ASSEMBLY BUDGET COMMITTEE

STATEMENT TO

ASSEMBLY, No. 5324

with committee amendments

STATE OF NEW JERSEY

DATED:  JUNE 28, 2026

      The Assembly Budget Committee reports favorably and with committee amendments Assembly Bill No. 5324.

      As amended, this bill requires employers to pay a fee for employees, or dependents of employees, who receive health benefits coverage through the State Medicaid program.  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. 

      Beginning on July 1, 2027, the bill would exclude an employer’s lack of coverage for the following persons from the requirements of its provisions:

      (1) an employee of the employer who has been employed by the employer for less than 90 days at the time the fee is determined pursuant to the bill;

      (2) an employee who works part-time, on a per diem basis, or who is a temporary employee; or

      (3) a seasonal employee. 

      If, prior to July 1, 2027, an employer is charged a fee pursuant to the bill’s provisions for an employee who would be excluded under the bill beginning on July 1, 2027, the employer will be entitled to a credit against any liability for the provisions of the bill, or if there is no liability, a refund in the following year for any fee paid by the employer concerning that employee.  The employer will bear the burden to demonstrate to the satisfaction of the commissioner that the employer paid a fee for an employee who meets the criteria for an exclusion under the bill, in a form and manner as determined by the commissioner.

      As amended, the bill provides that:

      (1) an employer may not rely upon, use, or consider information disclosing whether a job applicant or employee receives health benefits coverage through the State Medicaid program as a basis for denying to the applicant or employee the opportunity to obtain or maintain employment, or to advance in position in their job; and

      (2)  the substantive right established for a job applicant or employee against adverse employment action may be enforced pursuant to the “New Jersey Civil Rights Act.”

      The bill imposes fines for employers that fail to comply, and establishes an appeal process for employers that dispute an assessment of a fee under the bill’s provisions.

      As amended, the bill provides that individually identifiable information about an employee or a dependent who receives health benefits coverage through the State Medicaid program contained in data prepared for the purposes of implementing the provisions of the bill will be confidential and privileged.  The commissioner, the Director of the Division of Revenue and Enterprise Services, or any employee engaged in the administration thereof or charged with the custody of any such data may not divulge, disclose, use for their own personal advantage, or examine for any reason other than a reason necessitated by the performance of official duties any information obtained from the data.  Individually identifiable information about an employee or a dependent will be exempt from disclosure under the open public records act.

      The Governor’s Fiscal Year 2027 budget recommendations include the enactment of legislation to impose an employer healthcare assistance contribution on certain employers that have 50 or more employees receiving State Medicaid benefits, for example NJ FamilyCare.  The bill is intended to defray the healthcare costs of employees covered by those benefits.  The Department of the Treasury estimates that the average State cost for covering this population is $1,700 per person per year, and the department expects the fees will increase State revenues by about $145 million annually.

COMMITTEE AMENDMENTS:

      The committee amended the bill to provide that:

      (1) an employer may not rely upon, use, or consider information disclosing whether a job applicant or employee receives health benefits coverage through the State Medicaid program as a basis for denying to the applicant or employee the opportunity to obtain or maintain employment, or to advance in position in their job;

      (2)  the substantive right established for a job applicant or employee against adverse employment action may be enforced pursuant to the “New Jersey Civil Rights Act”; and

      (3)  individually identifiable information about an employee or a dependent who receives health benefits coverage through the State Medicaid program contained in data prepared for purposes of implementing the provision of the bill will be confidential and privileged, and the commissioner, the Director of the Division of Revenue and Enterprise Services or any employee engaged in the administration thereof or charged with the custody of any such data may not divulge, disclose, use for their own personal advantage, or examine for any reason other than a reason necessitated by the performance of official duties any information obtained from the data.  Individually identifiable information about an employee or a dependent will be exempt from disclosure under the open public records act.

FISCAL IMPACT:

      The Office of Legislative Services (OLS) estimates that this bill will increase State revenues by up to $183.6 million from July 1, 2026 through June 30, 2027 due to the collection of fees from employers in the State that employ at least 50 individuals enrolled in the State Medicaid program.  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.

      From July 1, 2028, and annually thereafter, with all exemptions active and any applicable employer credits expired, the OLS estimates that this bill will increase State revenues by up to $105.6 million, of which $5.5 million also represents an increase in State and local costs.

      The OLS assumes that all private sector employers required to pay the fee established under the bill are currently subject to the Corporation Business Tax (CBT) and, whenever applicable, the Corporate Transit Fee (CTF).  To the extent that the fee established under the bill is interpreted in a manner consistent with the Division of Taxation's treatment of deductible business expenses, the bill would also result in concurrent CBT and CTF revenue losses of up to $20.0 million from July 1, 2026 through June 30, 2027; $3.0 million from July 1, 2027 through June 30, 2028; and $11.5 million each year from July 1, 2028 onward.  In addition, the OLS finds that the administrative activities required to assess the fee and collections of employer-noncompliance penalties will have indeterminate net State and local fiscal impacts.

      This analysis is largely based upon data provided in the Department of Human Services’ 2024 Annual Report on Access to Employer-Based Health Insurance.  To the extent that the fee established under the bill applies to more or fewer employers, employees, or employee dependents than identified under this report or assumed in this analysis, these estimates would be adjusted accordingly.  Finally, the OLS notes that pending changes to Medicaid eligibility rules under the 2025 federal budget reconciliation law, commonly known as the “One Big Beautiful Bill Act,” will have indeterminate impacts on the number of Medicaid-enrolled employees and employee dependents subject to the employer fee under this bill due to the complex potential effects of new “community engagement” rules, more frequent eligibility reviews, and immigrant eligibility restrictions on the employees and dependents subject to the employer fee.