ANCHORs Aweigh: Explaining Governor Murphy’s New Property Tax Relief Program

Everyone in New Jersey deserves a fair property tax system, where lower-income and lower-wealth families get money back for the high cost of housing, while wealthier families pay what they owe to support schools and high-quality public services that strengthen our communities. So when property tax relief proposals come along, we must ask: Who does this program make New Jersey affordable for, and by how much? Does it advance equity and close the gap between wealthy and the rest, or does it widen that gap?

As the centerpiece of his latest budget proposal, Governor Murphy announced a new property tax credit named “ANCHOR” (Affordable New Jersey Communities for Homeowners and Renters). This explainer outlines the size and scope of the proposal, how it stacks up against existing property tax relief benefits, and highlights who benefits most from it — and by how much.

What is ANCHOR?

Despite the new name, ANCHOR is really an expansion of the Homestead Benefit program, which provides property tax relief to homeowners who earn up to $75,000 per year, as well as seniors and those who meet the state’s definition of “disabled” earning up to $150,000 per year.

The proposed ANCHOR program would expand the Homestead Benefit in three main ways:

  • Increasing the credit amount for current recipients
  • Extending the benefit to homeowners with higher incomes ($75,000-$250,000 annual income)
  • Reopening the benefit to renters on a limited basis.


The credit would cost an additional $550 million in Fiscal Year 2023 — for a total of $893 million in property tax credits — and would increase in subsequent years.[i] The average yearly credit amount for homeowners would be $682 and the renter credit would be fixed at either $150 or $250, depending on other factors.

Who benefits from ANCHOR?

It’s important to contrast the proposed ANCHOR program with the Homestead Benefit that it would replace.

Homeowners: As noted above, the ANCHOR proposal would extend property tax relief to households earning between $75,000 and $250,000, well into the top 15 percent of earners in the state.[ii] For reference, the median household income in New Jersey was roughly $83,000 in 2019.[iii]

The following graphs show how much homeowners would receive in the new ANCHOR program, as a percentage of their total property tax bill, compared to the current Homestead Benefit program.[iv]

Although households in all eligible income ranges receive increases, the increases are largest for the higher-income homeowners not previously eligible for the credit. More than $150 million of the credit would go to households earning $150,000 annually or more, including households well within the top 20 percent of New Jersey earners.[v] Of the $550 million in additional funding for the program, more than a quarter would go to well-off households.

A property tax credit that advances equity should not include benefits to the wealthiest households simply because they happen to own their homes.

Renters: The ANCHOR proposal notably includes renters in property tax relief. Renters, on average, have lower incomes than homeowners in New Jersey – where median homeowner income ($112,000) is more than double median renter income ($52,000).[vi] Although renters do not pay property taxes directly, a substantial portion of their rent goes toward their landlords’ property tax payments.[vii]

The credit amounts proposed in ANCHOR are substantially smaller than for homeowners. Benefits are fixed at $150 for most renters earning under $100,000, and $250 for seniors or disabled renters who earn less than $70,000.[viii] In total, payments to renters make up only about $100 million of the nearly $900 million cost of the ANCHOR program in the coming fiscal year – less than the amount going to households earning $150,000 or more. To advance a more equitable tax code, the dollar amount going to renters should be increased to parity with homeowner benefits.

To better enable the program to alleviate wealth inequality and help those who need it most, the ANCHOR program should direct fewer dollars to high-income homeowners, and more to renters.

How does a property tax credit affect wealth inequality?

As lawmakers on both sides of the aisle talk about the need to make the state more affordable —  in this case, through property tax rebates  — they gloss over the fact that property ownership is heavily tied with wealth. The median homeowner nationally has $255,000 in net worth, compared with a mere $6,300 for the median renter.[ix] And this wealth includes non-home wealth as well, as homeowners possess on average more financial assets like bonds, stocks, and retirement accounts.[x]

Why does wealth matter? Wealth provides families and communities with greater economic security and opportunity, enabling them to sustain financial shocks, afford educational opportunities for their children, invest in business opportunities, and engage in greater political advocacy.

And because Black and Hispanic/Latinx New Jersey residents make up a much smaller proportion of homeowners than they do of the population as a whole, the gap between wealth in homeowners and renters also drives racial wealth inequality. As one recent report from the New Jersey Institute for Social Justice points out, the median white household in New Jersey has $132,000 in home equity, while the median Black and median Hispanic/Latinx household have $0.[xi]

White householders make up 74 percent of all owner-occupied units in the state, but only 39 percent of renter-occupied units. Benefits that go primarily to homeowners run the risk of disproportionately benefiting wealthier, white households.

Further, like the current Homestead credit, the ANCHOR credit is based on a percentage of a homeowner’s tax bill, which will likely benefit those with more expensive homes. For example, 10 percent of a $1 million home’s tax bill is much higher than 10 percent of a $300,000 home’s tax bill in the same town.[xii]

Any property tax benefit runs the risk of primarily benefiting homeowners who already have substantial wealth, rather than low- and moderate-income residents who need the most help with housing costs.

How will this work in practice?

These concepts can be difficult to convey, especially the interplay between higher incomes and higher property values and tax bills. Here are some hypothetical examples of the ANCHOR credit as proposed for FY 2023 to better illustrate who will benefit — and by how much. The dollar amounts are in the ballpark of the median property tax bills and household incomes for the towns indicated.

Although all income groups in the eligibility range benefit, the largest gains would go to those with high property tax bills earning between $75,000 and $250,000. But this range is quite wide, and individual results may vary on factors including a property’s assessed value, local property tax rates, and special levies, to name a few.

There’s also a large difference in financial footing between a household of four with an income of $200,000 and a household of one with an income of $100,000, including the home they might own or rent and the town where they live.

Even with the wide range of possible credit amounts, a credit that advances affordability and economic equity should not provide households with income above $150,000 with average benefit amounts three times greater than the maximum renter benefit amount.

So, as lawmakers propose ways to make New Jersey more affordable through new property tax relief, the question remains: Affordable for who?

End notes

[i] State of New Jersey, Budget in Brief FY 2023, pg. 11-12.

[ii] U.S. Census Bureau, American Community Survey 2019 5-Year Estimates, Table S1901: Income in the Past 12 Months (in 2019 Inflation-Adjusted Dollars).

[iii] U.S. Census Bureau, American Community Survey 2019 5-Year Estimates, Table S1901: Income in the Past 12 Months (in 2019 Inflation-Adjusted Dollars).

[iv] Derek Hall, Here’s how much you would get in N.J. property tax rebates under new Murphy plan, (March 8, 2022).

[v] The top quintile in New Jersey income starts around $166,000. See U.S. Census Bureau, American Community Survey 2019 5-year estimates, Table B19080: Household Income Quintile Upper Limits.

[vi] U.S. Census Bureau, American Community Survey 2019 5-year estimates, Table S2503: Financial Characteristics.

[vii] Under New Jersey’s current property tax deduction system, 18% of rent paid during the year is considered property taxes paid.

[viii] Budget in Brief FY2023 at pg. 12.

[ix] Federal Reserve, Survey of Consumer Finances, year 2019 data.;demographic:housecl;population:all;units:median

[x] Federal Reserve, Survey of Consumer Finances, year 2019 data.;demographic:housecl;population:all;units:median

[xi] New Jersey Institute for Social Justice, Making the Two New Jerseys One, February 15, 2022,

[xii] The Homestead Benefit does have a cap of $10,000 on claimable property taxes paid. N.J. Division of Taxation, How Homestead Benefits Are Calculated, last updated July 16, 2021,

[xiii] The Homestead Benefit currently caps eligible property tax bills at $10,000. This table assumes the cap will remain in the ANCHOR program.

For the People, By the People: New Jersey State Budget 101

Every year, New Jersey legislators make choices that shape our communities through the state budget. The budget reveals short-term and long-term priorities of the state and is, at its very core, a moral document. It is how we pool all of our resources together, mainly through taxes, to fund vital programs and essential services that benefit all of us, including public schools and colleges, highways, mass transit, public-health infrastructure, and the social safety net. Communities, programs, services, and lives depend on the state budget.

Yet, despite the importance of the budget, many New Jersey residents do not understand the budget document or process, as they are complicated and rarely transparent. There is also a significant lack of information about how changes in the budget help or harm specific programs and services that are important to the overall economic and social health of the state, or how those programs and services are funded ー or, in many cases, underfunded. This explainer demystifies the state budget, including where the money comes from and goes, how the budget is created, and how residents can be a part of the process.

The Budget: What is it?

The state budget is a formal declaration of where public funds will be allocated. It is also a piece of legislation known as the Appropriations Act, which is passed by the Legislature and signed into law by the Governor every year. As such, it determines whether taxes increase or decrease, which residents and businesses will shoulder those changes, and how the state will gain and distribute additional revenue. This is important because policies that govern our shared investments should ensure that all people, regardless of their race, gender, income, or address, get a fair shot at economic opportunity and financial stability.

The budget is drafted with input from the Governor, state departments and agencies, the Legislature, residents, and after reading this explainer, you!

Where Does the Money Go?

The New Jersey budget funds programs and services that directly benefit the lives of all 8.9 million residents across the state. Through the budget, the state provides aid to 1.37 million students in 584 operating school districts[i] and supports over 300,000 college students attending New Jersey’s 30 public universities and colleges.[ii] It funds salaries and pensions for almost 70,000 state employees[iii] who keep the state government running and provides aid to local municipalities (read: cities, boroughs, townships) so they can meet the unique needs of their communities. The budget also funds critical safety net programs for when families fall on tough times, and many other things we tend to take for granted, such as clean air and water, reliable transit infrastructure, enforcement of labor laws, and much more. It is difficult to find anything that is not touched by the state government.

The largest areas of the budget are education and health and human services, which includes needs-based programs for families with limited income like Social Security Insurance (SSI) and Temporary Assistance for Needy Families (TANF).[iv] The chart below outlines some of the major expenditures in the budget for Fiscal Year 2021.[v]

Given that Education and Health and Human Services have long been the state’s largest investments, it’s worth exploring some key program areas and how they are impacted by the budget.


Education accounts for the largest percentage of state appropriations, or money dedicated for a certain purpose ー and for good reason. High-quality public schools are a building block of New Jersey communities, as education spending is fundamental to advancing equity, building a strong workforce, and promoting social mobility. There are almost 1.4 million children enrolled in New Jersey public schools, and the quality of their education determines the future prosperity of the state.[vi] State spending on education goes toward funding things like textbooks and other supplies for students, fee waivers for activities and testing for low-income students, special education accommodations, and salaries and pensions for teachers, counselors, nurses, and other staff. It also includes costs associated with keeping public schools safe places to learn that are free of asbestos, lead, and other contaminants.

While New Jersey is known for having some of the best schools in the country, the state has routinely underfunded its school aid formula — sometimes by as much as $1 billion each year.[vii] There have been some attempts to close this funding gap, but they have fallen short and the state is backsliding.[viii] Further, salaries for many teachers and support staff are still alarmingly low,[ix] many schools still do not have what they need to be safe and effective institutions of learning, and guidance counselors and social workers are either overworked or have been let go to cut costs.[x] Until the state fully funds public education, some school districts will remain under-resourced and ill-equipped to provide students with a quality education. This inequality often falls along lines of race and class, underscoring the need for continued investment in public schools so all our children receive the education they deserve.

