It is has been mandated that NJ residents have health coverage.
Failure to have health coverage or qualify for an exemption may result in having to pay penalty for Shared Responsibility Payment (SRP) on 2019 New Jersey Income Tax Return.
- Penalty of SRP will be based on income and family size capped at the statewide average premium for Bronze Health Plans in New Jersey.
People may think that is less expensive to just pay SRP and go without health insurance especially healthy young individuals that do not go to doctors office besides for wellness check up. Why pay monthly for a health insurance that you do not use as much?
But,
That is not the case, as it is subject to the same penalties and interest as New Jersey Individual Income Tax.
The amount of tax penalty is the NJ average premium for bronze level plans, $695 or 2.5% of income, whichever is greater income is defined as household income minus any deductions.
The tax will be collected via the NJ income tax return.
Following are examples of what the payment could be:
- Individual taxpayer: $695 to a max of $3,012
- Family with two adults and three dependents with household income of $200,000 or below: $2,085 to a max of $4,500
Claim Exemption for NJ Mandate
Job-Based Affordability: Job-based health insurance is considered unaffordable in different ways, depending on how the coverage is offered:
For the employee: The annual premium for the lowest cost?self-only?plan (a plan that covers only you and not other members or your family) is more than 8.05% of household income.For the employee’s family: The annual premium for the lowest cost family plan is more than 8.05% of household income.
If you claim this exemption, it may apply to everybody on your tax return who doesn’t have coverage in the tax year. This will depend on the cost of coverage and to whom it’s offered.
Short Gap in Coverage
In any tax year, you may apply for a Short-Gap exemption if you had a lapse in coverage of less than three months. New Jersey considers you covered during a month if you had coverage for even one day during that month. So if you are without insurance for two consecutive months, you must have insurance by the last day of the third month to qualify for a short-gap exemption. If you have a gap that is three months or longer, you cannot claim this exemption for any month. The Shared Responsibility Payment will be due for every month you were without coverage. If you had two or more such gaps in coverage during a year, you can claim this exemption only for the months of the first coverage gap. Example: You didn’t have coverage any day in May or any day in November or December. You can claim the exemption only for May.If your coverage gap crosses calendar years, the months without coverage of the second tax year aren’t counted for the exemption for the first tax year. But the uncovered months from the first year are counted for the exemption for the second tax year. Example: You don’t have qualifying coverage in November 2019, December 2019, and January 2020. You’re not eligible for the 2020 short gap exemption for January because you didn’t have coverage for three consecutive months – from November 2019 through January 2020.
If you qualify, you can claim this exemption for the dependent(s) you claim on your tax return.
U.S. Citizen Abroad/Non-U.S. Citizen
You are a U.S. Citizen who spent at least 330 full days outside of the U.S. during a 12-month period; or was a bona fide resident of a foreign country for a full tax year.
You are a resident alien who: Was a citizen or national of a foreign country with which the U.S. has an income tax treaty with a nondiscrimination clause including (1) dual-state alien in the first year of U.S. residence or (2) a non-resident alien or dual-status who elects to file a joint return with a U.S. spouse; and was a bona fide resident of a foreign country for the next tax year.
You are not lawfully present in the U.S. This includes “Dreamers.”
If one of these applies to you, you don’t have to pay the fee for the months you didn’t have health coverage.