TRENTON - The Assembly this afternoon passed A-5324, which requires employers to

pay a fee for employees, or dependents of employees, who receive health benefits coverage through the State Medicaid program.

The bill aims to mitigate the impacts on working people of federal Medicaid cuts enacted by the Trump Administration.

Sponsored by Assemblywoman Carol Murphy (D-7), the bill passed 48-22.

Under the bill, for each employee or dependent of an employee who receives those benefits, an employer will be assessed a fee as follows:

      (1) for an employer with at least 50 but fewer than 250 employees who receive health benefits coverage through the State Medicaid program, $325 for each employee, and for each of the employee’s dependents, who receives State Medicaid benefits;

      (2) for an employer with at least 250 but fewer than 500 employees who receive health benefits coverage through the State Medicaid program, $525 for each employee, and for each of the employee’s dependents, who receives State Medicaid benefits; and

      (3) for an employer with 500 or more employees who receive health benefits coverage through the State Medicaid program, $725 for each employee, and for each of the employee’s dependents, who receives State Medicaid benefits.

The bill provides that an employer is not liable for the fee for an employee, or dependent of the employee, who receives health benefits coverage through the State Medicaid program and has a developmental disability, intellectual disability, or a permanent physical disability.

The Sherrill Administration estimates raising $183.6 million dollars from the tax in this fiscal year.

Republicans vociferously opposed the bill on the floor of the chamber.

"It is not [business friendly]," Fantasia decried of the bill.

"Another tax on the businesses of New Jersey," Assemblyman Brian Rumpf (R-9). "This is only a starting point [for the Sherrill Administration to tax business]."

"You're going to be discouraging employers for hiring people with disabilities," said Assemblyman Eric Peterson (R-23). "That's just wrong."

"People with disabilities are exempt from this bill," Murphy corrected.

From the bill:

The fee is assessed on employers for both the employee and the employee’s dependents who are covered under Medicaid, with an exemption from the fee for employees and employees’ dependents who have a developmental disability, intellectual disability, or a permanent physical disability.  Of this revenue, $9.5 million will be collected from State and local government employers, and thereby represents an increase in State and local costs.

Beginning on July 1, 2027, the bill additionally exempts from the fee: employees not yet eligible for Medicaid coverage due to a defined waiting period for benefits eligibility; employees who work part-time, on a per diem basis, or are temporary employees; and seasonal employees.  Under the bill, if an employer is charged a fee for these delayed exemptions between July 1, 2026 and June 30, 2027, the employer would be entitled for a credit in the following year.  Assuming all eligible employers receive a credit, the OLS estimates that this bill will increase State revenues by up to $27.6 million from July 1, 2027 through June 30, 2028 from the collection of fees that are partially offset by employer credits, with $1.4 million of that revenue also representing an increase in State and local costs.