News Release

New Jersey Department of
Banking and Insurance
Commissioner Holly C. Bakke

For Immediate Release:  September 10, 2003

For Further Information::  Ellen Lovejoy - (609) 292-5064

Small Employers Get $3.7 Million in Health Insurance Refunds

TRENTON - Governor James E. McGreevey and Department of Banking and Insurance Commissioner Holly C. Bakke today announced that health insurance companies and HMOs have returned more than $3.7 million in refunds to some of New Jersey's small businesses.

"Small businesses are the backbone of New Jersey's economy," Governor McGreevey said. "These refunds help ensure that they remain strong and put money back into businesses to keep people employed and keep business growing."

The refunds are mandated by the state's health insurance reform laws and reflect excess health insurance premiums small employers paid to insurance carriers and HMOs in the calendar year 2001. The Department is currently reviewing 2002 data to determine how much should be refunded for that year.

This is the eighth mandated refund since New Jersey's 1994 health coverage reforms. Businesses have received refunds totaling more than $61.2 million. In 1994, 27 carriers were required to refund $5.2 million; in 1995, 32 carriers were required to refund $13 million; in 1996, 31 carriers were required to refund $18.9 million; in 1997, 22 carriers were required to pay back $9.2 million; in 1998, 20 refunded $3.8 million; in 1999, 20 refunded $4.7 million; in 2000, 12 refunded $2.8 million; and in 2001, eight carriers refunded $3.7 million.

"The Department is making sure that the interests of New Jersey small businesses and the people who work for them are protected," Commissioner Bakke said.

Wardell Sanders, Executive Director of the New Jersey Small Employer Health Benefits (SEH) Program Board, the state agency responsible for regulating the small employer health benefits market in conjunction with the Department, said the law protects consumers.

"The refund mechanism is not a penalty against insurance carriers, but rather a true-up mechanism to ensure that small employers receive a fair return on the health coverage premiums they pay," Sanders said.

Under the health coverage market reforms that took effect in 1994, small employers with two to 50 employees are required to submit a report to the Department in August of each year identifying the premium and claims paid for standard plans and for pre-reform plans (i.e., plans developed prior to the 1994 reforms). Carriers are required to meet a minimum 75 percent ratio of premium to claims for both standard and pre-reform plans. Carriers not meeting the 75 percent minimum loss ratio requirement are required to develop a refund plan which the Department must approve.

Small employers entitled to refunds should have received notice directly from the carrier that issued their coverage in 2001. Since the refunds apply by type of plan, not all small employers that secured coverage from one of the carriers required to provide refunds would be entitled to a refund. Refunds may be in the form of a check to an employer or a credit toward the employer's premium.

A free Buyer's Guide containing information about health coverage for small employers including a Premium Comparison insert, is available by calling 1-800-263-5912 or on the Department's web site at