Special Phase-in Period: Age-Out Prior to May 12, 2006
If an adult child meets the eligibility requirements for Chapter 375, AND aged-out prior to May 12, 2006, the adult child may enroll any time from May 12, 2006 through May 11, 2007. After that, an adult child may enroll either during an open enrollment period, or within 30 days after becoming eligible for reasons other than age.
Special Phase-in Period: Age-Out After May 12, 2006
If a young adult loses coverage on or after May 12, 2006, a carrier is required to offer a Chapter 375 election to continue coverage to that young adult at the annual renewal date of the group plan under which the young adult’s parent is covered. FOR EXAMPLE – if you age out as of July 1, 2006 but the group plan that covers your parent renews on January 1, 2007, you will not be able to make the Chapter 375 election to continue coverage until January 1, 2007, resulting in a loss of health coverage unless you make a COBRA or NJSGCR election, or purchase individual health coverage. You can elect COBRA or NJSGCR continuation to provide coverage from the date you age out of your parent's group plan until the date you can obtain Chapter 375 coverage.
General Requirements
Once a policy renews (and all policies will have renewed on or before May 12, 2007), adult children who meet the Chapter 375 eligibility standards may make Chapter 375 elections as follows:
- Within 30 days PRIOR to the date a dependent is scheduled to age-out of the policy;
- Within 30 days AFTER an adult child meets the Chapter 375 eligibility standards for reasons other than age (for example, an adult child who had been working in California decides to return to live in New Jersey); OR
- For small employers with coverage under a Small Employer Health Benefits plan, annually, during the 30-day period following the anniversary of the adult child's loss of coverage
- For large employers (generally those with 51 or ore employees) during the group's annual open enrollment period.
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Answers to "How Do I Get Started?"
- I read about a law that will let me have coverage until age 30 – how do I apply?
There is a new law (P.L. 2005, c. 375, sometimes called “Chapter 375”) that will allow certain adult children younger than 30 years old to be covered under their parent’s plan until age 30. But you have to meet eligibility requirements.
- What are the eligibility requirements?
There are a number of eligibility requirements. To begin with, you must have aged-out of a parent’s group health benefits plan issued in New Jersey, or be about to age-out of one.
- What does age-out mean?
“Age-out” means that you were covered as a dependent under a parent’s group health benefits plan issued in New Jersey, but you became ineligible when you reached the dependent limiting age in the policy. Most policies specify that a dependent child is no longer eligible for coverage once the child reaches a certain age (for example, upon the child’s 18th or 19th birthday). Plans vary on when coverage actually ends. They may end dependent coverage on your actual birthday, they may end coverage on the last day of the month of your age-out birthday, or they may end coverage on the last day of the year of your age-out birthday. You’ll need to contact the insurance company to find out exactly when your coverage ends, if you do not know already. Most policies allow full-time students to be covered beyond the limiting age of 18 or 19 until a specified student age. Many plans allow full-time students to be covered until age 23. Again, check with your insurance company to find out the student age on your parent’s plan, if you are not already familiar with it. If while you are covered under a parent’s group policy, you reach the policy’s stated limiting age, and then you continue to be covered because of a full-time student exception to the initial limiting age, you will still be considered to have aged-out when you later become ineligible for coverage under the policy because you: (1) graduate; (2) stop being a full-time student for reasons other than graduation; or, (3) reach the second limiting age in the policy.
- Okay, I know I aged-out of my parent’s coverage, but I’m not sure I aged-out of a “group health benefits plan issued in New Jersey” – what does that mean?
A group health benefits plan issued in New Jersey means a contract of insurance (or service benefits) issued by a licensed carrier to a group plan sponsor (usually an employer or union) for the purpose of providing payment for the expenses of covered hospital or medical expenses incurred by the plan sponsor’s employees or members and eligible dependents. When the contract is “issued in New Jersey” this basically means that the carrier and the group enter into their agreement in New Jersey. The state of issue may be the state in which the employer’s principal place of business is located, the state in which the employer is incorporated or the state in which the majority of employees work. If you are not sure whether the group health benefits plan in question was issued in New Jersey, speak with a representative of the plan sponsor – typically someone from the human resources or benefits office can help with this information – or contact the carrier. Also, the first page of the certificate of coverage distributed to the covered employee (your parent) will state that it is subject to the laws of the state of New Jersey if the group policy is issued in New Jersey.
