New Jersey has recently implemented a new law that imposes increased monetary burdens on employers who employ individuals who receive health benefits coverage through the State Medicaid program.

Eligibility and Required Payments

The new fee is levied on the employer for each employee and each dependent who receives State Medicaid benefits. These payments only apply to employers with at least 50 employees who received State Medicaid benefits. This law has increased payments as the employer size increases.

- If the employer has 50-249 employees who receive State Medicaid Benefits: $325 per employee and dependent receiving State Medicaid benefits

- If the employer has 250-499 employees who receive State Medicaid Benefits: $525 per employee and dependent receiving State Medicaid benefits

- If the employer has 500+ employees who receive State Medicaid Benefits: $725 per employee and dependent receiving State Medicaid benefits

Liability and Payment Processes

The law also outlines the process of determining liability under the law. On March 1 of each year, the appropriate body will inform the employer of the number of employees on State Medicaid and total payment required. The employer then must pay through a method detailed in a future update (most likely electronically through a secure website) by April 15 of that same year.

The employer may dispute any fee levied if it believes the count is incorrect. However, the employer must still remit payment pending any reviews.

Exceptions

Certain employees and dependents are excluded from the payment requirement:

- Individuals with a developmental disability as described in state law

- Individuals with an intellectual disability as defined in state law

- Individuals with a permanent physical disability as described in state law

- (Beginning July 1, 2027) an employee who has worked fewer than 90 days (at the time the fee is levied)

- (Beginning July 1, 2027) A part-time employee

- (Beginning July 1, 2027) A seasonal employee

In order to dispute any fees given by the state, employers may want to keep count of the amount of employees receiving State Medicaid benefits. However, employers need to be mindful of state and federal law surrounding medical privacy (including the Americans with Disabilities Act).

This law became effective July 1, 2026.

You can read the entire bill A5324 HERE.