If you run a retail chain, a restaurant group, a home care agency, or any business with 50 or more workers in New Jersey, the state can now send you a bill based on how many of your employees are enrolled in Medicaid — even though you have no legal way to find out who they are. That's not a hypothetical. It's the law in New Jersey as of July 1, 2026, and it's the first assessment of its kind to actually take effect in the country.
The law, known as A5324, imposes a new annual per-employee assessment on employers whose workers rely on the state's Medicaid program for health coverage. It's a striking shift in how a state can fund a public benefits program, and if you employ people in New Jersey — or run a multi-state business that might soon face a copycat law — you need to understand how it works, what it will cost, and how to prepare your books for it.
What A5324 Actually Does
Signed by Governor Mikie Sherrill, A5324 creates an annual assessment on employers that have at least 50 employees (or their dependents) enrolled in New Jersey's Medicaid program. The state expects the assessment to generate roughly $145 million a year, money it's using to help cover the growing cost of the joint federal-state Medicaid program.
The industries most exposed are the ones you'd expect from a lower-wage, high-headcount workforce: retail, hospitality, food service, home care, logistics, and healthcare support. If a meaningful share of your staff earns close to minimum wage and doesn't have access to (or can't afford) employer-sponsored health coverage, this law was written with your payroll in mind.
The Tiered Fee Structure
The assessment scales with how many Medicaid-enrolled employees (and their dependents) a company has on the books. As of the law's July 2026 effective date, the per-person annual fees are:
| Medicaid-enrolled employees | Fee per person, per year |
|---|---|
| 50–249 | $325 |
| 250–499 | $525 |
| 500+ | $725 |
Notice that this isn't a flat per-employer fee — it's per person, and the rate itself climbs as your headcount of Medicaid-enrolled workers grows. A company with 300 employees on Medicaid doesn't just pay more in total; it pays a higher rate per person than a company with 100. For a mid-size retailer or hospital system with several hundred lower-wage workers on Medicaid, that math can add up to a six- or seven-figure annual liability with very little warning.
It's also worth being precise about what's being counted. The fee applies both to employees themselves and to their dependents who are covered through the state Medicaid program — so a single low-wage employee with a spouse and two kids on Medicaid can generate more than one billable unit under the law.
You Won't Self-Report — And That's the Strange Part
Here's the detail that catches most employers off guard: you don't calculate or report this yourself. Under HIPAA, employers generally have no legal way to know which of their workers are enrolled in Medicaid. So the state does the matching instead, cross-referencing its own Medicaid enrollment records against wage and unemployment insurance data reported by employers, then issuing an assessment notice.
Practically, that means the first time many businesses learn their exact liability will be when the bill arrives. The operational mechanics of the matching and billing process are still being finalized by the state, but the structural point stands: this isn't a self-assessed tax like sales tax or payroll withholding, where you calculate the number yourself throughout the year. It's an external assessment that lands on your desk, and you're expected to be ready to pay it — or formally dispute it through the law's appeal process if you believe the count is wrong.
Exemptions — Today and Starting in 2027
The law carves out a few categories from day one: employees with developmental disabilities, intellectual disabilities, or permanent physical disabilities don't count toward the assessment.
A broader set of exemptions phases in starting July 1, 2027, when employers will also be able to exclude:
- New hires in their first 90 days
- Part-time, temporary, and seasonal workers
- Per diem employees
Employers affected by that expanded carve-out are expected to receive prior-year credits or refunds for individuals who become exempt once the new rules take effect. If your workforce leans heavily on seasonal or part-time labor — think retail during the holidays, or hospitality during peak season — the gap between the 2026 rules and the 2027 rules is worth flagging now, because your first year's bill could look meaningfully different from your second.
Why New Jersey Did This — And Why Other States Are Watching
The pitch behind A5324 is straightforward from the state's perspective: Medicaid is a joint federal-state program, and states are bracing for it to get more expensive as federal policy changes shift costs and coverage. New Jersey's argument is that employers whose wage structures push workers onto public coverage should share some of that financing burden, rather than leaving it entirely to state taxpayers.
Unsurprisingly, employer groups see it differently — as a new payroll-adjacent tax dressed up as a public health financing tool, one that penalizes exactly the industries that already run on thin margins and high labor costs.
New Jersey isn't necessarily going to be alone for long. California has passed a bill directing its administration to present lawmakers with options for a similar charge next year, and comparable legislation has already cleared one legislative chamber in both Colorado and Oregon this session, even though neither has become law yet. If you operate in any of those states, or you're a multi-state employer watching legislative trends, A5324 is worth tracking as a bellwether, not a one-off.
There's also a cautionary precedent. Massachusetts tried something similar back in 2017 — a fee of up to $750 per non-disabled worker covered through Medicaid or a subsidized exchange plan. It took effect in 2018 and was allowed to lapse the following year after employer pushback. Whether New Jersey's version has more staying power remains to be seen, but it's a reminder that these assessments can be politically volatile even after they pass.
What This Means for Your Bottom Line — And How to Prepare
If your business has 50 or more employees in New Jersey, here's a practical checklist for the months ahead:
1. Estimate your exposure before the state does it for you. You can't run the exact Medicaid-enrollment match the state will run, but you can look at your wage distribution. If a meaningful share of your workforce earns near minimum wage and works full-time without taking your health plan, assume a nontrivial number of them — plus dependents — could be Medicaid-enrolled. Build a rough estimate using the tiered fee table above so a $150,000 or $300,000 bill isn't a total surprise.
2. Treat it as a new line item in your labor cost model, not a one-time surprise. This assessment behaves less like a tax you file and more like a recurring cost of doing business in New Jersey — closer in spirit to unemployment insurance or workers' comp premiums than to income tax. Add a placeholder expense account for it now, even before you receive your first notice, so the eventual bill has somewhere to land in your books instead of blowing up an "other expenses" bucket.
3. Watch for the assessment notice and know your appeal rights. Because the state is matching its own Medicaid data against your wage reporting, errors are possible — a former employee who's still showing up in the match, a dependent miscount, or a headcount tier that's off by a few people (which matters a lot given how the per-person rate jumps at each threshold). Don't assume the first bill is correct; review it against your own headcount and payroll records before paying.
4. Reconsider how you're tracking part-time and seasonal labor now, ahead of the 2027 exemption expansion. If your workforce is heavy on seasonal, temporary, or per diem staff, the 2027 carve-outs could meaningfully reduce your liability — but only if your payroll records clearly distinguish those categories. Clean classification now saves a fight over credits and refunds later.
5. Don't let this drive rash staffing decisions. It might be tempting to cut headcount below 50, or to push workers to reduce hours, to dodge the assessment. Both moves carry their own legal and operational risk (unemployment claims, morale, service quality, and potential exposure to other worker-classification issues), and the exemption thresholds are narrow enough that half-measures may not actually get you under the line.
Keep Your Books Ready for a Bill You Didn't Send Yourself
A new assessment like this is exactly the kind of cost that's easy to miss until it's a five-figure surprise on your P&L — because you're not the one triggering it, calculating it, or timing it. That's a strong argument for keeping labor-related costs, state assessments, and compliance liabilities in a chart of accounts you actually understand and can query at any time, rather than buried in a black-box payroll platform. Beancount.io provides plain-text accounting that gives you complete transparency and control over your financial data — no black boxes, no vendor lock-in, and a system you can adapt the moment a state legislature decides to send your business a new kind of bill. Get started for free and see why developers and finance professionals are switching to plain-text accounting.