Health and Human Services

The Department of Human Services (DHS) is home to several critical safety net programs that help to keep New Jersey residents healthy. They include NJ FamilyCare, the state’s public health insurance program, which provides coverage for children, low-income adults, and the elderly; WorkFirst NJ, the state’s welfare program, which provides cash assistance to families having trouble affording basic needs; and the Supplemental Nutrition Assistance Program (SNAP), the state’s food assistance program, which helps low-income people put food on the table. DHS also provides support for residents with substance abuse issues, families in need of affordable child care, and housing assistance for people with developmental disabilities. Moreover, DHS provides critical support for the elderly with subsidized drugs for seniors, funds for long-term care facilities, and on-site investigations in cases of abuse or neglect.

The Department of Health makes up the state’s public health infrastructure and is the first line of defense in responding to public health crises such as the COVID-19 pandemic. They respond directly by disseminating information and helping connect individuals with critical resources, and they respond indirectly by funding local health initiatives in communities. The Department of Health also keeps some of the most vulnerable people in our state healthy through prevention education and the establishment of Harm Reduction Centers.

With nearly four in ten New Jersey residents struggling to make ends meet,[xi] a growing number of people experiencing substance use and mental health disorders, and an aging population that requires care and support, continued investments in a health infrastructure and robust social safety net are needed to maintain a strong quality of life for millions of New Jersey residents.

Where Does the Money Come From?

New Jersey, like all states, funds the state government with revenue from taxes, fines and fees, and transfers from the federal government.

A majority of the state’s revenue comes from the income tax, sales tax, and the corporate business tax (CBT), which account for approximately 75 percent of the state budget. Other major taxes include cigarette, alcohol, and motor fuel taxes. The state also generates revenue through various departmental fees, including marriage licenses, hunting and fishing licenses, and parking tickets.

Tax contributions are placed into multiple funds that New Jersey draws on to finance the necessities outlined above. Of these, the General Fund and the Property Tax Relief Fund are the largest and most important.

The General Fund is where all state revenues not restricted by statute, or not dedicated to specific areas of the budget, are deposited and from which most appropriations are made. The revenues in the Property Tax Relief Fund, however, are dedicated to reducing or offsetting property taxes. The chart below illustrates the actual revenue that was generated and deposited into the General Fund in 2019.[xii]

The Property Tax Relief Fund is made up of revenue generated from the New Jersey Gross Income Tax and one half-cent of the Sales and Use Tax. This fund provides direct property tax relief through programs like the Senior Freeze and Homestead Rebate, as well as indirect relief by funding local school districts and essential services provided by local governments — investments that would otherwise be funded by property taxes.

Is There Enough Revenue to Meet New Jersey’s Needs?

Taken together, New Jersey generates approximately $40 billion in revenue every year. While that may be a large amount of money, the state budget has struggled to keep up with mere inflation over the last decade — due in part to some major tax cuts that benefitted wealthy individuals and big corporations. Because states are required to pass balanced budgets, meaning annual spending cannot exceed annual revenue collections, the state must bring in additional revenue to pay for its growing obligations, including programs that were chronically underfunded over the last thirty years.[xiii] Even without new programs, the state must ramp up spending over the next few years to fully fund public schools (in adherence to the School Funding Reform Act) and make full annual pension contributions, which were routinely skipped under previous administrations. The state must also raise enough revenue to build up a healthy surplus and Rainy Day Fund to protect against future economic downturns. New Jersey currently has one of the lowest Rainy Day Funds in the nation as the reserves were never replenished after the Great Recession.

New Jersey needs new, fairer ways to raise revenue to both meet its existing obligations and make new investments that benefit our communities. By making the tax code fairer, New Jersey can create a healthy and vibrant place to live for everyone that calls New Jersey home.

How Does the Budget Become Law?

In New Jersey, the fiscal year runs from July 1st to June 30th of every year, but the budget process extends across many months and includes lots of different stakeholders — from the Legislature, to the Governor, to the leaders of state departments and agencies, to members of the public like you! Given the size and significance of the budget, it should be no surprise that the process is long and sometimes complicated. Let’s break it down.

What is the Budget Timeline?

The budget process is a nearly year-round affair.

September – January: It starts with the Office of Management and Budget (OMB), which manages the state’s financial assets, assessing the economy and making predictions about how much revenue is likely to be generated in the following year. With input from state agencies, they also make predictions about how much revenue will be needed to fund existing programs and departments.

January – February: With the projections from the OMB and requests for funding made by various departments, the governor prepares and presents a budget proposal to the Legislature and the public through the annual budget address, which takes place on or before the fourth Tuesday in February.[xiv] The governor’s address is what’s colloquially known as the start of “budget season” in Trenton.

February – May: Like OMB, the Office of Legislative Services (OLS) produces its own revenue projections, which the Legislature uses to craft their own budget or, as is often the case, make adjustments to the governor’s budget proposal. All the while, they hold extensive committee hearings for state agencies and the general public about their budget priorities. This part of the process begins after the governor’s budget address and generally runs through May.

June: The Legislature drafts and releases its own budget proposal, known as the Appropriations Act, which must be approved with a majority vote by both the Assembly and the Senate.[xv] Finally, the bill goes before the governor to be signed before the June 30th deadline.[xvi]

What is the Role of the Governor?

The governor of New Jersey enjoys an incredible amount of power and leverage in the budget process. Through the budget address, the governor sets the tone and priorities for the budget process. The governor’s initial budget proposal is also often used as the foundation for the Legislature’s budget bill. The governor also determines how much revenue is ultimately needed to balance the budget — which has big implications on tax policy — as the executive branch has the sole power to certify revenue estimates. And because the governor appoints the state Treasurer (as well as every other department head) the governor can influence both revenue projections and how much departments and agencies request in funding.

Once the Legislature passes their own budget proposal, the governor has four options:

  1. Sign the proposal, as is, into law.
  2. Reject the entire budget proposal outright and send it back to the Legislature.[xvii]
  3. “Line-item veto” certain spending priorities before signing the budget into law.
  4. If revenue projections from the OMB and the OLS are far enough apart, the governor may accept the budget as is and put some funding into a lockbox to be released later in the year if enough revenue is collected to cover those investments.

After the budget is signed into law, the governor also has the power to change the budget through Executive Orders. Nothing can be added to the budget, however, without approval from the Legislature.

What is the Role of the Legislature?

Once the governor releases a full budget proposal, the Legislature gets to work crafting their own bill with their own spending and revenue priorities. While the Legislature can choose to accept the governor’s budget in its entirety, this is unlikely. What often happens is that the Legislature writes their own budget and then negotiates a final deal with the governor.

Each house, the Senate and General Assembly, has their own budget committee that holds budget hearings throughout the Spring. Each committee has their own chairperson who wields power over their respective house’s budget process, but the Senate President and the Speaker of the Assembly ultimately act as the final gatekeepers for what is included in or excluded from the budget. The committees are responsible for hearing testimony from the public and all the state department heads. All of these hearings are also open to the public to attend.

After the budget becomes law, the Legislature has the power to change it by drafting and approving new bills to allocate funding for a particular program or service. This bill would have to follow the same process as the Appropriations Act and be signed into law by the governor.

If the governor vetoes a bill or performs a line-item veto, the Legislature has the power to override the veto with a two-thirds majority of all members of both the General Assembly and Senate.[xviii]

How Can Members of the Public Participate in the Budget Process?

Active participation in the budget process can really make a difference. Advocates and members of the public alike can and should share their priorities with the governor’s office and members of the Legislature both before and during the formal budget process.

While the governor is preparing the budget proposal, residents can contact the governor’s office to voice support for specific programs or initiatives that rely on state funding. You can also contact the governor’s office later in the budget process to voice your opinion in support of or opposition to potential programs at risk of being cut or line-item vetoed.

During the Legislature’s budget hearings, one of the best ways for residents to ensure their voices are heard is to testify at one of three public hearings offered by the Senate and Assembly budget committees. These hearings are often held across the state, with one meeting in each region of New Jersey: North, Central, and South. Anyone who signs up to testify can give comments. Legislators are meant to represent the people and be responsive to community needs. Believe it or not, most legislators like to hear from their constituents. Giving the issues you care about a face by providing a personal account can make an impact.

Writing, calling, and emailing legislators, including your own representative as well as those serving on the budget committees, with concerns or questions regarding a particular program or initiative is another way to ensure your voice is heard.

During the month of June, legislators negotiate the final budget within their caucuses and with the governor’s office. This is the time when advocates are the most active, lobbying and otherwise engaging legislators and the general public. This is a great opportunity to tap into your local advocacy organizations and meet with legislators about items in the budget that are of concern to you!

Glossary of Terms



Appropriation A sum of money that is authorized by the Legislature for a specific expenditure for a single fiscal year.
Appropriations Act The bill passed by the New Jersey Legislature that ultimately becomes the state’s annual budget. The budget becomes law when the Appropriations Act is signed by the Governor.
Corporate Business Tax (CBT) A tax on the net income or capital of a corporation. There are different rates for C and S Corporations.
Earmark Designated funds or resources for a particular purpose.
Expenditure Money owed, whether paid or unpaid.
Fiscal Year The twelve-month period to which the annual budget applies. New Jersey has a July 1 to June 30 fiscal year.
General Assembly One of the two Houses that comprises the state Legislature. The General Assembly has 80 members, two elected from each legislative district, and is presided over by the Assembly Speaker.
Line Item Any single item for which an appropriation is provided in the Appropriations Act.
Line-Item Veto Applying only to bills containing an appropriation, this veto action allows the Governor to approve the bill but reduce or eliminate funding for specific items.
Office of Legislative Services (OLS) A non-partisan agency of the Legislature that provides professional support services, including analysis, research, bill drafting, and legal services. In addition, the office provides information about the Legislature to the public.
Office of Management and Budget (OMB) An agency of the Governor’s Office that manages New Jersey’s financial assets. With direction from the Governor, the annual budget is the responsibility of the Office of Management and Budget (OMB).
Senate One of the two Houses that comprises the state Legislature. The Senate has 40 members, one elected from each legislative district, and is presided over by the Senate President.
Senate President The chief presiding officer of the Senate during legislative sessions. The Senate President appoints committee chairs and members of committees and commissions, refers bills and resolutions to reference committees, sets the agenda for session days, and supervises the administration of the day-to-day business of the Senate.
Speaker of the General Assembly The chief presiding officer of the General Assembly during legislative sessions. The Assembly Speaker appoints committee chairs and members of committees and commissions, refers bills and resolutions to reference committees, sets the agenda for session days, and supervises the administration of the day-to-day business of the General Assembly.
Veto An official action taken by the Governor to nullify or deny a legislative action.


End Notes

[i] State of New Jersey Department of Education. (2019).

[ii] Nelson, B. (2019, July 25). What N.J. colleges are growing (and shrinking) the most? Retrieved 2020, from


[iv] In NJ, TANF is also called “Work First New Jersey.”