- What if I was covered under NJFamilyCare until age 19?
NJFamilyCare is an expansion of Medicaid and is not a group health benefits plan, so your loss of coverage does not entitle you to elect coverage under Chapter 375.
- What if I was covered as a dependent of a parent who was active duty military when I aged-out?
Coverage through TRICARE does not qualify as a group health benefits plan issued in New Jersey.
- What if I was covered as a dependent of a parent who worked for the government or worked for a university in New Jersey when I aged-out?
IT DEPENDS. You need to find out whether the coverage was under a group health benefits plan issued in New Jersey. Your best source of information will be the human resources or benefits department handling your parent’s coverage. Most people who work for the federal government as part of the civilian workforce receive their health benefits through the Federal Employees Health Benefits Program (FEHBP). Some coverage under the FEHBP is self-funded, some is insured, but much of the coverage is unlikely to qualify as group health benefits plans issued in New Jersey. Most people who work for the New Jersey state government are covered through the State Health Benefits Plan (SHBP). Although the SHBP is self-funded, if you aged-out of SHBP coverage, you will qualify for the Chapter 375 election. People who work for counties, municipalities, local authorities, or public universities in New Jersey may have coverage through the SHBP, another group health benefits plan issued in New Jersey, or through a self-funded plan. If you aged-out of a self-funded plan other than the SHBP, you will not qualify for the Chapter 375 election. Most people who work for private universities located in New Jersey will have coverage under a group health benefits plan issued in New Jersey or a self-funded plan. If you aged-out of a self-funded plan, you will not qualify for the Chapter 375 election.
- What if I was covered as a dependent of a parent who received coverage through a union plan when I aged-out?
You will need to obtain more information about your parent’s coverage at the time you aged-out. Many union plans self-fund the health benefits offered to members and their families. In some instances, the health benefits may be through a jointly-sponsored employer-employee self-funded welfare plan. Self-funded plans are not group health benefits plans issued in New Jersey. Even when the health benefits are insured, many unions exist across state lines, and may seek to have the insurance contract issued in a single state, which may or may not be New Jersey. If insured through an out-of-state policy, the coverage is not through a group health benefits plan issued in New Jersey. If you did not age-out of a group health benefits plan issued in New Jersey, you are not eligible for the Chapter 375 election.
- What is a self-funded plan?
“Self-funded” means that the health claims are being paid with the funds of the sponsor of the plan – an employer, an employee organization (usually, a union), or an employee-employer organization. The plan sponsor takes the risk of claims being more or less than the amount the plan sponsor set aside to pay claims. So, when an employer self-funds a plan and claims prove to be greater than expected, the employer will have to contribute more to pay the claims, but if claims are lower than expected, the employer keeps any extra funds. On the other hand, when a plan is insured, the employer pays the premiums to a carrier, and the carrier takes the risk of claims being more or less than expected. So, the employer does not have to pay extra premium if claims are higher than the carrier expected – the carrier has to make up the difference. But if claims are low, the employer does not receive any refund of premium either – the carrier keeps it all. Many unions and large public and private employers self-fund the welfare plans they offer to their members or employees and eligible dependents. Very often, even though a plan sponsor may self-fund the health benefits, the plan sponsor may still contract with a carrier for one or more administrative services; for example: eligibility and enrollment determinations, claims handling, contracting with health care providers, or collection of data. Frequently, when a plan sponsor contracts with a carrier for administrative services and access to the carrier’s network(s), the plan sponsor’s members or employees and their dependents receive ID cards that have the carrier’s logos and other information similar to (or the same as) what the carrier may issue to its insured enrollees. If you are not sure whether the health benefits in question were/are insured or self-funded, speak with a representative of the plan sponsor – typically someone from the human resources or benefits office can help with this information – or contact the carrier. Self-funded plans of private employers are not subject to the requirements of Chapter 375 or any State insurance law. Self-funded plans of public employers are subject to the laws of the states where located. So, although the SHBP is self-funded, it is specifically subject to Chapter 375. For more information about the SHBP, you can contact the Division of Pension and Benefits in the Department of Treasury.
