LEGISLATIVE FISCAL ESTIMATE
SENATE, No. 3818
STATE OF NEW JERSEY
221st LEGISLATURE
DATED: JUNE 4, 2025
SUMMARY
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Synopsis: |
Requires third-party discounts and payments for individuals covered by health benefits plans to apply to copayments, coinsurance, deductibles, or other out-of-pocket costs for covered benefits. |
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Type of Impact: |
Annual increase in State and local costs. |
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Agencies Affected: |
Department of the Treasury; Department of Banking and Insurance; local governments; school districts. |
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Office of Legislative Services Estimate |
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Annual Fiscal Impact |
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State Cost Increase |
Indeterminate |
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Local Cost Increase |
Indeterminate |
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· The Office of Legislative Services (OLS) finds that the bill would increase annual State expenditures under the New Jersey State Health Benefits Program and the School Employees’ Health Benefits Program by an indeterminate amount. Generally, the expenditure increase would result from some insured individuals meeting their cost sharing requirements sooner than they otherwise would absent this bill, thereby shifting some of the health benefit costs of providing health insurance from the insured individual to the health insurance provider. This shift would put upward pressure on health plan premiums. The OLS lacks the informational basis to estimate the magnitude of any increase that may result.
· The bill would result in indeterminate increases in annual expenditures for local government employers that provide employee coverage through the State Health Benefits Program or the School Employees’ Health Benefits Program. Local government and school district employers that provide employee health insurance coverage through the private market could also experience an indeterminate increase in annual costs.
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There is the potential for annual State and local cost savings if
the bill’s prohibition on the use of copay accumulator programs were to cause
positive health outcomes that reduce future treatment costs.
BILL DESCRIPTION
The bill requires health insurance carriers and pharmacy benefit managers to include any payments for health care services made by insured individuals, or made on their behalf, when calculating their overall contribution towards the cost sharing requirements of their health benefits plan. Cost sharing refers to any copayment, coinsurance, deductible, or similar charge paid by insured individuals or made on their behalf for a health care service covered by their plan, including prescription drugs. The bill also provides that for high deductible plans paid using a health savings account, if including these payments would make the insured individual’s health savings account ineligible under the federal Internal Revenue Code, the payments would only apply after the individual has met the minimum deductible amount required under the code.
Current federal policy permits health insurance carriers and pharmacy benefit managers to exclude payments or other benefits provided to insured individuals by third party entities when calculating the insured person’s out-of-pocket and cost sharing requirements under their health benefits plan. This practice is often referred to as a copay accumulator program. This bill would prohibit this practice and require any third-party assistance to be credited to the insured person when calculating their overall contribution towards the out-of-pocket costs and cost sharing requirements of their health benefits plan.
FISCAL ANALYSIS
EXECUTIVE BRANCH
None received.
OFFICE OF LEGISLATIVE SERVICES
The OLS finds that the bill would increase annual State expenditures under the New Jersey State Health Benefits Program and the School Employees’ Health Benefits Program by an indeterminate amount. Generally, the expenditure increase would result from some insured individuals meeting their cost sharing requirements sooner than they otherwise would absent this bill, thereby shifting some of the health benefit costs of providing health insurance from the insured individual to the health insurance provider. This shift would put upward pressure on health plan premiums. The OLS lacks the informational basis to estimate the magnitude of any increase that may result.
Additionally, the fiscal impact of the bill would be affected by several unknown variables, such as the number of enrollees who would be affected under the bill, the terms of their health benefit plans regarding cost sharing requirements, and the value of any discounts offered by third parties toward an enrollee’s covered benefits. The OLS also notes that the Department of Banking and Insurance may also incur some additional annual costs related to its administrative responsibilities under the bill.
The bill would result in indeterminate increases in annual expenditures for local government employers that provide employee coverage through the State Health Benefits Program or the School Employees’ Health Benefits Program. Local government and school district employers that provide employee health insurance coverage through the private market could also experience an indeterminate increase in annual costs.
The OLS notes that federal statutes prohibit drug manufacturers from offering coupons for beneficiaries of federal healthcare programs, including Medicaid and Medicare, so no impacts on NJ FamilyCare are expected from the bill.
There is the potential for annual State and local cost savings if the bill’s prohibition on the use of copay accumulator programs were to cause positive health outcomes that reduce future treatment costs.
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Section: |
Commerce, Labor and Industry |
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Analyst: |
John Gaudioso Assistant Fiscal Analyst |
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Approved: |
Thomas Koenig Legislative Budget and Finance Officer |
This legislative fiscal estimate has been produced by the Office of Legislative Services due to the failure of the Executive Branch to respond to our request for a fiscal note.
This fiscal estimate has been prepared pursuant to P.L.1980, c.67 (C.52:13B-6 et seq.).