[v] Some of the agencies that are separate have been combined in this chart in order to make it easier to digest.


[vii] Clark, Kakkar, & Marcus (2020, September). Here’s how much money every N.J. school district gets in state funding shakeup.

[viii] Sitrin (2020, September) Why New Jersey’s progressive school funding formula still isn’t working for some children.

[ix] Weber, M. (2019, September). New Jersey’s Teacher Workforce, 2019: Diversity Lags, Wage Gap Persists.

[x]This report highlights how schools suffer (and which schools) due to lack of investment:

[xi] ALICE (Asset Limited, Income Constrained, Employed) Project, New Jersey (2020).

[xii] FY2019 is the most recent year for which there is actual revenue data. The data for more recent years are currently “estimated” revenues. Source: Office of Management and Budget: Summaries of Revenues, Expenditures, and Fund Balances.

[xiii] The archives containing all budget documents can be found on the OMB’s website. This is a summary of the funds from FY2010, indicating that the balance of the state funds is just under 30 billion.

[xiv] Some exceptions are made to this deadline: it can be superseded by legislation, and if it is a governor’s first term, there is an extended deadline of March 13th.

[xv] At least 21 votes in the Senate and 41 in the General Assembly

[xvi] More detailed and technical information about the state’s budget process: NJ OMB

[xvii] If a Governor vetoes a bill, the Legislature can override it by a vote of at least two-thirds of the members of each house.

[xviii] Here is a FAQ from the OMB that contains more technical information and links to all the budget publications released by the state.

GetCoveredNJ: How New Jersey’s State-Based Exchange Will Make Health Coverage More Affordable

Health coverage for all New Jerseyans is essential for protecting public health, especially during a global health crisis. The COVID-19 pandemic — along with the ongoing attempts by the outgoing Trump Administration to derail the Affordable Care Act (ACA) — have put all residents at risk. In an important move towards building a health system that better addresses the needs of New Jersey residents, the state opened its own state-based health exchange (SBE) on November 1, 2020.

The state-based exchange will help to increase access to, and affordability of, health insurance, particularly for low-income residents who, due to decades of discriminatory policies, are disproportionately Black and Latinx. By improving the state’s ability to address racial equity in health and meet the demands of an increasingly expensive health care landscape, the exchange promises to increase coverage rates and better protect public health in the Garden State. This explainer answers frequently asked questions about this new state-based health exchange.

What is a state-based health exchange (SBE)?

A state-based health exchange (SBE) is a platform that offers residents health insurance coverage options while promoting competition among insurance companies, which can lower costs.[1] For residents of New Jersey, the SBE will take the place of the federal Marketplace, This new “Marketplace” allows individuals and families to compare and purchase coverage plans that best support their needs.[2] It also allows those who qualify to get financial support for health insurance from the state or federal government.[3] New Jersey’s new SBE opened for enrollment on November 1, 2020; the enrollment period is open until January 31, 2021.

The advantage of a SBE over the federal exchange is that the state controls all aspects of the Marketplace, from creating and managing its own website for the exchange, to advertising, setting the enrollment period, and determining eligibility for financial support. These moves should also help make coverage more affordable, allow for greater engagement with potential enrollees, and make the system easier to use.

With a SBE, the state is able to tailor the exchange to the unique needs of New Jersey residents, particularly for low-income communities and people of color who have struggled to enroll or afford coverage in previous years. Other states’ experiences with SBEs have shown that, with adequate funding and personnel support, SBEs can better offer personalized assistance and build confidence in the exchange. They can help people feel better protected from the risks of information sharing with federal agencies during times of uncertainty and attacks on immigrant populations from the federal government.[4] In using these strategies, SBEs in other states have successfully reduced their uninsured rates and seen higher rates of insurance amongst younger enrollees.[5]

For the 2021 plan year, New Jersey joins 13 states and the District of Columbia with SBEs, including a number of regional neighbors, such as Pennsylvania, New York, Connecticut, and Maryland.[6]

How does the state-based exchange improve coverage options for New Jersey residents?

Beginning with the 2021 plan year, New Jersey is offering expanded support and financial assistance to make it easier for residents to enroll in coverage. With continued focus on these efforts, the state can continue to improve health care access and affordability for all Garden State residents.

The new SBE will improve health coverage options by:

Expanding the Enrollment Period
New Jersey residents will have double the amount of time to shop for an insurance plan on the exchange compared to people in states using the federal exchange.[7] The state’s enrollment period this year runs from November 1, 2020 through January 31, 2021.[8] This extended opportunity to enroll in coverage will give residents more time to explore their options and choose an appropriate option that best fits their needs. For coverage that begins on January 1, 2021, residents must sign up by December 31, 2020.[9]

Providing Additional Navigator Program Assistance
The Navigator program is a part of the ACA that is designed to help people learn about the exchange and enroll in a plan appropriate for them. Navigators act as liaisons within communities, helping residents understand the exchange website, explore their plan options, and complete eligibility and enrollment forms. Navigators have been shown to be effective in increasing insurance coverage rates and successfully connecting diverse populations.[10]

Over the years, federal funding for the Navigator program has been drastically cut, hurting access and enrollment.[11]Once a state adopts a SBE, it is responsible for funding the program, allowing for greater investment even when federal funding is cut. With the New Jersey state exchange, the state dedicated $3.5 million for 16 organizations across the state to serve as Navigators for the 2021 plan year.[12] This is an increase of $1.5 million over the amount that the state dedicated for the 2020 plan year and is about nine times greater than the $400,000 that New Jersey received when still using a federally-facilitated exchange for the 2019 plan year.[13] The increased funding will be essential to the exchange’s success and to increasing coverage for residents across the state.

Providing Additional Financial Assistance
With the passage of the state exchange in July 2020, New Jersey replaced the recently repealed federal health insurance assessment with one at the state level.[14] This fee on health insurance companies provides funding for a new state-level subsidy on the SBE.[15] This means that, in addition to the federal financial assistance provided through the exchange (known as the Advanced Premium Tax Credit, or APTC), enrollees with incomes below 400 percent of the federal poverty level may also receive additional assistance with their monthly payments. 

Keeping Costs Under Control
States that run their own SBEs are better able to curb premium increases and control costs for their enrollees.[16] Having also established a reinsurance program — which provides payments to health insurers to help mitigate the costs of large claims — additional state subsidies, and regulation of short-term plans, New Jersey can better improve cost control with the SBE and further dampen rising prices for coverage.[17] Without having to pay the user fees for utilizing the federal platform and by shifting the exchange to a more uniquely New Jersey consumer-oriented approach, there remains an opportunity for further improvements in the Marketplace mirroring those seen in other states with SBEs.[18]

How is New Jersey’s new exchange different from the old exchange?

From 2014 to 2019, New Jersey used a federally-facilitated exchange (FFE).[19] Under a FFE, the U.S. Department of Health and Human Services (HHS) handles all Marketplace functions — such as advertising, certifying health plans that meet the required standards for guaranteed coverage (including covering women’s preventative health care, like mammograms), managing enrollment, and determining eligibility — through When using this option, the federal government also collects user fees from states for their services in running and managing the Marketplace.[20] Essentially, the Garden State relied on the federal government to provide “one-size-fits-all” health coverage options.

For the 2020 plan year, New Jersey then transitioned to a state-based exchange on a federal platform (SBE-FP) before fully transitioning to a SBE. Under a SBE-FP, the state government manages Marketplace functions except for eligibility determination and enrollment, which is still done through the platform by HHS. The federal government continued to collect user fees for these services.

From the 2021 plan year forward, New Jersey is using a SBE, which does not require user fees paid to the federal government because it does not use the platform. Overall, for the 2021 plan year, 30 states are using federally-facilitated exchanges, 6 states are using SBE-FPs, and 14 states are using SBEs.[21]

Who will benefit from coverage through the state-based exchange?

There are hundreds of thousands of uninsured New Jersey residents who stand to benefit from a SBE.[22] Most of these residents are likely eligible for health coverage plans under the SBE, as well as for the new financial assistance programs in the SBE.[23]

With additional financial support opportunities through new state subsidies, increased funding for the Navigator program which helps people understand their options and enroll, an extended enrollment period, and future options for expanding eligibility, the SBE will be more accessible than New Jersey’s previous exchanges for residents with low incomes and those who may need additional outreach to help them know about and understand the exchange.

Black and Latinx residents, as well as young adults, make up the largest number of people who may currently be eligible for Marketplace coverage but who have not obtained coverage through the earlier exchanges. This may be due to a lack of knowledge about the exchange or due to inability to afford coverage even after federal financial assistance. Given the expanded benefits of the SBE that will help to address these issues, people of color with low incomes in New Jersey will see the greatest benefits and have the greatest potential for increases in coverage as a group. Additionally, residents who have enrolled in coverage through the exchanges in previous years will gain access to the new state financial assistance and the extended enrollment period.

During the 2020 plan year’s Open Enrollment Period (OEP), about 246,400 individuals purchased plans on the state exchange through the federal platform (SBE-FP) that New Jersey utilized at that time. Of those enrolling in plans, the majority of people were between the ages of 45 and 64, and white. This indicates an ineffectiveness of previous exchange types to enroll younger working adults, a key demographic that is often more difficult to get covered due to cost barriers and perceptions of not “needing” coverage.[24] In 2019, over 390,000, or over 56 percent of the uninsured population, were adults between the ages 19 and 44.[25] With only 40 percent of the enrollees in last year’s exchange representing these age groups, there remains a need for further affordability, outreach, and enrollment efforts.

Also worryingly, Black residents were noticeably underrepresented in previous exchanges, only making up 5 percent of enrollees during the 2020 plan year Open Enrollment Period, while representing 16 percent of New Jersey’s uninsured population. Similarly, Latinx residents are underrepresented, making up only 14 percent of enrollees while representing nearly 50 percent of New Jersey’s uninsured population. While some of the uninsured may be undocumented or qualify for other programs, like NJ FamilyCare, the low rates of enrollment indicate a need for improvement in outreach efforts for communities of color. 

Further, people with low incomes would benefit from the exchange, as many who are uninsured will qualify for subsidized coverage. In 2019, approximately 68 percent of uninsured individuals in New Jersey had incomes that qualified them for subsidies (between 139% and 400% FPL, or between $17,609 and $51,040 for an individual, and between $29,974 and $86,880 for a family of three).[26] Latinx residents are the most represented amongst this group. Based only on income eligibility among uninsured residents (notably, not considering documented status), people of color, and particularly Latinx residents, would see the largest increases in coverage if all who qualified enrolled through the exchange.

 Further, people with low-incomes would benefit from the exchange, as many who are uninsured will qualify for subsidized coverage. In 2019, approximately 68 percent of uninsured individuals in New Jersey had incomes that qualified them for subsidies (between 139% and 400% FPL, or between $17,609 and $51,040 for an individual, and between $29,974 and $86,880 for a family of three).[27] Latinx residents are the most represented amongst this group. Based only on income eligibility among uninsured residents (notably, not considering documented status), people of color, and particularly Latinx residents, would see the largest increases in coverage if all who qualified enrolled through the exchange. 

