Two States Pass Individual Mandate Legislation

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Two States Pass Individual Mandate Legislation

June 25, 2018

After last year’s GOP tax bill zeroed out the penalties for the ACA’s individual mandate provision beginning in 2019, two states – New Jersey and Vermont – passed legislation to institute individual mandates of their own. They become the second and third states to do so after Massachusetts, which has had an individual mandate in place since 2006.

New Jersey’s law, the New Jersey Health Insurance Market Preservation Act, will take effect in 2019. Its penalties are structured similarly to the ACA’s mandate, and the penalties will be used to fund a reinsurance program that will help offset costs for the highest claimants. (A bill establishing the reinsurance program was also signed into law.) The state took early action to pass a mandate in order to stabilize individual market premiums  to preserve the gains it had realized under the ACA’s mandate, including a historically low uninsured rate.

Vermont’s bill doesn’t go as far as New Jersey’s, instead establishing a framework for an individual mandate to take effect in 2020 and requiring formation of a working group to make recommendations to the legislature in 2019.

Several other states considered similar legislation in 2018, but in the end, only New Jersey and Vermont moved forward. However, other states may adopt similar legislation in future years, once the market has had some time to react to the “repeal” at the federal level. This will be something to keep an eye on. Although the existence or non-existence of the individual mandate doesn’t directly affect employers’ requirements under the ACA, having a mandate in place may mean higher levels of enrollment in both group coverage and subsidized individual marketplace coverage. The former may affect employers’ benefit offerings, and the latter may affect an employer’s potential for being assigned penalties if it doesn’t comply with the employer mandate.