New Jersey Implements Medicaid Fee on Businesses

New Jersey has implemented a new fee on businesses that have employees covered by Medicaid health insurance, rather than through an employer-sponsored plan. Other states are considering similar measures.

Proponents, including Democratic lawmakers and governors, view the fee as a necessary revenue stream to support the joint federal and state insurance program. This comes as anticipated changes in federal policy are expected to increase costs for states and potentially reduce the number of individuals with coverage.

New Jersey Governor Mikie Sherrill signed legislation this week enacting the fee, which applies to employers with at least 50 workers enrolled in Medicaid. The state budget approved assumes this program will generate $145 million this year. The fee ranges from $325 annually per employee for companies with 50-249 Medicaid beneficiaries to $725 for those with 500 or more.

California has passed a bill directing its administration to propose options for implementing such a fee next year, though it does not impose one currently. Similar legislative efforts have been considered in Colorado and Oregon but did not pass. Connecticut's Governor Ned Lamont has also proposed a comparable measure.

Business groups have criticized the fee, arguing it increases expenses and unfairly penalizes employers for employees' decisions to opt for Medicaid. Some liberal policy organizations also express concern that the fee could lead to reduced employment or discrimination against low-income workers and single parents.