Learn if you are a “small” or “large” employer, or an “individual.” Different rules apply to different purchasers.

One advantage for small employers is guaranteed access to small employer standard health benefits plans, regardless of industry, claims history or health status of employees.  Similarly, eligible individuals are guaranteed access to individual standard health benefits plans regardless of health status or claims history.  All group health plans and individual standard plans are guaranteed renewable regardless of any changes in the health status of anyone covered under the policy.

To buy or renew a health benefits plan in the small employer market, you must:

• Meet the definition of a small employer;
• Meet employee participation requirements; and
• Meet employer contribution requirements.

To be considered a SMALL EMPLOYER for health insurance purposes, you must:

• Employ an average of 2 to 50 eligible employees on business days during the preceding calendar year;
• Employ at least two eligible employees on the first day of the plan year (i.e., the date your coverage would start or your annual renewal date); and
• Have a majority of eligible employees working at a location in New Jersey.

Eligible employees include the business owner if s/he is an employee of the business, and the business’ employees routinely working 25 or more hours weekly.  Temporary and seasonal employees and employees covered under a union’s collectively-bargained welfare arrangement are not eligible employees.

At least 75 percent of a small employer’s eligible employees MUST PARTICIPATE in coverage.

However, an eligible employee is considered to be participating in a health benefits plan – and counts towards the group’s total 75 percent participation goal – if the employee:

• Is covered by a group health plan offered by another employer as: an employee, a former employee continuing coverage (e.g., COBRA), or as an eligible dependent;
• Is covered as a dependent through any of the policies offered by your group health plan;
• Is covered through Medicare;
• Is covered through Medicaid; or
• Is covered through NJ FamilyCare.

A small employer may offer more than one small group health benefits plan to employees, if participation is met for the group of eligible employees in total.

A small employer MUST CONTRIBUTE 10% towards the total group premium.

A small employer may elect to pay more, but a carrier may not require the employer to do so as a condition of issuing a small group health benefits plan. The employer’s contribution requirement is based on the total cost of the health benefits plan, not just the cost related to employees or a class of employees.  For example, if the total cost of a plan for all employees and dependents is $10,000 per year, the minimum employer contribution would be $1,000 per year.

What Are My Options?

Five standard health benefits plan options are available.  As of 2009, carriers must offer at least three of the standard health benefits plan options.  All standard health benefits plans:

• Restrict preexisting condition limitation periods;
• Are modified community rated;
• Include coverage continuation for members of groups not subject to COBRA; and
• Meet standard benefit requirements.

Plan A is designed primarily to cover facility charges and other health care provider charges related to services provided while hospitalized. Insureds pay a deductible and coinsurance, up to a $5,000 out-of-pocket maximum for an individual.  Plan A includes:

• coverage for 30 inpatient days per calendar year; and
• limited benefits for preventive services.

Plans B through E and the HMO Plan provide inpatient and outpatient hospital and medical coverage, without lifetime maximums, including:

• prenatal and maternity care;
• immunizations and well-child care;
• screenings;
• x-ray and laboratory services;
• all biologically based mental illness services;
• certain non-biologically based mental illness and substance abuse services;
• therapy services (e.g., physical, speech); and
• prescription drugs.

Plans B through E differ on the level of cost-sharing required before the carrier agrees to pay for services covered under the contract. 

Cost-sharing may include:

Deductibles — allowed charges paid out-of-pocket before carriers pay benefits, ranging from $250 to $5000 per person.

Copayments — a dollar amount paid per visit or service. All plans may use copayments for in-network services when offered as a PPO or POS plan.

Coinsurance — the percentage of allowed charges the carrier pays after the deductible is met, ranging from 60% (Plan B) to 90% (Plan E), until the MOOP is met.

MOOP (maximum out of pocket) — the total amount of allowed charges, ranging from $2000 to $10,000 per person, that must be satisfied before the carrier pays 100% of the allowed charges.

The HMO Plan is a network-based plan – it may be a closed network or have a point-of-service feature allowing out-of-network access. It usually has copayment options ($10 to $50), but an HMO plan may be offered with deductibles ranging from $250 to $2,500/person, coinsurance ranging from 50% to 100%, and a MOOP amount. Copayments and coinsurance do not apply to the same health care services.

Riders are also available.  Standard riders enhance prescription drug coverage. Carriers may offer other riders increasing or decreasing benefits. Riders are selected by the small employer.

I Need More Information

More information is available online at www.state.nj.us/dobi/division_insurance/ihcseh/index.html, including The Small Employer Health Benefits Program Buyer’s Guide, FAQs, carrier contact information, a sample premium comparison survey, charts for calculating employees and participation, and web links to the IRS, U.S. Department of Labor and Centers for Medicare & Medicaid Services.

Licensed insurance agents or brokers can provide guidance.  You also may contact the carriers directly.

Get a price quote before making any decisions.  Submit completed application and employee enrollment forms with the required premium.  You will receive notice on the application in 15 business days or sooner.  If approved by the carrier, your effective date of coverage will be no later than the first of the month after notice, unless you request a later effective date.

To renew your coverage, the carrier will ask you to verify you still meet the definition of a small employer, employee participation requirements, and employer contribution requirements.