Wednesday, January 16, 2019


One of the good things to come from the GOP Tax Act was the elimination of the individual “shared responsibility penalty” for not having “minimal essential” health insurance coverage for the full year effective with tax year 2019.

Actually, the law and the penalty remain intact – the Act just set the penalty at 0.

So, beginning in calendar year 2019 you no longer need to maintain health insurance coverage for each member of your household.  Unless you live in New Jersey.

The presentation on NJ state tax updates at Saturday’s NJ-NATP “Famous NJ State Tax Seminar” I “reviewed” here on Monday discussed the “New Jersey Health Insurance Market Preservation Act” – the new NJ health insurance mandate.

To quote the opening lines of a Lerner and Lowe song from MY FAIR LADY - "Damn, damn, damn, damn."

Thankfully this does not affect the 2018 Form NJ-1040.

According to the Act’s webpage (highlights are mine) -

Beginning January 1, 2019, New Jersey will require its residents to maintain health insurance.

The law requires you and your family to have minimum essential health coverage throughout 2019 and beyond, unless you qualify for an exemption.

Failure to have health coverage or qualify for an exemption will result in a Shared Responsibility Payment when you file your 2019 New Jersey Income Tax return.

If you are not required to file a 2019 New Jersey Income Tax return – you are exempt from this mandate.”   

Similar to the disappearing federal shared responsibility penalty, the NJ penalty is calculated and paid as part of the NJ-1040 filing.

What is the NJ Shared Responsibility Penalty (SRP)?

Your payment amount is capped at the cost of the statewide average premium for Bronze Health Plans in New Jersey, as determined by the New Jersey Department of Banking and Insurance.

The following are examples of what the SRP could be:

Individual taxpayer:

Minimum: $695
Maximum: $3,012

Family with two adults and three dependents and household income of $200,000 or below:

Minimum: $2,085
Maximum: $4,500

So, like the federal penalty had been, the NJ penalty ain’t cheap.

In addition to the exemption for NJ residents who are not required to file a NJ-1040 there are other exemptions that are similar to the exemptions under the federal Affordable Care Act, including “affordability” and a gap in coverage of less than 2 consecutive months.  These are explained in a link on the webpage.

Just when I thought I no longer had to be concerned with health insurance coverage on the federal Form 1040 for my clients this comes along.  What a PITA!  At least NJ taxpayers would not need to pay the penalty to both Sam and Phil.


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