LEGISLATIVE FISCAL ESTIMATE

[First Reprint]

ASSEMBLY, No. 2550

STATE OF NEW JERSEY

222nd LEGISLATURE

 

DATED: MARCH 6, 2026

 

 

SUMMARY

 

Synopsis:

Requires continuation of health benefits dependent coverage for certain children with disabilities who are 26 years of age or older.

Type of Impact:

Annual expenditure increase for certain local governments and school districts; annual State expenditure and revenue decreases.

Agencies Affected:

Certain local governments and school districts; Department of Human Services; Department of Banking and Insurance.

 

 

Office of Legislative Services Estimate

Fiscal Impact

 

Annual 

 

 

State Expenditure Decrease

 

Indeterminate

 

 

State Revenue Decrease (Federal Funds)

 

Indeterminate

 

 

Local Expenditure Increase

 

Indeterminate

 

 

 

·       The Office of Legislative Services (OLS) concludes that permitting certain dependent adult children to receive healthcare coverage indefinitely through a parent’s insurance plan will result in indeterminate cost increases to local government and school district employers that provide health insurance coverage for such dependents through private insurers.  Moreover, this additional coverage required under the bill may affect the cost of future contracts between local governments and private health insurers.

·       The OLS also finds that the State will realize indeterminate reductions in Medicaid expenditures to the extent that adult dependent children currently enrolled in NJ FamilyCare, the State’s Medicaid program, elect to receive healthcare coverage via a parent’s insurance plan.  These reduced State Medicaid expenditures would also reduce the amount of State revenue received from associated federal Medicaid cost reimbursements.

·       The OLS further finds that additional, indeterminate State savings will result from some adult children disenrolling from State-based marketplace coverage after enrolling in a parent’s insurance plan, thereby no longer receiving State premium subsidies for marketplace coverage.

BILL DESCRIPTION

 

      This bill requires health insurers and group health plans that provide dependent coverage to make that coverage available to adult children 26 years of age or older who are incapable of self-sustaining employment by reason of physical or intellectual disability and reliant on the plan subscriber for support and maintenance.  Current State law permits such dependents to receive healthcare coverage through the plan subscriber’s insurance until the dependent reaches age 31.

 

 

FISCAL ANALYSIS

 

EXECUTIVE BRANCH

 

      None received.

 

OFFICE OF LEGISLATIVE SERVICES

 

      The OLS concludes that permitting certain dependent adult children with disabilities to receive healthcare coverage indefinitely through a parent’s insurance plan will result in indeterminate cost increases to local government and school district employers that provide health insurance coverage for such dependents through private insurers.  Moreover, this additional coverage required under the bill may affect the cost of future contracts between local governments and private health insurers.  Due to insufficient data, the OLS cannot estimate the number of eligible adults with disabilities likely to enroll in a parent’s coverage under the bill or the aggregate increase in premiums or other costs likely to be incurred by local governments and school districts.

      At present, many of the adult children affected by the bill are likely enrolled in NJ FamilyCare, the State’s Medicaid program, due to receiving Supplemental Security Income benefits for persons with disabilities (which confer automatic Medicaid eligibility) or by otherwise having monthly incomes below the program’s eligibility thresholds.  Under the bill, some affected adults may choose to receive healthcare coverage via a parent’s insurance while remaining enrolled in NJ FamilyCare, which would become a secondary payer for services not fully reimbursed by a parent’s insurance; other adults may entirely disenroll from NJ FamilyCare upon joining a parent’s insurance.  

      In either case, these shifts would reduce State Medicaid expenditures on coverage and services for the affected adults while also reducing the amount of State revenue received from associated federal Medicaid reimbursements.  These impacts would likely persist under the federal One Big Beautiful Bill Act since most NJ FamilyCare members with disabilities are expected to remain enrolled in the program due to exemptions from new Medicaid eligibility rules that begin in January 2027.  Based on available data, however, the OLS cannot estimate how many adult NJ FamilyCare members with disabilities have parents with private insurance, those members’ likely enrollment in private coverage under the bill (including any differential impact on NJ FamilyCare members who are dually eligible for Medicare as “disabled adult children” of Social Security beneficiaries), potential State savings due to disenrollments from NJ FamilyCare, or other expected cost-shifting from NJ FamilyCare to private insurance for individuals who dually enroll in both forms of coverage.

      Finally, the OLS notes that some affected adults who do not qualify for NJ FamilyCare due to income, immigration status, or other factors may currently purchase health insurance via Get Covered New Jersey, the State-based health insurance marketplace.  This marketplace coverage is subsidized for eligible enrollees by a combination of federally funded premium tax credits, federal cost-sharing reductions, and additional State premium subsidies.  To the extent that some adults disenroll from marketplace coverage under the bill and alternatively enroll in a parent’s private insurance, the State’s Health Insurance Affordability Fund would realize savings due to these individuals no longer receiving State premium subsidies for marketplace coverage.  The OLS has insufficient data to estimate the number of these adults who are likely to substitute a parent’s insurance for marketplace coverage and the potential State savings that would result.

 

 

Section:

State Government

Analyst:

Anna Harris

Associate Fiscal Analyst

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.).