Thirty-five New Jersey business and health care organizations released a letter Monday addressed to Gov. Phil Murphy and members of the Legislature that is opposing a proposed new tax on health insurance that is being considered.
The legislation (S2676/A4389) aims to raise $300 million by levying a 2.75% tax on health insurance coverage purchased by New Jersey employers, working-class families and seniors on certain Medicare plans.
Early estimates suggest the tax will increase health insurance premiums by at least $600 every year for New Jersey residents covered by the typical family health insurance plan.
And, while the state is desperate for revenue during the COVID-19 pandemic, the organizations said such a health insurance tax is the wrong thing at the wrong time.
“Quite simply, during this unprecedented public health emergency and deep economic disruption resulting from the COVID-19 pandemic, now is not the time for new taxes, let alone new taxes that would increase the cost of health insurance for consumers and businesses in New Jersey,” the organizations wrote in the joint letter.
“We believe putting a sales tax on health insurance — which would effectively increase costs on those employers who are able to maintain coverage for their employees — is a significant step backward in ensuring New Jerseyans have access to affordable health care.”
The new tax also would hit Medicare supplemental plans, threatening higher health care costs for over 500,000 New Jersey seniors who already face a heightened risk of health issues associated with the COVID-19 pandemic.
The new tax is modeled after a federal tax on health insurance that was permanently repealed in 2019 by Congress with overwhelming bipartisan support from Democrats and Republicans.
Those in the group said they are not arguing with the merits of initiatives aimed at ensuring all New Jerseyans can access affordable health coverage. They said this bill will do the opposite.
“It does not make sense to tax a product to make it cheaper,” they wrote. “Ultimately, the result of this effort will mean the cost of doing business in New Jersey will increase as health coverage becomes less affordable for both employers and their employees across our state.”
Michele Siekerka, the CEO of the New Jersey Business & Industry Association, said the tax could be the undoing of businesses on the bubble of making it through this crisis.
“Local businesses across the state are already struggling to keep their doors open and their employees on payroll, and a new tax on health insurance will only make matters worse,” she said. “However well-intentioned this legislation may be, now is not the time to ask New Jersey businesses, employees and families to shoulder added costs for their health care coverage.”
The complete letter is below:
As New Jersey’s statewide business community and other interested stakeholders, we are writing to voice our joint opposition to S2676 (Vitale)/A4389 (McKeon), state legislation to implement a new 2.75% state excise tax on fully-insured health insurance premiums for health benefits plans, MEWAs and dental and vision coverage. Quite simply, during this unprecedented period of public health emergency and deep economic disruption resulting from the COVID-19 pandemic, now is not the time for new taxes, let alone new taxes that would increase the cost of health insurance for consumers and businesses in New Jersey. We respectfully urge you to oppose this legislation.
Importantly, we are not arguing with the merits of initiatives aimed at ensuring all New Jerseyans can access affordable health coverage. In fact, it is in the name of affordability that we oppose a new tax on health insurance that will increase the premiums employers pay for health coverage for their employees and their families. It does not make sense to tax a product to make it cheaper. Ultimately, the result of this effort will mean the cost of doing business in New Jersey will increase as health coverage becomes less affordable for both employers and their employees across our state.
This legislation has its origins in an Affordable Care Act health insurance tax that was permanently repealed by Congress on a bipartisan basis in 2019. An otherwise divided Congress annually suspended it two times after realizing the direct impact it had on the cost of health insurance for individuals, employers, employees, Medicare Advantage members and Medicaid Managed Care costs, before ultimately repealing the federal tax in its entirety. Gov. Murphy proposed in his FY21 budget a New Jersey specific Health Insurance Tax — a hidden sales tax on health insurance premiums — that would impact the individual and employer-sponsored coverage markets.
The impact of the COVID-19 pandemic is real: Medicaid enrollment has already increased by 86,500 lives as a result of loss of jobs and loss of employer-sponsored coverage. We believe putting a sales tax on health insurance — which would effectively increase costs on those employers who are able to maintain coverage for their employees — is a significant step backward in ensuring New Jerseyans have access to affordable health care.
As the Legislature moves forward to consider its FY21 budget, it is imperative to recognize New Jersey’s employers and our employees are facing the same financial pressures that the state is experiencing. As businesses struggle to regain their financial footing after the impacts the COVID-19 pandemic, they cannot bear the added financial burden that would result from this proposal.
We oppose legislation to impose a new tax on fully-insured health insurance premiums and respectfully urge the legislature to avoid enacting any measures that could compound the financial hardships facing New Jersey businesses or counteract the efforts of employers to navigate this period of extreme economic hardship.
African American Chamber of Commerce NJ
Affiliated Physicians & Employers Master Trust (The trust is sponsored by: Employers Association of NJ, Medical Society of New Jersey, BioNJ, New Jersey Chamber of Commerce, CentraState Medical Center, Vista IPA, IPA of North Jersey, Trinitas Hospital Medical Staff, Mountainside IPA, Northwest Physicians Organization, The Medical & Dental Staff of Hackensack Meridian Health)
American Council of Life Insurers
Chamber of Commerce of Southern New Jersey
Commerce and Industry Association NJ
Early Childcare Education Advocates
Fuel Merchants Association of New Jersey
Garden State Pharmacy Owners, Inc.
Greater Metropolitan Furnishings Association
Irrigation Association of New Jersey
National Association of Dental Plans
National Association of Insurance and Financial Advisors
National Federation of Independent Business, New Jersey Chapter
New Jersey Air-Conditioning Contractors Association
New Jersey Association of Health Underwriters
New Jersey Association of Health Plans
New Jersey Builders Association
New Jersey Building Material Dealers Association
New Jersey Business and Industry Association
New Jersey Chamber of Commerce
New Jersey Dental Association
New Jersey Food Council
New Jersey Gasoline, C-Store, Automotive Association
New Jersey Independent Electrical Contractors Association
New Jersey Landscape Contractors Association
New Jersey Motor Truck Association
New Jersey Plumbing Heating Cooling Contractors
New Jersey Restaurant & Hospitality Association
New Jersey Retail Merchants Association
New Jersey State Funeral Directors Association
New Jersey State League of Master Plumbers Inc.
New Jersey Veterinary Medical Association
New Jersey Warehouse & Movers Association
Northeastern Retail Lumber Association
Statewide Hispanic Chamber of Commerce of New Jersey