NJ Insurance Commissioner Confirms State Law Trumps Changes to ACA

On October 29, 2018, the Commissioner of the New Jersey Department of Banking and Insurance issued two bulletins confirming that recent federal changes affecting the Affordable Care Act (ACA) don’t supersede New Jersey state law.

Bulletin No. 18-12, captioned “Short-Term, Limited Duration Insurance,” confirms that short-term, limited-duration health insurance plans, which never comply with New Jersey law, cannot be sold in the state. Amendments to federal law effective October 2, 2018, had lengthened the maximum permissible duration of short-term policies that don’t comply with the ACA’s coverage mandates. The Bulletin warns, “Any carrier or broker found to be marketing short-term, limited-duration plans to residents of New Jersey will be subject to enforcement action.”

Bulletin No. 18-13, captioned “Association Health Plans,” confirms that the state’s existing rules governing Multiple Employer Welfare Arrangements (MEWAs) are not superseded by a rule adopted by the U.S. Department of Labor (DOL) on June 21, 2018. Under the DOL rule, according to the Bulletin, “an association may be formed for the sole purpose of offering an association health plan to its members, provided that the association maintains a commonality of interest.” The Bulletin warns that the DOL rule does not preempt New Jersey law with respect to the regulatory oversight of MEWAs.

The Insurance Departments of numerous other states, including New York, Connecticut and Massachusetts, have recently reminded insurers that changes in federal requirements, particularly regarding short-term and association health plans, do not override existing state law prohibitions.