- My parent’s job was in New York when I aged-out of the coverage offered by that employer – do I meet the age-out requirements?
Working in New York may mean the policy was issued in New York. Contact the human resources or benefits department and ask where the group policy was issued. If the answer is not New Jersey, then you are not eligible under Chapter 375.
- My parent works outside of New Jersey, but has group coverage – is that policy regulated by Chapter 375?
It is possible that the policy is regulated by Chapter 375. Neither the location of the job site nor the location of the parent’s home determines whether the group coverage is regulated by Chapter 375. Instead, it depends on where the policy was issued. A group health benefits plan issued in New Jersey may cover employees that live and work in other states. For example, an employee may live in Pennsylvania and work at a Pennsylvania location of a New Jersey employer. If you are not sure whether the group health benefits plan in question was issued in New Jersey, speak with a representative of the plan sponsor – typically someone from the human resources or benefits office can help with this information – or contact the carrier.
- My parent did not have coverage when I was in my teens or early 20s – could I still be eligible for the Chapter 375 election?
No. You are only eligible for the Chapter 375 election if you were actually covered under a parent’s group health benefits plan issued in New Jersey and lost that coverage due to age-out.
- Does Chapter 375 apply to stand alone dental, pharmacy and vision plans?
For purposes of Chapter 375, stand alone dental and vision plans are not considered to be group health benefits plans. However, stand alone pharmacy plans (prescription drug plans) are subject to Chapter 375.
- Okay, I know I aged-out of my parent’s group health benefits plan, and that it was issued in New Jersey – now what?
Your parent must be covered under a group health benefits plan issued in New Jersey that allows dependent coverage. The coverage your parent now has does not have to be the same group health benefits plan you aged-out from.
- Does group health benefits plan mean the same thing now as it meant for age-out?
Yes. “Group health benefits plan issued in New Jersey” means the same thing for both the coverage you age-out from and the coverage in which you may possibly enroll.
- Okay, I aged-out of a group health benefits plan issued in New Jersey, and my parent is covered under a group health benefits plan issued in New Jersey – are there other qualifications?
Yes: you cannot be married, have any children, be covered by another individual or group health plan, or be entitled to Medicare. In addition, you either must live in New Jersey or be a full-time student if you don’t live in New Jersey.
- I work and I could get coverage through my employer, but I haven’t yet – am I ineligible?
You are ineligible if you are actually covered under another group health plan (or are entitled to Medicare).
- What does “entitled to Medicare” mean?
To be entitled to Medicare, you must be both eligible and actually covered under Medicare. You become eligible for Medicare due to age, disability or end stage renal disease (ESRD), but you only become entitled to Medicare when you actually sign up for it.
- I work and have coverage through my employer – does that mean I can’t elect coverage on my parent’s policy?
While you have coverage under another group health plan, you are not eligible for the Chapter 375 election. However, if you give up coverage under the group health plan, you may become eligible for the Chapter 375 election, assuming you meet all of the other eligibility requirements. Before deciding to discontinue your employer’s coverage, carefully consider your situation, and review the benefits available under the various coverage options, the costs, and conditions for maintaining coverage. Reviewing these questions and answers can help. But there is no one-size-fits-all answer as to whether it is better to keep your employer’s coverage or make a Chapter 375 election.
- Is “group health plan” different from “group health benefits plan issued in New Jersey”?
Yes, the terms are a little different. “Group health plan” is a larger category of coverage. “Group health plan” includes group health benefits plans issued in New Jersey AND other states, AND it includes self-funded plans, too. Actual coverage under any group health benefits plan or any self-funded plan will make you ineligible for the Chapter 375 election.
- I chose to keep coverage through COBRA when I aged-out – will I be able to elect to keep coverage on my parent’s policy when my COBRA coverage ends?