Who can buy coverage on a state-based exchange?

Currently, in order to buy insurance on the SBE, a person must be a U.S. citizen, a national with primary residence in New Jersey, or a documented immigrant for the entire time covered by the health insurance plan.[28] Incarcerated individuals and residents with affordable health insurance coverage available through other means, such as through employment, a spouse’s employment, Medicare, Medicaid, or the Children’s Health Insurance Program (CHIP), cannot purchase coverage through the SBE.[29]

While undocumented residents cannot purchase coverage through the exchange, certain members of a mixed status household can; this means that, in mixed status households where members have different immigration or citizenship status, a child or spouse may be eligible to enroll even when one or both parents or other members cannot because they have other coverage or are undocumented.[30]

A state does have the power to submit waivers to the federal government to expand eligibility to undocumented residents within the state’s exchange. These waivers are known as 1332 State Innovation Waivers, and they have to be approved by the Centers for Medicare and Medicaid Services (CMS) to take effect. New Jersey does not currently have this in place, but will have the option to submit waiver applications for this purpose in future plan years.

What other options do New Jerseyans have to enroll in health insurance coverage?

 The exchange website provides information about eligibility not only for potential financial assistance on the exchange, but also for the state’s other health insurance programs outside the exchange, including NJ FamilyCare, the state’s Medicaid program.

In order to check eligibility for financial support on the exchange, New Jersey residents can visit GetCoveredNJ ( On the site, consumers can compare potential financial assistance by entering information such as ZIP code, birthdate, income, and information on spouses or dependents. If a person is determined to be eligible to purchase a plan, they can then complete a full application and browse the options for purchase. These options provide information on coverage and final monthly cost after federal and state financial assistance has been taken into account. A plan for 2021 must be purchased by January 31, but Special Enrollment Periods (SEPs) — or times at which a person may become eligible to purchase during the year due to changes in employment and other reasons for loss of coverage — are available throughout the year.

In addition to the plans and subsidies offered on the SBE, New Jersey residents may qualify for NJ FamilyCare ( This program has served as an important buffer during the COVID-19 pandemic for many who lost employer-based coverage during the public health crisis.[31] When checking eligibility on GetCoveredNJ, the site will tell individuals whether they may qualify for the NJ FamilyCare program for low-cost coverage.

The combination of the new SBE and NJ FamilyCare provides opportunities for more New Jerseyans to gain affordable health insurance coverage. As COVID-19 continues to ravage the country, lawmakers need to continue to support and expand these programs to guarantee the best health outcomes for all New Jerseyans.

How can state lawmakers further strengthen the state exchange?

 New Jersey lawmakers still have opportunities to strengthen the state exchange by addressing challenges faced in other states implementing SBEs. Major challenges for SBEs in other states have resulted from: a lack of sufficient funding; ineffective communication about the SBE; technological difficulties; limitations on eligibility; and an unstable political environment surrounding the ACA. In learning from these lessons, New Jersey can better address issues of racial inequities and discouragement amongst uninsured residents most in need of affordable coverage.

Some of the key recommendations include:

Expand Eligibility
The SBE does not currently address the need for coverage options for undocumented residents living in New Jersey. Approximately 225,000 New Jerseyans live in households with at least one person filing taxes using an Individual Taxpayer Identification Number (ITIN).[32] These numbers are issued to those who are ineligible for a Social Security Number, including undocumented immigrants, as well as to those with certain other documented statuses, such as spouses and children of those on an employment visa. While not all ITIN filers or their family members are undocumented, it is estimated that a significant number are.[33] Additionally, not all undocumented individuals have ITINs, expanding the number of people affected by the narrow eligibility policies guiding ACA exchanges. Extending coverage options to undocumented individuals, and further ensuring that those living in households with undocumented individuals are confident in gaining coverage, is essential for increasing New Jersey’s coverage rate and protecting public health.[34]

Prioritize Programs that Address Language Barriers and Outreach
The GetCoveredNJ website is offered in both English and Spanish, with additional assistance available in other languages commonly spoken in New Jersey (such as Chinese, Portuguese, Italian, Tagalog, Korean, Gujarati, Polish, Hindi, and Arabic).[35] A key part of outreach and making sure that residents are getting enrolled will be to ensure that the resources available are meaningfully translated and easily accessible for those residents.[36] If the translations are technically accurate but use jargon or vocabulary that is not used conversationally in a language, the effectiveness of the materials can be weakened. Making sure to include feedback from native speakers will help to address these issues.

Make the Exchange More Easily Accessible for Those with Seasonal or Inconsistent Income
Another challenge of the exchanges lies in ensuring ease of eligibility determination and enrollment for individuals and families that may have inconsistent or seasonal income. People with low incomes often face the challenge of “churning,” or the involuntary movement between coverage systems. This can be especially problematic for people whose incomes qualify them for Medicaid, but with temporary boosts in income, such as those from seasonal or gig work, may find themselves with income that qualifies them for Marketplace coverage instead.[37] This movement between coverage options can lead to periods of interrupted coverage and worsening health outcomes.[38] Additionally, the enrollment forms can prove confusing for those whose income is not consistent or easily predicted for the year. Ensuring that enrollment forms are clear and provide detailed instructions for people with seasonal or inconsistent income on how to complete them is important for getting and keeping those individuals covered. Additionally, finding ways to move people more easily between exchanges and Medicaid when their eligibility changes will help to address this issue.

Anticipate and Plan for Technological Difficulties
When other states opened their SBEs, the experiences and smoothness of the rollout varied. Much of this depended on how much state authorities anticipated difficulties for consumers and sought to address them early and quickly. Extensive testing of and improvements to the website, as well as channels for customer feedback and clear communication when there is an issue needing to be addressed, were key for those states that were successful.

Additionally, ensuring that a clearly-marked “no wrong door” enrollment and eligibility system is in place will help to lessen the technological difficulties faced by people seeking to enroll in coverage.[39] A user-friendly and non-repetitive application structure without bias toward a particular program on the exchange website can ease enrollment into the appropriate coverage option, whether it is the Marketplace, NJ FamilyCare, Medicare, or another program. Without creating these easy-to-use application channels, consumers can become frustrated or confused and leave the enrollment process even when they are eligible for affordable coverage.[40] 

Safeguard Against the Possibility of ACA Overturn
The future of New Jersey’s SBE is under threat by the ongoing efforts to have the U.S. Supreme Court (SCOTUS) overturn the ACA, as it would deem that everything included in the law, including the model for the exchanges, unconstitutional.[41] If the ACA is overturned, state lawmakers would have to pass a law that re-establishes the guidelines for the state-based exchange in order to continue offering plans in this manner. This could create instability in the insurance Marketplace and leave hundreds of thousands of New Jerseyans stranded without coverage. While New Jersey has already passed laws at the state level on many of the protective aspects of the ACA, such the guarantee for coverage for those with pre-existing conditions and a child’s ability to stay on a parent’s plan until age 26, a plan for the continuation of the exchange at the state level if the ACA is overturned is advisable.

End Notes

[1] National Academy of Social Insurance (2011). “Designing an Exchange:  A Toolkit for State Policymakers.” January 2011. Online:

[2] Sometimes, “Marketplace” is used in place of “health exchange,” with the resulting term being “State-Based Marketplace,” or SBM. In this report, I chose to use “State-Based Exchange” (SBE) because this keeps the terminology consistent with the language used by the New Jersey state government. Additionally: small businesses cannot buy plans directly through New Jersey’s GetCoveredNJ. Instead, small group employers can shop for plans through the Small Business Options Program (SHOP), which is required by the ACA to be set up alongside the exchange. More information can be found here: Additionally, discussion of SHOP markets and their relation to SBEs can be found at:  Haase, Leif Wellington, David Chase, and Tim Gaudette (2017). “Talking SHOP: Revisiting the Small-Business Marketplaces in California and Colorado.” The Commonwealth Fund. 18 July 2017. Online: 

[3] A person’s financial assistance will differ depending on income, number of household members, and location of residency. Additionally, the amount a person pays per month will depend on the plan they choose. Plans are divided into “metals”: Bronze, Silver, Gold, and Platinum. These differ in the way that they split the costs, with Bronze plans having the lowest monthly premiums but the highest costs at the point of service, and Platinum plans having the highest monthly premiums with the lowests costs at the point of service. For more information, see: HealthCare.Gov (2020). “How to pick a health insurance plan: The ‘metal’ categories: Bronze, Silver, Gold & Platinum.” Online:

[4] Anderson, Karen M. and Steve Olson (2015). “Chapter 2: The Potential of the ACA to Reduce Health Disparities.” Roundtable on the Promotion of Health Equity and the Elimination of Health Disparities; Board on Population Health and Public Health Practice. Institute of Medicine; National Academies of Sciences, Engineering, and Medicine. Washington DC: National Academies Press; Schwab, Rachel and Sabrina Corlette (2019). “ACA Marketplace Open Enrollment Numbers Reveal the Impact of State-Level Policy and Operational Choices on Performance.” The Commonwealth Fund. 16 April 2019. Online:

[5] National Academy for State Health Policy (2019). “State-based Health Insurance Marketplace Performance.” September 2019. Online:

[6] Kaiser Family Foundation (2020). “State Health Insurance Marketplace Types, 2021.” Online:

[7] One policy that may be implemented under a potential Biden administration could be an expansion of the open enrollment period on the federal exchanges as well.

[8] GetCoveredNJ (2020). “What to Expect.” Online:

[9] GetCoveredNJ (2020). “About Us.” Online:

[10] Texas Health Institute (2016). “Advancing Health Equity in the Health Insurance Marketplace: Results from Connecticut’s Marketplace Health Equity Assessment Tool (M-HEAT).” October 2016. Online:

[11] For 2021, the Trump administration has dedicated only $10 million in total for all of the FFE states. Some states received no funding. Pollitz, Karen and Jennifer Tolbert (2020). “Data Note: Limited Navigator Funding for Federal Marketplace States.” Kaiser Family Foundation. 13 October 2020. Online:

[12] Office of Governor Phil Murphy (2020). “Murphy Administration Announces $3.5 Million Investment in State Navigators to Assist Uninsured and Underserved New Jerseyans With ACA Health Insurance Enrollment.” 16 September 2020. Online:

[13] Office of Governor Phil Murphy (2019). “ICYMI: New Jersey Will Provide $2 Million in Navigator Grants & Outreach Funding to Assist New Jerseyans with ACA Enrollment.” 3 October 2019. Online:; Pollitz, Karen, Jennifer Tolbert, and Maria Diaz (2018). “Data Note: Further Reductions in Navigator

Funding for Federal Marketplace States.” Kaiser Family Foundation. September 2018. Online:; Stainton, Lilo H. (2017). “NJ Loses Federal Funding to Expand ACA Enrollment.” NJ Spotlight. 12 October 2017. Online:

[14] Office of Governor Phil Murphy (2020). “Governor Murphy Signs Legislation to Restore a Key Provision of the Affordable Care Act and Lower the Cost of Health Care in New Jersey.” 31 July 2020. Online:

[15] Holom-Trundy, Brittany (2020). “New Jersey Can Act Now to Make Health Care More Affordable: The Health Insurance Assessment Explained.” New Jersey Policy Perspective. 13 July 2020. Online:

[16] National Academy for State Health Policy (2019). “State-based Health Insurance Marketplace Performance.” September 2019. Online:

[17] Lueck, Sarah (2019). “Reinsurance Basics: Considerations as States Look to Reduce Private Market Premiums.” Center on Budget and Policy Priorities. 3 April 2019. Online:

[18] Corlette, Sabrina, Kevin Lucia, Katie Keith, and Olivia Hoppe (2019). “States Seek Greater Control, Cost-Savings by Converting to State-Based Marketplaces.” Urban Institute. 10 October 2019. Online:

[19] Kaiser Family Foundation (2020). State Health Insurance Marketplace Types, 2021. Online:

[20] Schwab, Rachel and JoAnn Volk (2019). “States Looking to Run Their Own Health Insurance Marketplace See Opportunity for Funding, Flexibility.” The Commonwealth Fund. 28 June 2019. Online:

[21] Kaiser Family Foundation (2020). “State Health Insurance Marketplace Types, 2021.” Online:

[22]  NJPP analysis of U.S. Census Bureau data. U.S. Census Bureau (2020). American Community Survey, 2019 1-Year Estimates. Online:

[23] Ibid.

