On June 30, 2026, New Jersey enacted bill A5324 (P.L. 2026, c.23), establishing a new employer assessment designed to help offset state Medicaid costs. The law requires certain employers whose workers and dependents receive Medicaid coverage to pay annual fees based on the number of covered individuals. The law took effect immediately but became operative on July 1, 2026.
Which Employers Are Covered?
The law applies to employers that, during the prior calendar year, employed 50 or more employees who receive health benefits coverage through the New Jersey Medicaid program. The definition of employer is broad and includes corporations, partnerships, LLCs, and other business entities operating in the state.
Importantly, the threshold is based on the number of employees receiving Medicaid coverage, not simply the employer’s total workforce size.
New Employer Fee Structure
Covered employers must pay an annual fee for each employee and each dependent receiving Medicaid coverage.
The fee amount depends on the number of Medicaid-covered employees employed by the organization:
- Employers with 50 to 249 Medicaid-covered employees must pay $325 per covered employee and dependent.
- Employers with 250 to 499 Medicaid-covered employees must pay $525 per covered employee and dependent.
- Employers with 500 or more Medicaid-covered employees must pay $725 per covered employee and dependent.
The revenue generated by the assessment is intended to help defray state Medicaid costs.
Annual Notification and Payment Deadlines
The law establishes recurring annual compliance obligations.
Beginning each year:
- The State will notify affected employers on or before March 1 regarding their liability under the law and the number of employees and dependents triggering the assessment.
- Employers must submit required filings and remit payment on or before April 15 through approved electronic methods.
These deadlines create a new annual reporting and payment cycle for covered employers.
Exemptions for Certain Employees and Dependents
Employers are not required to pay the fee for employees or dependents with:
- Developmental disabilities;
- Intellectual disabilities; or
- Permanent physical disabilities.
In addition, beginning July 1, 2027, the law excludes:
- Employees employed for fewer than 90 days;
- Part-time employees;
- Per diem employees;
- Temporary employees; and
- Seasonal employees.
The legislation also provides a mechanism for employers to obtain credits or refunds relating to fees paid before those exclusions become available.
Audits, Appeals, and Penalties
Employers that disagree with an assessment may appeal to the Department of Labor and Workforce Development. However, employers generally must pay the assessed fee while the appeal is pending.
The law also grants the Commissioner of Labor and Workforce Development authority to audit employers and review employment records related to the assessment.
Failure to pay required fees can result in a penalty of up to $500 per day for each day the fee remains unpaid.
Employers Impacted
The law is expected to have the greatest impact on employers with significant numbers of Medicaid-enrolled workers, including employers in industries such as:
- Retail;
- Hospitality;
- Food service;
- Health care support services;
- Warehousing and logistics; and
- Other sectors with substantial numbers of lower-wage employees.
Because dependents receiving Medicaid coverage are also included in the assessment calculation, employer costs may be substantially higher than anticipated based solely on employee enrollment figures.
Employer Takeaway
With the law now operative, employers should begin evaluating whether they meet the 50-employee threshold and estimating potential exposure under the new assessment. Employers should also prepare for the annual March 1 notification and April 15 payment and filing deadlines, review workforce Medicaid participation levels, and establish processes for responding to audits or challenging assessments where appropriate. The new law represents a shift in New Jersey’s approach to Medicaid financing and may create substantial new costs for employers whose workforces rely heavily on state-sponsored health coverage.