If you meet all of the other eligibility requirements at that time, you will be eligible to make a Chapter 375 election when your coverage under COBRA ends. If you have already made a COBRA election, you are not required to exhaust COBRA before you can make a Chapter 375 election; you could choose to end your coverage under COBRA early and make a Chapter 375 election. Of course, you should carefully consider the pros and cons of discontinuing your COBRA election early, because you will not be allowed to reinstate it if you change your mind or your circumstances change.
- Okay, I aged-out of a group health benefits plan issued in New Jersey, my parent is covered under a group health benefits plan issued in New Jersey, I’m not married, don’t have kids, don’t have other coverage, and I live in New Jersey (or am a full-time student elsewhere) – now what do I do?
You should contact the employer to see about filling out enrollment forms. The employer may ask you to contact the carrier directly. There are some special procedures that may apply from May 12, 2006 through May 11, 2007, and depending on the circumstances, you may have to wait awhile to enroll. Consider carefully other coverage options you may have in the meantime.
- What happened May 12, 2006? Could I really be asked to wait to enroll?
The law went into effect on May 12, 2006. It has a special provision that allows people who aged-out prior to May 12, 2006 to make a Chapter 375 election anytime from May 12, 2006 until May 11, 2007. The law has another provision that allows group health benefits plans to require those people who age-out on and after May 12, 2006 but before the renewal (or anniversary) date of the group health benefits plan (occurring after May 12, 2006) to wait until the renewal or anniversary date to make the Chapter 375 election. Someone who will be aging-out after the group health benefits plan renews (or reaches its anniversary date) will have an opportunity to enroll within 30 days prior to aging-out. By May 12, 2007, all group health benefits plans will have renewed or reached their anniversary date.
- What if I don’t make the Chapter 375 election when I first age-out, can I make the Chapter 375 election at another time, if I still meet all of the eligibility standards?
Yes. Except during the first year (May 12, 2006 through May 11, 2007), you can make the election within 30 days prior to aging-out, within 30 days after becoming eligible again (for example, you move back to New Jersey), or during an annual open enrollment period. You will need to check with the employer for more details. The employer may ask you to contact the carrier directly.
- How much is this going to cost?
You have to contact the employer for more information. The employer may ask that you contact the carrier directly. You can be charged up to 102% of the rate attributable to child dependents for that group. You cannot be charged the single adult rate.
- It doesn’t look like I am eligible – what other options do I have?
If you haven’t yet aged-out, or you aged-out very recently, you may still be eligible to make a continuation election using COBRA, or the New Jersey Small Group Continuation Right (NJSGCR). The standards and requirements for making a COBRA and an NJSGCR election are very similar. COBRA (a federal law) applies to all employers with 20 or more employees. The NJSGCR applies to New Jersey employers with fewer than 20 employees, if the employer has a group health benefits plan issued in New Jersey. If you are not eligible for any continuation election, and do not otherwise have group coverage available through your own employer or a college as a student (group student insurance), you may still be eligible to purchase an individual policy. Individual policies tend to provide comprehensive coverage, are community-rated, and tend to be more expensive than similar group policies. However, carriers offer the “Basic & Essential” health benefits plan in the individual market, which is a less expensive option because it has fewer benefits and may be priced taking into consideration age, gender and/or geography.
- I might have to consider an individual policy. What do the Basic & Essential plans provide, and what do they cost?
Basic & Essential (B&E) plans cover the following services, subject to cost-sharing requirements (deductibles, coinsurance):
- 90 days per year for hospitalization
- $600 per year for wellness services
- $700 per year for office visits for illness or injury
- $500 per year for out-of-hospital diagnostic testing, and limited benefits for biologically-based mental health services, alcohol and substance abuse treatment, and physical therapy
Some carriers offer B&E plans as indemnity policies (meaning, you may elect which health care providers to go to), while other carriers offer B&E plans that restrict your choices of health care providers to those health care providers in a selected network.
Some carriers allow you to purchase riders to their B&E plans to increase the plan benefits.
You can compare rates and get company contact information at the Department’s web site. Always contact the company for the most up-to-date information on rates.
- What benefits are added to the Basic & Essential plans through riders?
