Official Site of The State of New Jersey

Changes to Law on Insurance Premiums Tax Effective July 1, 2009 (REVISED 10/9/09)

P.L. 2009, c. 75 was signed into law on June 29, 2009 resulting in modifications to the administration of the insurance premiums tax.

The law increases the tax on group accident and health insurance premiums from 1% to 1.35% for one year. Thus, the tax rate on group accident and health insurance premiums for 2009 is 1.35% and will return to a rate of 1% starting in 2010.

Also, the premium receipts tax for surplus lines coverage has been increased from 3% to 5%. In the event that surplus lines policies cover fire insurance on property located in a municipality or fire district with a duly incorporated firemen’s relief association, the law provides that 3% of the premium receipts tax collected shall be paid to the New Jersey State Firemen’s Association with the remaining 2% forwarded to the Department of Banking and Insurance.

For a period of one year from January 1, 2009 through December 31, 2009, the definition of insurance company includes dental service corporations for purposes of the insurance premiums tax provisions. A dental service corporation must file and remit the tax at a rate of 1.35% for the 2009 calendar year on March 1, 2010.

For a period of one year from January 1, 2009 through December 31, 2009, the definition of insurance company includes dental service corporations for purposes of the insurance premiums tax provisions. A dental service corporation must file and remit the tax at a rate of 1.35% for the 2009 calendar year on March 1, 2010.

The law also dedicates $19.5 million from the revenue collected from the tax on group accident and health policies, and $5 million from taxation of dental service corporations to the Health Care Subsidy Fund.

In addition, that law provides a one-time transfer of $60 million from the New Jersey Surplus Lines Insurance Guaranty Fund into the Health Care Subsidy Fund 60 days from enactment of the legislation (P.L. 2009, c 75). There is also a provision which establishes a contingency appropriation from the General Fund into the New Jersey Surplus Lines Insurance Guaranty Fund not to exceed $27 million in the event that the transfer leaves that fund with an insufficient amount of revenue to satisfy existing covered claims.