[24] Munira Z. Gunja, Gabriella N. Aboulafia, and Sara R. Collins (2019). “What Young Adults Should Know About Open Enrollment.” The Commonwealth Fund. 31 October 2019. Online:

[25] NJPP analysis of U.S. Census Bureau data. U.S. Census Bureau (2020). American Community Survey, 2019 1-Year Estimates. Online:

[26] NJPP analysis of U.S. Census Bureau data. U.S. Census Bureau (2020). American Community Survey, 2019 1-Year Estimates. Online: Official Federal Poverty Level (FPL) guidelines for 2020 can be found through the U.S. Department of Health and Human Services at:

[27] NJPP analysis of U.S. Census Bureau data. U.S. Census Bureau (2020). American Community Survey, 2019 1-Year Estimates. Online: Official Federal Poverty Level (FPL) guidelines for 2020 can be found through the U.S. Department of Health and Human Services at:

[28] Norris, Louise (2020). “How immigrants can obtain health coverage.” 18 May 2020. Online:

[29] In 2021, the Internal Revenue Service (IRS) defines “affordable” coverage as coverage that requires an employee to contribute less than 9.83% of household income. See: Norris, Louise (2020). “Is the IRS changing how much I’ll have to pay for my health insurance next year?” 15 August 2020. Online:

[30] Kaiser Family Foundation (2020). “FAQ: Can family members in families with mixed immigration status, where some family members are citizens or lawfully present and others are undocumented, enroll in Medicaid or CHIP or receive help buying coverage through the Marketplaces?” Online:

[31] Holom-Trundy, Brittany (2020). “COVID-19 Job Loss Leaves More Than 100,000 New Jerseyans Uninsured.” New Jersey Policy Perspective. 6 August 2020. Online:

[32] Institute on Taxation and Economic Policy (2020). “Analysis: How the HEROES Act Would Reach ITIN Filers.” 14 May 2020. Online:; Kapahi, Vineeta (2020). “Building a More Immigrant Inclusive Tax Code: Expanding the EITC to ITIN Filers.” New Jersey Policy Perspective. 15 June 2020. Online:

[33] Kolker, Abigail (2020). “Noncitizens and Eligibility for the 2020 Recovery Rebates.” Congressional Research Service. 1 May 2020). Online:

[34] Other states have recognized this same dilemma for undocumented residents and begun taking steps to expand eligibility. For example, California sought to expand coverage through a waiver in 2016, but subsequently withdrew their application when the Trump Administration came into office due to their administration’s anti-immigrantion stance. It is anticipated that these types of efforts to expand eligibility will continue, and New Jersey will be able to learn from the experiences of other states in this process. For information on California’s effort, see Ibarra, Ana B. and Chad Terhune (2017). “California Withdraws Bid To Allow Undocumented To Buy Unsubsidized Plans.” Kaiser Health News. 20 January 2017. Online:

[35] New Jersey Department of Transportation (2012). “NJ Population by Language Spoken.” Online:

[36] Texas Health Institute (2016). “Advancing Health Equity in the Health Insurance Marketplace: Results from Connecticut’s Marketplace Health Equity Assessment Tool (M-HEAT).” October 2016. Online:

[37] Bergal, Jenni (2014). “Millions Of Lower-Income People Expected To Shift Between Exchanges And Medicaid.” Kaiser Health News. 6 January 2014. Online:

[38] Hancock, Jay (2017). “Churning, Confusion And Disruption — The Dark Side Of Marketplace Coverage.” Kaiser Health News. 7 December 2017. Online:

[39] Lueck, Sarah (2020). “Adopting a State-Based Health Insurance Marketplace Poses Risks and Challenges.” Center on Budget and Policy Priorities. 6 February 2020. Online:

[40] Sprung, Andrew (2020). “Op-Ed: NJ’s new state-run health insurance exchange must learn from the mistakes of others.” NJ Spotlight. 23 October 2020. Online:

[41] The case currently being considered that threatens this is Texas v. California. More information about this case can be found on the SCOTUSblog here:

New Jersey Can Act Now to Make Health Care More Affordable: The Health Insurance Assessment Explained

The COVID-19 pandemic is revealing the fragility of our health system: from disparities in providing care to people of color to budget shortfalls that threaten the state’s social safety net. In the midst of these concurrent health and budget crises, New Jersey has the opportunity to expand health coverage by picking up revenue that the federal government is leaving behind through the Health Insurance Assessment (HIA). The HIA would bring in more funding for health care programs, increasing coverage and affordability amongst children and low- and moderate-income families across the state. This explainer answers frequently asked questions about the HIA and how it can improve health care in New Jersey.


What is a Health Insurance Assessment (HIA)?

The Health Insurance Assessment (HIA) is a federal fee on health insurance companies that was established in 2014 to help fund the Affordable Care Act (ACA). This fee is set to expire on January 1, 2021, giving states the opportunity to take on the assessment on insurance providers and capture funding all without raising insurers’ payments.[1] States that implement their own HIA have the ability to spend the funds however they see fit, providing them the flexibility necessary to meet their own unique health care needs. Governor Phil Murphy first proposed the HIA for New Jersey in his Fiscal Year 2021 Budget.[2]

How much revenue would a state-level HIA bring into New Jersey?

The HIA proposed in S2676/A4389 (as amended in committee on Monday, July 27, 2020) is projected to bring in over $224 million in revenue for New Jersey in calendar year 2021.[3] Because the state HIA proposal differs from the existing federal HIA, it will bring in less revenue than if the state had mirrored the federal fee, which would have net the state $567 million in revenue. This lower revenue figure is a result of the state HIA proposal not applying to Medicaid, Medicare Advantage and prescription plans, federal employee and retiree coverage, dental plans, Multiple Employer WelfareArrangements (MEWAs) established before the enactment of the bill, or small-group plans which were included in the federal fee.[4]

Who would benefit from a state-level HIA?

With funds directed toward health care, New Jersey’s children, working families, and low- to moderate-income households would benefit from a state-level HIA. Unlike the federal fee, which was not directed toward specific health care costs, a state-level HIA can help provide the funding needed to expand coverage and address existing inequities in access to quality care.[5] This can be accomplished by using the funds to: provide health coverage for all kids; provide subsidies to low-income residents; create a public plan on the ACA market for families with income of less than 400% of the federal poverty level (FPL), which, in 2020, is $68,960 for a family of two or $104,800 for a family of four.[6] The state could also offset high claims through the reinsurance program, which partially reimburses insurance providers for high-cost claims, helping to stabilize the market and decrease plan prices.

As we have learned during the COVID-19 pandemic, improving access to health care helps to improve public health for all New Jerseyans. By getting more people covered and giving them greater access to quality care, we can reduce the spread and fatalities from infectious diseases like COVID-19 that occur when residents are unable or reluctant to seek health care when needed.

How would a state-level HIA improve public health and increase affordability?

In New Jersey, the state-level HIA would generate revenue to improve health care access and affordability through a variety of mechanisms, including subsidies, reinsurance, tax policies, outreach and enrollment efforts, and other efforts to extend coverage to and improve affordability of health insurance for low- and moderate-income families and the uninsured. The funds can only be used for these purposes, as outlined in S2676/A4389.

The revenue collected could fund initiatives like enrollment efforts for children, so that more affordable coverage options are available to the approximately 80,000 uninsured kids in New Jersey.[7] Revenues could also be used to improve affordability and coverage options for working families, particularly low- and moderate-income families. With revenue from a state-level HIA, New Jersey could provide subsidies to individuals so they can better afford their insurance, create a public plan on the ACA market that will benefit families with income of less than 400% of the federal poverty level (FPL), and/or offset high claims through the reinsurance program. New Jersey should determine how to most effectively use this revenue based on forthcoming affordability studies by the state Department of Banking and Insurance, as mandated by legislation passed in 2019.[8]

How would a state-level HIA impact insurance providers, and what types of insurance plans would be included?

For insurance providers, a state-level HIA would not be a new fee. The federal HIA came into effect in 2014.[9] While it was suspended temporarily in 2017 and 2019, the federal HIA is in place for 2020 and was included in the calculations for the 2020 premium rates. By taking action in 2020, New Jersey would be preserving the current assessment, rather than allowing it to lapse.

The state would redirect the assessment funds currently paid to the federal government by individual insurance and large-group coverage plans back to the state. Medicaid Managed Care Organizations (MCOs) — which contract with the state to provide Medicaid benefits in exchange for payments from the state — small-group plans, MEWAs, and dental plans are currently subject to the expiring federal fee. However, under the proposed state-level assessment, these plans would not be included.

The state also cannot legally collect this assessment from Medicare plans or federal employee or retiree coverage, which are included in the federal HIA. Finally, the fee will not be collected from self-funded plans, which were exempted from the federal HIA.

Would a state-level HIA lead to increases in premiums?

Based on the experiences of other states with their own HIA, New Jersey should not see an overall increase in premiums due to the assessment. This is because it continues the structure of fees that is already in place. Further, increasing affordability and coverage would strengthen and improve New Jersey’s State-Based Health Exchange, which is set to launch in November 2020.[10] An increase in enrollment would help to lower premiums by improving the risk pool; it would also bring more federal money into the state through premium tax credits, a tax credit that the federal government provides to help lower the cost of monthly premiums on the Marketplace for low- and moderate-income individuals.

Have other states introduced state-level HIAs?

Other states have shown that a state-level HIA can generate funds to help improve affordability of health insurance for state residents. Maryland and Delaware both enacted state-level HIAs when the federal fee was temporarily suspended in 2019 to provide funds for market stabilization efforts.[11] Delaware’s and Maryland’s programs partially reimburse insurance providers for high-cost claims, which helps to keep plan costs down.[12] New Jersey currently has a reinsurance program in place that could similarly benefit from a portion of the funding through a state-level HIA.