It depends on the insurance company and the rider. Insurance companies offering B&E plans may offer more than one rider, but they do not have to offer any. Some companies offer one or more riders, and some companies offer none. You will need to contact the company for more information. Three companies that offer B&E with riders are: AmeriHealth HMO, Inc., Horizon Healthcare, Inc., and Oxford Health Insurance Company.
- Okay, I’m going to be aging-out soon, and I understand I can elect COBRA continuation or a Chapter 375 continuation. What’s the difference?
COBRA is a federal law that applies to public and private employers whether they insure or self-fund any health benefits they may offer. Chapter 375 only applies to group health benefits plans issued in New Jersey.
COBRA allows you to continue coverage with the group for up to an additional 36 months. Chapter 375 allows you to continue coverage until your 30th birthday, so long as you meet all other Chapter 375 eligibility standards.
You must make the COBRA election when you first age-out. Chapter 375 allows you to make a Chapter 375 election when: (1) you age-out, (2) when you meet the other Chapter 375 eligibility standards, or (3) during an established open enrollment period. If you exhaust the COBRA election (for instance, the 36-month period ends), you may make a Chapter 375 election later if you meet all of the Chapter 375 eligibility standards.
The premium rate for an adult child making a COBRA election may be up to 102% of the group’s single person rate. The premium rate for an adult child making a Chapter 375 election may be 102% of the rate applicable to the group’s child dependents. Generally, the Chapter 375 charge may be a little lower than the charge for the same coverage under a COBRA election.
Continuation of your coverage following a Chapter 375 election is contingent upon whether: (1) your parent continues to have coverage with the group, (2) your parent elects to continue dependent coverage, and (3) the group continues to offer dependent coverage. Continuation of your coverage with a group following a COBRA election is not contingent upon your parent’s actions, or a decision by the group policyholder to eliminate the option to cover dependents.
If you are continuing coverage under Chapter 375, you will lose the right to such coverage if you marry, become a parent, move out of state and are not a full-time student, or complete your studies but do not live in New Jersey. None of these events disqualifies you from continuing coverage under COBRA. You may lose coverage you have under either a COBRA election or a Chapter 375 election if your coverage is with an HMO and you move out of the HMO’s service area.
Your COBRA election is restricted to the group from which you aged-out. Your Chapter 375 election right is not restricted to the group from which you aged-out.
See a side-by-side comparison of COBRA, New Jersey Small Group Continuation Right (NJSGCR) and Chapter 375 in the Comparison Chart.
- The carrier asked me to give them a certificate of creditable coverage. I don't know what that is. And why does the carrier need it anyway?
A certificate of creditable coverage is a piece of paper a plan sponsor or carrier sends to people when they lose their health coverage. It is required by a Federal law called HIPAA. This piece of paper will state your name, the date your health coverage started and the date it ended. The certificate of creditable coverage is used to determine if a person enrolling under a plan had prior coverage and how long ago it ended. Both Federal and New Jersey law require health plans to give credit for the time a person was covered under prior coverage, provided the coverage ended no more than 63 or 90 days earlier, depending on the plan. That credit is applied toward any pre-existing condition exclusion under the plan. If you don't have a certificate of creditable coverage, or if it shows your coverage ended more than 63 or 90 days ago, the new plan will apply the pre-existing conditions exclusion to your coverage.
- My coverage ended 6 months ago so I guess that means I am subject to a pre-existing conditions exclusion. But what does that mean?
A pre-existing condition exclusion is a provision that lets a carrier exclude coverage for a limited time for an illness or injury you had within a certain period of time prior to your enrollment date under the plan. For example, the plan may use a 6-month look-back period. If you had an injury or illness for which you sought diagnosis, care or treatment or took a prescription drug during that 6-months period prior to your enrollment date, the condition is a pre-existing condition. If a condition is a pre-existing condition, then coverage for that condition is excluded under the plan for a specified number of months. For example, the exclusion period may be 12 months. That means you will not be covered for any charges related to that condition for the first 12 months. After the first 12 months, you will be covered for the condition. And during the first 12 months you will be covered for all conditions except the condition that was pre-existing.
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