If you employ 50 or more people in New Jersey, a new state Medicaid fee needs to be part of your 2027 budget planning now.
Under New Jersey P.L. 2026, c.23 (A5324/S4533), the state imposed an annual fee on employers connected to employees and dependents enrolled in the state Medicaid program. The fee is assessed per enrolled person, not only per employee.
The law took effect July 1, 2026. The first employer notification is due by March 1, 2027, and payments are due by April 15, 2027.
That timing makes this a 2027 planning issue today. It should not be left in a file labeled “review next spring.”
What the New Jersey Medicaid fee is
The fee applies to employers with 50 or more employees, based on the number of their workers and enrolled dependents who receive coverage through New Jersey Medicaid.
The state’s stated purpose is to help defray Medicaid costs attributable to employed individuals and their families. In practical terms, the law places an annual cost on qualifying employers when employees or their dependents are enrolled in the state Medicaid program.
The fee is charged for each enrolled employee and each enrolled dependent. That distinction matters because an employer may know how many employees it has but have no reliable view of how many spouses, children, or other enrolled dependents are receiving Medicaid coverage.
For employers in the 50-to-249 enrolled-employee tier, the fee is $325 per enrolled person. Higher tiers of $525 and $725 apply to larger employers with 250 or more enrolled employees, as reported under the law.
Your exposure therefore depends on two variables:
- The applicable per-person rate for your employer tier.
- The total number of employees and dependents included in the state’s assessment.
How to estimate your potential cost
Start by developing an internal estimate of the number of employees and dependents enrolled in New Jersey Medicaid. Then multiply that count by the applicable per-person fee.
Hypothetical illustration
Assume an employer has:
- 60 enrolled employees; and
- 40 enrolled dependents.
That would equal 100 enrolled people for purposes of this hypothetical illustration.
If the employer falls within the $325 tier:
100 enrolled people × $325 = $32,500 annually
This is a generic example, not a prediction of what any particular employer will owe. Your actual assessment may differ based on the state’s count, the applicable tier, and the information used for the assessment.
The right way to budget is to model this as an annual fixed cost until you have better information from the State of New Jersey. You can create a range using low, expected, and high enrollment assumptions rather than relying on one number.
Why your count may be larger than expected
Many employers do not have a complete picture of public-program enrollment across their workforce.
Employees may not routinely report that they or a dependent has enrolled in Medicaid. They may also move between employer-sponsored coverage and public coverage as household income, family circumstances, or eligibility changes.
Even when an employer knows that an employee is enrolled, it may not know whether the employee’s children or other eligible family members are also covered.
That is why the new fee cannot be estimated by looking only at your employee census or group health enrollment report. Dependents are part of the assessment, and they may substantially increase the total count.
What employers need to clarify operationally
The law creates a notification and payment cycle, but important implementation questions deserve careful attention.
How will the state identify enrolled employees and dependents?
You should confirm how the State of New Jersey will match Medicaid enrollment information to an employer and what information will appear in the notice.
The state’s notification is expected to identify whether an employer is subject to the fee and provide the enrollment count used in the assessment. Employers should monitor official state communications and avoid relying solely on informal summaries.
What will the employer notification include?
The first notification is due by March 1, 2027. You should confirm where the notice will be delivered, which state agency or portal will issue it, and what employer information will be required in response.
Do not assume that a standard payroll report, insurance carrier report, or benefits enrollment file will satisfy the state’s requirements.
How will you reconcile the state’s count?
When you receive the notice, compare the state’s count with the information you can lawfully and appropriately review. Look for obvious issues such as duplicate records, outdated employee status, or dependents who may have been counted incorrectly.
At the same time, remember that Medicaid enrollment information is sensitive. Any internal data collection or review must be handled carefully and lawfully, with appropriate privacy safeguards and limited access.
What if you disagree with the count?
The exact mechanics for correcting or disputing an assessment, including any appeal process, should be confirmed with the State of New Jersey and qualified counsel. Do not assume that an employer can simply adjust the state’s number or delay payment while a question is unresolved.
Your compliance calendar should include time to review the notice, ask questions, and obtain advice before the April 15, 2027 payment deadline.
This is another total-benefits cost pressure
The Medicaid fee does not replace your existing benefits obligations. It arrives alongside familiar cost pressures, including group health plan renewals, the Maryland Paid Family and Medical Leave program, and rising pharmacy costs.
That combination is one more reason to review your total benefits spend, not just your monthly medical premium.
A plan with a lower premium may not produce the lowest overall cost after employee contributions, pharmacy expenses, administrative fees, leave-program costs, and new state assessments are considered. Your review should account for the complete benefits budget.
Should you review your health benefit design?
Yes, but carefully.
You may want to ask whether offering affordable, competitive employer-sponsored coverage could change how many employees rely on Medicaid. That is a legitimate benefits-design question, not a guaranteed savings strategy.
The goal should never be to discourage employees from using public benefits appropriately or to pressure anyone to disclose private health information. Instead, evaluate whether your current benefits are competitive, understandable, and affordable for the workforce you are trying to retain.
Depending on your circumstances, it may be appropriate to review:
- Employee contribution levels.
- Eligibility rules and waiting periods.
- Plan options available during renewal.
- Dependent coverage affordability.
- Whether alternative designs, including properly structured reimbursement arrangements, fit your workforce and compliance requirements.
For background, you can review our explanation of how an HRA works. Any change should be evaluated with qualified benefits, legal, and tax professionals before implementation.
A practical checklist for New Jersey employers
Use the following checklist as an initial planning tool:
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Confirm whether you meet the 50-employee threshold. Review your workforce structure and determine which employees may be relevant under the law.
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Develop a careful count of employees and dependents enrolled in Medicaid. Be thoughtful about how you ask for information, what you document, and who can access it. Involve qualified counsel regarding privacy and employment-law considerations.
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Budget the fee as an annual 2027 line item. Use the applicable per-person rate and create reasonable enrollment scenarios.
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Calendar the deadlines. The first notification is due by March 1, 2027, and payment is due by April 15, 2027.
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Review your overall benefits design. Ask whether a lower-cost or more affordable plan design could affect Medicaid reliance, while treating that as a question to evaluate, not a guaranteed outcome.
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Confirm implementation details with the state. Verify the notification process, required filing steps, payment method, count-reconciliation procedure, and any process for disputed assessments.
Get help planning for the 2027 fee
You do not need to interpret this new requirement in isolation. Total Benefit Solutions helps New Jersey employers understand changing health insurance and benefits rules, evaluate total benefits spending, and compare practical options through an independent advocacy and consulting process.
We can help you organize the questions, identify the information you need, and prepare for a more informed conversation with your payroll, benefits, legal, and tax advisers.
Visit https://www.totalbenefits.net or call (215) 355-2121 to discuss your 2027 benefits planning.
Disclaimer: This article provides general information and is not legal or tax advice. Employers should confirm requirements, deadlines, notification procedures, and payment obligations with the State of New Jersey and qualified legal and tax counsel.
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