At least two more states have sought to take advantage of this opportunity for funding affordability measures this year. In June 2020, Colorado became the latest state to enact its own Health Insurance Assessment, which will fund critical measures to make health coverage more affordable. Specifically, the Colorado HIA will provide additional funding for state-subsidized plans for those who are not eligible for premium tax credits or public assistance health care programs, payments to carriers to help lower premiums for those who already receive a premium tax credit, and their reinsurance program. The legislation will particularly help those families who receive assistance but still find health insurance unaffordable, as well as those who are ineligible for premium tax credits under federal law, including those without sufficient documentation.[13] New Mexico introduced a similar bill in February. This legislation proposed creating a Health Care Affordability Fund and using the revenue to decrease premiums for residents across the state.[14]

Over the last several years, New Jersey has emerged as a national leader in expanding health coverage and keeping insurance affordable amidst ongoing attacks on the Affordable Care Act by the federal government. Establishing a state-level HIA is the natural next step for New Jersey to improve public health and ensure all residents can lead healthy lives.

End Notes

[1] Internal Revenue Service, Treasury. 2020. “Affordable Care Act Provision 9010 – Health Insurance Providers Fee.” Online: The fee is repealed for all calendar years after December 31, 2020.

[2] Office of Governor Philip Murphy. 2020. 2021 Budget in Brief. Pg. 26. Can be read online here:

[3] State of New Jersey, 219th Legislature. 2020. “An Act concerning an assessment on entities authorized to issue health benefits plans and supplementing Title 17B of the New Jersey Statutes.” Online: Note that this estimate was provided by the Department of Banking and Insurance (DOBI). The Office of Legislative Services wrote a fiscal impact note on the bill that estimates $390 million in revenue. This appears to be a possible error, as it is significantly higher than previous estimates that had included the now exempted small-group plans, MEWAS, and dental plans.

[4] Dorn, Stan. 2020. “A Golden Opportunity for States to Make Health Insurance More Affordable: Rapid Action Required.” The National Center for Coverage Innovation. Families USA. Online:

[5] The revenues from the federal fee were used to help cover costs of the establishment and expansion of the ACA, but their specific use for affordability purposes is not legally required.

[6] Office of the Assistant Secretary for Planning and Evaluation, U.S. Department of Health and Human Services. 2020. “HHS Poverty Guidelines for 2020.” 8 January 2020. Online: See “A chart with percentages (e.g., 125 percent) of the guidelines (PDF)” on the right of the page.

[7] Castro, Raymond. 2019. “It’s Time for All Kids Health Coverage.” New Jersey Policy Perspective. Online:

[8] The data could come from a study on methods of improving affordability of coverage that was commissioned through New Jersey’s Department of Banking and Insurance (DOBI), which regulates the insurance market in the state. This study was commissioned in the FY 2020 Appropriations Act, which can be found here: Please see pg. 28, beginning at line 20: “[T]he Commissioner of Banking and Insurance shall commission an actuarial and/or microsimulation analysis of options for the State to provide more affordable health coverage in the individual market for both consumers who are currently eligible for federal financial assistance and those who are not, while reducing disruptions in coverage affordability for consumers who become ineligible for Medicaid due to an increase in the minimum wage or who will lose federal subsidies in the Marketplace or exceed the income limits for federal subsidies in the Marketplace for other reasons.”

[9] Internal Revenue Service, Treasury. 2013. “Health Insurance Providers Fee.” Federal Register 78 (230): 71476. Document number 2013-28412, Available online:

[10] Office of Governor Philip Murphy. 2019. “Governor Murphy Announces New Jersey to Transition to State-Based Exchange.” Online:

[11] Levitis, Jason, John-Pierre Cardenas, Steven Costantino. 2020. “Considerations for a State Health Insurer Fee Following Repeal of the Federal 9010 Fee.” State Health & Value Strategies. Available online:

[12] Delaware’s “The Delaware Health Insurance Individual Market Stabilization Reinsurance Program” (Delaware Code, Title 18, Chapter 87, § 8703) can be found here: Maryland’s (Insurance Article, §6-. 102.1 Annotated Code of Maryland) can be found here:

[13] Colorado’s SB20-215 can be found here:

[14] New Mexico’s House Bill 278 can be found here:

Strengthen and Expand New Jersey’s Earned Sick Days Law

This fact sheet was produced by the New Jersey Time to Care Coalition.
To read a PDF version of this fact sheet in English and Spanish, click here.

Why workers need emergency Earned Sick Days?

One of the most basic steps to protect public health during a pandemic is for people who are sick, or who have been exposed to the virus, to quarantine themselves, and the CDC recommends staying home for 14 days after possible exposure.[1] But that’s not always possible for essential workers unless they have access to enough paid sick days. New Jersey’s current earned sick day law provides only five days a year and employers can require that workers wait 120 days after the first day of work, and that they earn their time before they can use it. Employers can also ask for a doctor’s note for three or more consecutive days of absence. These burdensome measures make it harder for workers to access their paid sick days so that they can take care of their own health, stay home and protect others from exposure. We need to do more to protect essential and frontline workers and stop the spread of contagion, now or in the future, by strengthening and expanding our earned sick day law. 

The need for paid sick days, especially during a pandemic, was so evident that the U.S. Congress took action for the first time ever, passing the Families First Coronavirus Response Act (FFCRA) which provides workers with 10 paid sick days for reasons related to COVID-19.[2] However, the new federal law exempted employers with over 500 employees and virtually all health care workers. And while health care workers are included in the NJ Earned Sick Leave law, per diem health care employees are not. That means an estimated 58 percent of New Jersey workers do not have access to any of the federal protections including emergency paid sick days.[3] Many of these workers are low paid, working at grocery store chains, big box stores and warehouses, and some have reported working in unsafe conditions, potentially exposed to sick coworkers and members of the public. By making changes to improve the state Earned Sick Leave law, we can ensure all essential and frontline workers have access to both basic and emergency paid sick days. 

What does bill S2453 do?

Senate Majority Leader, Loretta Weinberg, the champion of the original Earned Sick Leave bill, has sponsored bill S2453 which improves the New Jersey Earned Sick Leave law by: 

  • Providing essential workers with 15 emergency paid sick days available immediately during a declared state of emergency. This would be for future possible pandemics or other emergencies and for the current COVID-19 emergency it is retroactive to March 1, 2020. 
  • Increasing the number of base earned paid sick days from 5 to 7 days.
  • Removing the burdensome 120 waiting period from a worker’s first day and when the employer must allow them to use the paid sick time that they have earned. As workers accrue their leave they should be able to take it. 
  • Including per diem health care employees (removes their previous carve-out from coverage). 
  • Changing employers’ ability to require a doctor’s note on the third consecutive day of absence to the fifth consecutive day and allows for telehealth documentation. 
  • Adding 2 days bereavement time as an allowable use under the law.

End Notes




FAQs: The Public Charge Rule Change

UPDATE: On Monday, January 27, 2020 the U.S. Supreme Court voted 5-4 to allow the public charge rule change to take effect.

New Jersey is home to the nation’s third largest share of immigrants, both documented and undocumented, who contribute greatly to the social and economic fabric of the state. Under the Trump administration, New Jersey’s immigrant residents face greater threats that put their health, safety, and future prosperity at risk. One such threat is the federal administration’s attempt to change the “public charge” policy, an inadmissibility test designed to identify people who may need public benefits in the future.[1] If the test determines that someone is likely to become a public charge, they would be denied admission to the United States or not be allowed to adjust their immigration status to lawful permanent residence (i.e. obtain a green card).[2] This brief answers frequently asked questions about the proposed public charge rule change.

It is important to note that immigrant families should not be fearful but educated on the issue of public charge so that they can make the best decision for themselves and their families.

What is the current public charge policy?

The public charge policy is a test that determines whether an immigrant is likely to use public cash assistance or institutional long-term care. The test applies to those who are applying for entry to the U.S., or for those seeking lawful permanent residence. Additionally, immigrants with green cards who are outside of the United States for more than six months could be subject to the public charge rule when they return.

The programs considered in the test are federal and state public cash assistance programs including Temporary Assistance for Needy Families (TANF), Supplemental Security Income (SSI), General Assistance, and institutional long-term .[3]If deemed a public charge, a person can be barred from entering into the U.S. or from obtaining lawful permanent residence status (LPR).  (For more on which specific state programs are considered under the rule, see section, “Would the public charge rule change immigrants’ access to New Jersey programs”).

Who is subject to public charge?

The public charge rule primarily applies to people seeking to immigrate to the U.S. or adjust their immigration status to Legal Permanent Residents (LPRs) or green card holders through family-based petitions. It also will affect certain people seeking to extend or adjust their non-immigrant status (i.e. tourists) while in the U.S. [4]

Who is not subject to public charge?

Naturalized U.S. citizens are not subject to a public charge inadmissibility determination, nor are immigrants with lawful permanent residence status (LPR). Additionally, humanitarian immigrants, such as survivors of trafficking, domestic violence or other serious crimes, special immigrant juveniles, and certain other immigrants are not subject to a public charge test.

Other immigrants who are not subject to a public charge test include those who apply for:

  • Deferred Action for Childhood Arrivals (DACA) renewals
  • Refugee status
  • Asylum status
  • Temporary Protected Status (TPS)
  • T and U visas (for victims of human trafficking and serious crimes or witnesses of certain crimes)

Which agencies enforce public charge?

The public charge policy is enforced by both the Department of Homeland Security (DHS) and the State Department. DHS is responsible for administering requests for adjustment of status and visas inside the United States and the State Department is responsible for handling similar requests made outside the U.S.

What would change under the new public charge rule?

In August 2019, the Trump administration proposed a radical change in the public charge policy that would expand the scope of public benefit programs considered in a public charge determination. The proposed rule change, which was scheduled to take effect on October 15 2019, includes public benefits programs such as the Supplemental Nutrition Assistance Program (SNAP), Medicaid, and certain subsidized housing programs.[5] The rule would apply a similar test to people seeking to extend or change their temporary visas, such as students or temporary workers.

Federal courts have temporarily blocked implementation of the rule for immigrants within the U.S., which is administered by the Department of Homeland Security. One court found that the rule raised serious questions about whether it violates the Equal Protection clause as well as the Rehabilitation Act, which prohibits discrimination against individuals with disabilities. The courts also found that the rule would cause immediate irreparable harm to states, counties, and organizations serving immigrants and their families.[6] In response, the Trump administration appealed these decisions. 

However, the court’s actions do not apply to public charge determinations made outside of the U.S. by the State Department. The new public charge rule will be enforced by the State Department once new forms are finalized.

What is the public charge policy for immigrants who have applications processed outside the United States?  

