excluded category, the employer may receive a credit or refund for any fees paid for that employee prior to the exclusion, subject to proof acceptable to the Commissioner.

  • Interagency Data Sharing (Section 2):

    • Departments of Human Services, Labor and Workforce Development, and Treasury will share data and resources as needed to implement the act, to the extent allowed by federal law.

  • Administrative Regulations (Section 3):

    • The State Treasurer, with input from LWD and HSS, may adopt emergency regulations to implement provisions, effective up to 365 days, with later adoption/reading as required.

  • Effective Date (Section 4):

    • Act takes effect immediately but remains inoperative until July 1, 2026.

Who Is Affected

  • Eligible Employers:

    • Businesses with 50+ employees who have at least some employees or dependents enrolled in Medicaid benefits.
    • The fee applies per employee and per dependent who receives Medicaid benefits.

  • Affected Individuals:

    • Employees and their dependents who receive health benefits through the State Medicaid program.

  • Exclusions Apply To:

    • Employees with specific disabilities (developmental, intellectual, permanent physical) who would be exempt from the fee.
    • Starting July 1, 2027, certain employee types (short-tenure, part-time, per diem, temporary, seasonal) will be excluded.

Financial Impact and Observations

  • The bill projects that the fee revenue will help defray Medicaid costs for covered employees and dependents.
  • The Department of the Treasury estimates average Medicaid cost around $1,700 per person per year.
  • The administration projects annual revenue of about $145 million from these fees.
  • Penalties for nonpayment and an appeals process are included to enforce compliance.
  • An anticipated data-sharing MOUs among state departments are required to support implementation.

Procedural Timeline and Key Dates

  • Notification of liability: On or before March 1 each year.
  • Payment and filing deadline: On or before April 15 each year.
  • Inoperative until: July 1, 2026 (with immediate effect, but not operative until that date).
  • Start of exclusions for certain employee types: July 1, 2027.
  • Emergency regulation authority: May be used for up to 365 days from filing.

Summary Assessment

  • A 5324 introduces a new employer surcharge tied to the Medicaid-covered population employed by the employer.
  • It creates a multi-tier fee structure, an appeal and audit framework, and a deferred effectiveness timeline with expanding exclusions over time.
  • The act contemplates interdepartmental data sharing to administer the program and allows for rapid regulations to implement its provisions.
  • The policy purpose is to fund Medicaid costs associated with employed individuals and dependents enrolled in Medicaid.

Compiled from official sources — confirm details with the bill’s official record.

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