New Jersey Approves Legislation to Increase HMO Annual Assessment
July 2019 ~
On June 30, the Governor of New Jersey signed into law a pair of identical bills (A5603/S3957) to increase the current annual assessment rate for net written premiums of Health Maintenance Organizations (HMOs) to support charity care.
Effective, July 2019, the approval of the A5603/S3957 legislation allows New Jersey to increase the state tax on what HMOs charge consumers for health policies, from two percent to three percent.
According to the Office of Legislative Services, the 1 percent tax increase will enable the state to collect an extra $100 million annually; of this, approximately $34 million would be needed to pay the state’s portion of the additional assessment, with the federal government covering the rest.
The Department of the Treasury estimates that the legislation would increase revenue by $66 million.
The approval of the bills comes in conjunction with the Governor’s final approval of the state budget for fiscal year (FY) 2020. Both the Senate Budget and Appropriations Committee and the Assembly Budget Committee voted unanimously in favor of the bill.