Outside the U.S., immigration officials within the State Department oversee visa applications and adjustment of status applications. In January 2018, the department revised its Foreign Affairs Manual (FAM) to change how immigration officials should weigh the affidavit of support that many U.S. sponsors must provide to demonstrate that an applicant will not become a public charge. In the past, an affidavit of support was generally considered enough to outweigh any public charge barrier.[7]

The FAM instructions also introduced other factors and thresholds that can be considered in a public charge test, such as new income thresholds, age, health, and health insurance considerations. Although it did not change the public charge definition, it allows officers to consider the use of any benefits by the applicant, family members or sponsors, thereby giving State Department officials more discretion to decide who is denied or approved.[8] 

In fiscal year 2019, the State Department denied 5,343 immigrant visa applications for Mexican nationals based on their likelihood of becoming a public charge. This is a substantial increase from just seven denials under the last full year of the Obama administration.[9]

What other factors are used to determine public charge outside the United States?

The public charge test is based on a “totality of circumstances” assessment. This includes the applicant’s age, health, family status, income and resources, education and skills, and the validity of an affidavit of support. Positive factors can be weighed against negative factors, and no one factor will determine the outcome.

The following characteristics are considered under the Foreign Affairs Manual (FAM):

  • Income, specifically whether the applicant earns less than 125 percent of the federal poverty level
  • Age, specifically whether the applicant is 18 or younger or 62 and older
  • Health, including complications that could interfere with the ability to work or care for oneself, increase future medical expenses, or require institutionalization
  • Education, specifically whether the applicant has less than a high school degree
  • Family size
  • Prior history of using public benefits

Would the public charge rule change immigrants’ access to New Jersey programs?

Immigrants, regardless of status, who participate in state-funded programs — with the exception of WorkFirst NJ, which includes TANF and General Assistance — would not have their benefits considered under the public charge rule because the programs are state funded.

In New Jersey, immigrants who are undocumented and meet certain criteria are eligible for the following programs: in-state tuition, state financial aid, and NJ FamilyCare. These benefits would not be considered in the DHS or State Department public charge test.

Additionally, if New Jersey joins other states in expanding access for undocumented immigrants to obtain state health care, driver’s licenses, or other state-funded programs, these benefits would not be counted under the public charge rule.

How would the public charge rule change harm immigrant families?

The public charge rule is purposely complicated to instill fear in immigrant families, even if the new rule does not apply to them. As a result, many immigrants and their U.S. citizen family members have unenrolled or foregone public services that they are entitled to.[10] This is also known as the “chilling effect” of the public charge rule change. In New Jersey, it is estimated that 690,000 people — including 250,000 children — may be harmed by the chilling effect. This represents 34.5 percent of the state’s immigration population.[11]

According to a survey by the Urban Institute, one in every seven adults in immigrant families avoided signing up for a public benefit program in 2018 because of the public charge rule’s chilling effect.[12] In addition, half of health care centers around the nation reported that immigrants have declined to enroll or re-enroll themselves or their children in Medicaid in the past year for fear of the public charge rule. This was found to be especially true among immigrant pregnant women, according to the Kaiser Family Foundation.[13]

To reduce the negative impact that the chilling effect has on immigrant families and their U.S. citizen family members, it is important for community organizations and state agencies to conduct outreach, clarifying what the public charge rule is and what it means.

Would  the public charge rule change harm New Jersey’s economy?

The new public charge rule, by harming immigrants and their families, also damages the broader state economy. As fewer immigrants sign up for health and nutrition programs, New Jersey can expect to lose $367 million in federal benefits.[14] The loss of these benefits could, in turn, harm local communities. Businesses such as grocery stores and supermarkets will likely lose income due to a decrease in SNAP enrollment.[15] Similarly, hospitals and health care providers will likely lose revenue with reduced enrollment in Medicaid and the Children’s Health Insurance Program (CHIP).

Overall, if the public charge rule change takes effect, New Jersey’s GDP is estimated to decline by as much as $709 million, with a related loss of 4,826 jobs and $38 million in lost state tax revenue, according to an analysis by the Fiscal Policy Institute.[16]


NJPP would like to thank Tanya Broder from the National Immigration Law Center (NILC) for reviewing this FAQ.

End Notes

[1] Protecting Immigrant Families. Updated: What Advocates Need to Know Now. Public Charge FactSheet. October 2019.

[2] Ibid 1.

[3] Ibid 1.

[4] Kaiser Family Foundation. Changes to “Public Charge” Inadmissibility Rule: Implications for Health and Health Coverage. August 2019.

[5] Ibid 1.

[6] Protecting Immigrant Families. Conference Call. October 2019.

[7] Ibid 6.

[8] Ibid 6.

[9] Hesson,Ted. Exclusive: Visa denials to poor Mexicans skyrocket under Trump’s State Department. Politico,  August 2019.

[10] New Jersey Policy Perspective. New Trump Regulation Puts New Jersey’s Health at Risk. August 2019.

[11] Fiscal Policy institute. Only Wealthy Immigrants Need Apply: The Chilling Effects of “Public Charge”. November 2019.

[12] Bernstein H. et. al. One in Seven Adults in Immigrant Families Reported Avoiding Public Benefit Programs in 2018. Urban Institute. 

[13] Tolbert. S. etl. Al. Impact of Shifting Immigration Policy on Medicaid Enrollment and Utilization of Care among Health Center Patients. Kaiser Family Foundation. October 2019.

[14] Ibid 11.

[15] Ibid 11.

[16] Ibid 11.

Driver’s License Expansion Would Pay for Itself and More

Expanding access to driver’s licenses to all New Jersey residents, regardless of immigration status, would make the state’s roads safer and its economy stronger. The proposal would also pay for itself by bringing in tens of millions of dollars in recurring revenue for the state’s general fund, according to an NJPP analysis of new data from the New Jersey Office of Revenue and Economic Analysis. This is a win-win for drivers, working families, and the state’s finances.

Over the first three years of implementation, driver’s license expansion is projected to generate $21 million in revenue from permit, title, and driver’s license fees. Once fully implemented, new drivers will generate $90 million annually from registration fees, the gas tax, and the sales tax on purchases made at gas stations and motor vehicle and auto parts retailers.[1]

New Jersey is one of the most diverse states in the nation and is home to approximately 484,000 undocumented residents, representing 5.4 percent of the state’s total population. Of the nearly half million undocumented residents, 91.5 percent are of driving age (16 and older). Based on the experiences of the twelve states that have already expanded access to driver’s licenses, NJPP estimates that 222,000 residents would obtain a drivers license during the first three years of implementation. This equates to a 3.5 percent increase in the total number of people in New Jersey with a driver’s license.[2]These new drivers would pay a collective $6 million in permit and license fees over the first three years of implementation.

These drivers are also estimated to purchase 80,000 cars over the same three year period, representing a three percent increase in the number of vehicles registered.[3] Title and plate fees associated with these new vehicles will generate almost $15 million in revenue.

According to NJPP’s analysis of new data from the New Jersey Treasury Department’s Office of Revenue and Economic Analysis, driver’s license expansion would also generate the state tens of millions of dollars in recurring revenue as new drivers register their vehicles and purchase gasoline as well as auto parts and associated retail goods at gas stations and auto part dealers. Using the Treasury’s data on sales taxes collected from gasoline stations and auto parts stores, combined with revenue figures from the petroleum gross receipts and motor fuels tax, NJPP projects that driver’s license expansion would generate $90 million annually in sales and gas tax revenue. Revenue from the gas tax would go directly to the Transportation Trust Fund, which currently collects 41.5 cents per gallon of gas sold. This will make the state’s gas tax collections less volatile and could lower the odds of a future gas tax increase.

In addition to making New Jersey’s roads safer and its economy stronger, expanding access to driver’s licenses would more than pay for itself, generating $90 million in tax revenue every year.


Number of Undocumented Immigrants of Driving Age and the Number Who would obtain a driver’s license during the first three years of implementation

There are three estimates used to quantify the number of undocumented immigrants: 452,000 (Center for Migration Studies), 475,000 (Pew Hispanic Center), and 526,000 (Migration Policy Institute). The average of the three estimates is 484,000. There are two estimates for the percent of New Jersey’s undocumented immigrants who are 16 years or older: 90 percent (Center for Migration Studies) and 93 percent (Migration Policy Institute). NJPP took the average of the two numbers (91.5) and multiplied that by average number of undocumented immigrants to get the estimated number of undocumented residents who are of driving age: 444,000. We assume that New Jersey would have a high-end participation rate after three years, similar to Illinois’ rate of 47 percent. We project New Jersey’s rate will be slightly higher at 50 percent given driving is necessary to getting around the state’s sprawling suburbs. The Fiscal Policy Institute (FPI) similarly uses this take up rate in their projections for New York. Thus, we multiply the number of undocumented residents of driving age by the take up rate of 50 percent to project that approximately 222,000 undocumented immigrants who would obtain a driver’s license during the first three years of implementation.

Number of new cars on the road

To analyze new cars on the road after driver’s license expansion, NJPP projects similar automobile purchases and new licenses as FPI projected for New York. Multiplying FPI’s take-up ratio by the number of New Jersey residents that would get a driver’s license during the first three years of implementation projects 80,000 new cars. Note that new cars means new car purchases, not brand new automobiles. For more information, see: Expanding Access to Driver’s Licenses: Getting a License Without Regard to Immigration Status and Expanding Access to Driver’s Licenses: How Many Additional Cars Might Be Purchased? (

Numbers for Annual Revenue  

The annual revenue includes: registration fees, gas station and auto part sales tax revenue, and gas tax revenue. The projected 80,000 new cars after three years represents a 2.86 percent increase in registered cars in New Jersey. We multiplied the 2.86 percent increase to the latest figures on gas station and auto part retailer sales tax revenue and to annual gasoline purchases subject to the state gas tax (including petroleum gross receipts and motor fuels).

Revenue from the first three years of implementation

Regardless of a person’s age, first time drivers must pay a $10 dollar permit fee. NJPP multiplied this fee by 222,000, the number of estimated new drivers during the first three years of implementation. We also include revenue associated with title and license plates fees. We multiplied the one time fee of $46.50 times the number of estimated new cars, 80,000. Finally, we multiplied the number of people who would get a driver’s license during the first three years of implementation, 222,000 by $18 the price of a basic driver’s license according to Assembly bill A4743.

End Notes

[1] Does not include the revenue from sales tax of new car purchased.

[2] NJPP divided the estimated number of people who would get a license during the first three by the number of licenced drivers in NJ. Highway Statistics 2016.

[3] See Methodology.

Why New Jersey Should Expand Access to Driver’s Licenses

As New Jersey welcomes 2019 with the passage of a $15 minimum wage and paid family leave expansion, it’s time to shift focus to another policy issue that’s critical to the economic security of working families: making New Jersey the 13th state in the nation to allow all its residents to apply for driver’s licenses, regardless of their immigration status. There is a proposal in the Legislature — A4743 — that would lower the barriers to getting a driver’s license, impacting 719,000 New Jersey residents and benefitting not only undocumented immigrants, but those who earn less than $25,000 a year as well as those reentering society from the criminal justice system. This policy will increase public safety, empower workers and families in every corner of the state, boost the state’s economy, and contribute over $9 million in revenue to the state in the form of registration and licensing fees.

In New Jersey, having a car is essential to fully participating in the economy. No matter where you live in the Garden State — with very few exceptions — driving is necessary to get to work, pick kids up from school and take them to the doctor, shop for groceries and complete all the other errands that fill up the day. The ability to drive legally and safely is central to a vibrant New Jersey economy where everyone can work, get around and provide for themselves and their families.

