If you are a business owner in New Jersey, the legislative landscape just shifted beneath your feet. On Tuesday night, June 30, Governor Mikie Sherrill signed a piece of legislation that moved through Trenton with remarkable speed. As part of the FY27 budget package, Assembly Bill A5324 (and its Senate counterpart S4533) officially established a new "Employer Health Care Contribution Assessment."
At Total Benefit Solutions Inc, we don't believe in sugarcoating regulatory changes. This is essentially a new "Medicaid Tax" on employers whose workers rely on state-funded health insurance. While the state aims to raise approximately $145 million to offset Medicaid costs, the administrative and financial burden on New Jersey businesses is significant.
You can view the full details of the bill via the New Jersey Legislature Bill Search.
Who is Affected? The 50-Employee Threshold
The most critical thing to understand is that this fee is not based on your total company headcount. Instead, it is triggered by the number of your employees who receive health benefits through NJ FamilyCare (New Jersey’s Medicaid program).
If your business has 50 or more employees (or their dependents) enrolled in NJ Medicaid, you will be billed an annual per-person fee. This creates a unique challenge: many employers currently have no reason to track which employees are using public assistance for their healthcare.
The Price Tiers: How Much Will You Pay?
The state has implemented a tiered system. The more employees you have on Medicaid, the higher the per-person fee becomes. This "multiplier effect" means that a large workforce can quickly lead to a substantial annual bill.
- 50 to 249 Beneficiaries: $325 per person, per year.
- 250 to 499 Beneficiaries: $525 per person, per year.
- 500 or More Beneficiaries: $725 per person, per year.
It is vital to note that this fee applies to both the employee and their dependents. For example, if an employee has two children on NJ FamilyCare, that single household could represent three separate fees for your business.
The Hidden Challenge: A Tracking Nightmare
As an employer, you are likely used to tracking payroll, hours, and standard benefit enrollments. However, Medicaid enrollment is typically a private matter between the individual and the state.
The state is counting on the Department of the Treasury to identify these individuals and send you the bill. This raises several red flags that we are currently monitoring for our clients:
- Notification Mechanics: How will the state notify you?
- Appeal Rights: What happens if the state’s data is incorrect or outdated?
- Privacy Concerns: How will the state share this sensitive data with employers without violating privacy norms?
Exemptions and Exclusions
Fortunately, the law does include specific carve-outs. You will not be liable for the fee if the employee or dependent receives Medicaid due to a developmental, intellectual, or permanent physical disability.
Additionally, beginning July 1, 2027, certain categories of workers, such as part-time, seasonal, per diem, and those employed for less than 90 days, will be excluded from the count. If you are charged for these categories before that date, you may be eligible for a credit or refund in the following year.
A National Trend: New Jersey as a Template
New Jersey is not acting in a vacuum. Other states, most notably California, are actively debating similar "fair share" employer fees. California’s Senate has proposed fees as high as $285 per month per employee (rather than per year), showing that this trend of shifting Medicaid costs onto employers is gaining momentum across the country.
How Total Benefit Solutions Inc Can Help
At Total Benefit Solutions Inc, we specialize in being the intermediary between you and the complex world of insurance regulations. We are an independent broker, which means we can shop around and compare options to help you provide affordable private coverage that might keep your employees off Medicaid entirely.
We are watching the enforcement mechanics of A5324 very closely. If you receive a notification or a bill from the state that seems incorrect, we are here to advocate for you. Our commitment is to never accept "no" as an answer when fighting for our clients' financial health.
Next Steps for Your 2027 Budget
This fee is officially part of the state's budget, meaning you need to make it part of yours. We recommend a proactive approach to your 2027 planning:
- Review your current benefit offerings: Are they "affordable" enough to prevent employees from qualifying for Medicaid?
- Audit your workforce data: While you cannot discriminate based on Medicaid status, you can encourage employees to explore the private plans you offer.
- Stay informed: Legislation this new often undergoes "trailer bill" changes or administrative adjustments.
Are you concerned about how the new NJ Medicaid Employer Fee will impact your bottom line?
Don't wait for the bill to arrive in the mail. Contact Total Benefit Solutions Inc today to discuss your 2027 budget planning and advocacy strategy. We help you navigate the rules so you can focus on running your business.
Visit us at www.totalbenefits.net or call us directly at (215) 355-2121 to schedule a consultation.
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