Trenton, NJ – New Jersey lawmakers are advancing legislation that would require large employers to pay annual fees when employees or their dependents receive health coverage through Medicaid rather than employer-sponsored insurance, even part-time employees who do not qualify for company provided health insurance under state law.
Assembly Bill A-5324, approved by the Assembly Budget Committee, would establish an employer healthcare assistance contribution for businesses with at least 50 employees enrolled in the State Medicaid program, including NJ FamilyCare.
Employers could pay up to $725 per covered employee
Under the bill, employers would pay annual fees based on their size:
- Employers with 50 to 249 Medicaid-covered employees would pay $325 per employee or covered dependent.
- Employers with 250 to 499 Medicaid-covered employees would pay $525 per employee or covered dependent.
- Employers with 500 or more Medicaid-covered employees would pay $725 per employee or covered dependent.
The legislation exempts employees and dependents with developmental disabilities, intellectual disabilities, or permanent physical disabilities from the assessment.
Beginning July 1, 2027, employers also would not be assessed fees for employees who have worked fewer than 90 days, part-time workers, temporary employees, per diem workers, or seasonal employees.
State expects more than $145 million annually
Gov. Phil Murphy’s Fiscal Year 2027 budget recommends the employer assessment as a way to recover part of the state’s Medicaid costs.
According to the Department of the Treasury, New Jersey spends an average of about $1,700 annually for each employee or dependent covered through Medicaid, while the proposed employer fees are expected to generate approximately $145 million in annual state revenue.
The nonpartisan Office of Legislative Services estimates revenues could reach as much as $183.6 million during the first fiscal year, before declining as exemptions and employer credits take effect. After the exemptions are fully implemented, annual revenue is projected at up to $105.6 million.
Civil rights protections added
Committee amendments added protections prohibiting employers from using an applicant’s or employee’s Medicaid enrollment status when making hiring, firing, promotion, or other employment decisions.
Employees who believe they were discriminated against based on Medicaid enrollment would be able to seek relief under the New Jersey Civil Rights Act.
The amendments also require that information identifying employees or dependents enrolled in Medicaid remain confidential and exempt from disclosure under New Jersey’s Open Public Records Act.
Business tax impact and federal uncertainty
The Office of Legislative Services also projects the bill could reduce Corporate Business Tax and Corporate Transit Fee revenues if employers are allowed to deduct the new assessments as business expenses.
Legislative analysts noted that recently enacted federal Medicaid reforms under the “One Big Beautiful Bill Act” could affect how many employees ultimately remain enrolled in Medicaid, making the long-term fiscal impact difficult to predict.
The legislation remains under consideration in the New Jersey Legislature and has not yet been enacted into law.