Based on the experiences of other states that have implemented driver’s license expansion, NJPP estimates that 338,000 New Jersey residents will apply for a license during the first three years of implementation.

Restricting who is allowed to legally drive also has a chilling effect on the families and children of those who do not have the documents necessary to receive a driver’s license. In New Jersey, 168,000 children have undocumented parents who cannot drive them to and from school, their doctors appointments, sports games and practices, and other activities and errands parents make with their children. Instead, they are left relying on underfunded transit systems and spending money on taxis or Uber/Lyft drivers when that money could be going toward their children and spent in their local communities.

The proposed legislation, A4743, would create two categories of driver’s licenses and identification cards:

  • REAL-ID: a REAL ID Act-compliant driver’s license and identification card that residents can use to travel domestically on an airplane and enter federal buildings.
  • Standard License: a non-REAL ID basic license and identification card that would not be valid to board an airplane or to be used for certain official federal purposes. However, the non-REAL ID license would be valid for driving purposes and a form of identification.


What is REAL ID?

In 2005, the Congress passed and then-President George W. Bush signed the REAL-ID Act, legislation requiring driver’s licenses and identification cards to meet certain requirements set by the federal government to control who could board an airplane and hence make the country “more secure.” Specifically, the Real-ID Act calls for proof of legal presence in the United States and identity, a social security number, and state residency. The law also requires that applicants’ personal data and documents be entered into a state government database that is accessible to the federal government. These requirements are similar to the six-point system New Jersey currently has with the exception of the requirement to retain or scan documents into a DMV database. Despite there being no data that suggests the provisions in this law actually make driver’s licenses and identification cards more secure, the federal government is set to fully implement and enforce the REAL ID Act over the next two years.

States are not required to have their driver’s licenses and identification cards comply with the REAL ID Act, as there is no legal or financial punishment, but non-compliance will create a burden for residents of those states as they will need additional documentation, such as a passport, to fly domestically or enter federal buildings. The federal government will start enforcing the provisions of the REAL ID Act in New Jersey on October 10, 2020.  

Is New Jersey REAL ID Compliant?

No, New Jersey’s licenses and identification cards are not compliant with the REAL ID Act, but state officials have signaled that they hope to change that in 2019. As of February 2019, 38 states are compliant, as well as Washington DC, Puerto Rico, and Guam. New Jersey is one of twelve states that is not compliant, and all twelve have received enforcement extensions into 2019 and 2020.

Who will benefit from A4743?

If New Jersey becomes REAL ID compliant without creating a standard license as an alternative option, many residents will be impacted by this change. The federal REAL ID Act’s requirements will make driver’s licenses out of reach for many, including undocumented immigrants, individuals earning less than $25,000 a year, and people reentering society from prison.

To ensure these residents, who may not have the funds and necessary documentation for a REAL ID, are able to legally drive and fully participate in society, New Jersey must create an alternative license. This is the only way to ensure that all New Jersey residents can continue to have access to a driver’s license and be able to protect their privacy.

Sponsored by Assemblywoman Annette Quijuano, A4737 would ensure New Jersey is compliant with the REAL ID Act while also creating an alternative standard license.

Creating an alternative standard license would benefit the following people:

  • Citizens who do not want their information stored in a federal data system
  • Those who do not need a license to travel domestically
  • Certain senior citizens
  • Survivors of domestic violence who are unable to retrieve all their documents
  • Formerly incarcerated individuals
  • Low-income individuals and families
  • Transgender people whose documents may not accurately match their gender identity
  • Immigrants, including undocumented immigrants
  • Both citizens and noncitizens who have lost essential documents and have not yet obtained replacements because of cost or administrative delay


New Jersey has an opportunity to be REAL ID compliant and allow other qualified New Jersey residents the opportunity to be trained, licensed, and insured. It is a common sense policy that would make the Garden State’s road safer, allow children to arrive safely to school, help local economies to prosper, and establish a modeled system for the nation to follow.




  1. Estimating how many people who are undocumented would be impacted

To estimate the number of people who would get licenses if New jersey allows undocumented immigrants to apply, we start with the number of unauthorized immigrants who are 18 years and older. We use the experience of other states to predict the “take-up rate” for New Jersey—the share of unauthorized immigrants who would get licenses if the policy was changed.

The number of unauthorized immigrants is drawn from the Center for Migration Studies (CMS), PEW Hispanic Center, and Migration Policy Institute Estimates of the Unauthorized Population; we take the average of the three estimates which is 484,000 and multiply that by the percentage of undocumented population that is 18 years and older,88 percent to give us the estimated number of folks who would benefit, 425,920.

The share of age-eligible unauthorized immigrants who get a license within three years of implementation of the policy ranges from about a quarter (25 percent in Nevada) to about a half (47 percent in Illinois), according to the Fiscal Institute Policy. In New Jersey, we assume that the policy would be implemented well, and that the take-up rate would be at the top of this range. Our estimate is that (47 percent) of age-eligible unauthorized immigrants would get a license.

  1. Calculating how many people earn less than $25,000

According to the IPUMS American Community Survey 2017, 1-year sample, an estimated 2.4 million U.S. citizens adults including naturalized citizens in New Jersey reported earning less than $24,999 and based on a study at least 12 percent of voting-age American citizens earning less than $25,000 per year do not have a readily available U.S. passport, naturalization document, or birth certificate. Hence, we multiple 2.4 million times 12 percent.

  1. Calculating how many people reenter from the criminal justice system

According to the latest outcome report, “State of New Jersey Department of Corrections
State Parole Board Juvenile Justice Commission (2016), 10,835 inmates were released in 2011. Based on the Motor Vehicles Affordability and Fairness and Task Force Final Report ( studies show that at least 50 percent of those released out prison do not have access to identification. Thus, we multiplied 10,835 times 50 percent.

  1. Calculating license revenue:

Under A4743, the cost of obtaining a “standard basic license” is $18 and an initial permit is $10 for a license, totaling $28. Under the first outcome, the three potential groups total is multiple by the 47 percent “take-up rate” (see number 1 for more). The second outcome only includes the undocumented population times the 47 percent “take-up rate” times the price of license plus permit. The recurring revenue calculates only the revenue for renewing the license.

New Jersey’s $15 Minimum Wage Proposal

Earlier this month Governor Murphy and legislative leaders reached a deal to raise the state’s minimum wage to $15 by 2024, for most workers. Seasonal and small business employees will reach $15 by 2026, while farm workers will reach $15 by 2027, but only if the labor commissioner and secretary of agriculture sign off on it. The proposal is far from perfect — and unnecessarily complex as all work should be valued equally — but nonetheless it will have a tremendous positive impact for the Garden State’s low-paid workers and broader economy. Further, the minimum wage will remain indexed to inflation, and despite a slower phase-in for some, the legislation provides a pathway for all workers to reach the full minimum wage by 2030.   

The Basics

NJPP has long-advocated for a $15 minimum wage for all workers to combat poverty and ensure all New Jerseyans can better support themselves and their families. The current minimum wage of $8.85 fails to reflect the state’s high cost of living and helps explain why four in ten New Jerseyans qualify as working poor, according to the United Way ALICE report. Raising the minimum wage to $15 an hour will boost the take home pay of nearly one million workers and inject billions of dollars into the state economy as families have more disposable income to spend in their local communities.

Assembly bill A15 is the current proposal to raise the minimum wage to $15 and is the culmination of a year-long deliberation between Governor Murphy, Senate President Sweeney, and Assembly Speaker Coughlin. The bill passed the Assembly Labor Committee on Thursday, January 24, and is being fast-tracked through the Legislature — the bill could pass both chambers and be signed by Governor Murphy by the end of the month.

The proposal makes new distinctions in New Jersey’s wage and hour law,  so workers in certain sectors — in particular farmworkers, seasonal workers and employees at small businesses with five employees or less — will have to wait longer to reach a $15 minimum wage. Again, it is important to note that for these workers, the bill provides a pathway to parity, so all workers will have the same minimum wage from 2030 onward. This is critical because it prevents workers on the slower phase-in schedule from earning a sub-minimum wage in perpetuity. Instead, they will just be on a slower phase-in schedule but will eventually catch up to the full minimum wage and its yearly cost of living increases.

Unfortunately, this does not apply to tipped workers, as is detailed below, and further advocacy is necessary on behalf of both tipped and farm workers to ensure that the dignity of their work is fully valued and properly honored.

Phase-In Schedule (For Most Workers)

As specified in the bill, the current minimum wage of $8.85 will rise to $10.00 an hour on July 1, 2019, and to $11.00 an hour on January 1, 2020. From then on, the minimum wage will increase by $1.00 per hour every January 1st until it reaches $15.00 on January 1, 2024. Every year thereafter, the minimum wage will receive an inflationary bump, tied to the Consumer Price Index (CPI).

Secondary Schedule (Seasonal and Small Business Workers)

For seasonal workers, defined as “those who are employed by an employer that is a seasonal employer or non-profit or government entity, and not outside of the period of that year commencing on May 1 and ending September 30,” and employees at businesses of five workers or fewer, the minimum wage will rise at a slower rate and reach $15.00 an hour on January 1, 2026. The next two years will act as a catch up period, so that by January 1, 2028 these workers will earn the same minimum wage as everyone else, including cost of living increases. From 2028 onward, these workers will earn the full minimum wage and will be eligible for the same CPI increases as the general minimum wage.

Farm Workers

With regard to farm workers, the minimum wage for will increase to $12.50 an hour by January 1, 2024. At that juncture, a joint decision will be made by the state labor commissioner and secretary of agriculture on whether to recommend that the minimum wage for farm workers should continue to increase. If the two agree that the minimum wage should continue to increase, it will rise to $15.00 per hour by 2027, and will reach parity with all other workers by 2030 If the two parties cannot come to an agreement, a third member — as proposed by the governor and approved by the legislator — would break the tie and affirm the decision. If the state labor commissioner and secretary of agriculture make a recommendation to prevent further increases, the legislature would have to affirm that decision by passing a concurrent resolution.

While the different schedule for farm workers is less than ideal, it is important to note that absent both a recommendation not to continue on the specified path by the state labor commissioner and secretary of agriculture, and a concurrent resolution adopted by both houses of the legislature implementing the recommendation, the increases to $15 by 2027 remain in effect, as will further increases to catch up to the general minimum wage.

Tipped Workers

With regard to tipped workers, their minimum wage will increase to $5.13 per hour by 2022, where it will remain until 2024. Then, beginning in 2025, the wage will increase in concert with the general minimum wage, remaining $9.87 lower than the general minimum wage in perpetuity. NJPP has advocated for a full phase-out of the tipped wage as it improves the work experience for employees, guarantees a level of income that enables them to reliably budget for their lives, and very clearly makes a tip a tip again rather than being a critical portion of earnings that is necessary to afford the most basic of needs. We will continue to advocate for a full phase-out of the tipped wage, as is the law in seven other states, so that the labor of tipped workers is properly recognized and valued.