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The Standard Small Employer Health Benefits Plans
NJ Small Employer Health Benefits Program Buyer's Guide
The SEH Program Board of Directors has adopted four standard small employer health benefits plans, generically known as Plans B through E, plus standard HMO and HMO-POS plans.
Plans B, C, D and E

Plans B through E all provide comprehensive inpatient and outpatient hospital and medical coverage, including the following health care services:
  • office visits
  • hospital care
  • prenatal and maternity care
  • immunizations and well-child care
  • screenings, including mammograms, pap smears and prostate examinations
  • x-ray and laboratory services
  • mental illness services
  • substance abuse services
  • therapy services
  • prescription drugs
  • pediatric dental and vision services
Plans B through E differ from one another because of the cost sharing they offer – that is, because of the amount of allowed charges for which the carrier agrees to be responsible.  Carriers may offer Plans B through E with a variety of deductible options among which employers may choose.  The plans have specified coinsurance levels, with the carrier agreeing to pay 50% or 60% of the allowable charges for Plan B, 70% for Plan C, 80% for Plan D and 90% for Plan E.  In 2014 the MOOP amount cannot exceed $6,350 per person for network services and supplies.  This amount may be adjusted annually. 
Delivery Systems: Network-based Health Benefits Plans

Plans B through E can offered as several types of network-based products.  The products are known as PPO which is the acronym for preferred provider organization, POS which is the acronym for Point of Service and EPO which is the acronym for Exclusive Provider Organization.  A PPO or POS product gives a consumer the option to access services in the carrier’s network, or go to out-of-network health care providers.  The individual receives greater benefits when he or she uses in-network health care providers, and when using in-network providers will not be responsible for any charges in excess of what has been negotiated between the carrier and health care provider.  POS products may require members to obtain referrals for various services, but PPO products do not.  EPO products are network-only plans, meaning services and supplies are covered only if the person uses a network provider.  EPO plans do not cover services of a non-network provider, except in case of medical emergency.  With an EPO the carrier may require the person to select a primary care physician (PCP) who generally coordinates the health care services the covered person needs, and provides referrals, as may be required under the EPO plan.

The HMO plan is a network-based product, with services provided through a network of health care providers under contract with the carrier.  The HMO Plan is a closed network product, meaning services and supplies are covered only if rendered by in-network providers, except in case of medical emergency.  The covered person selects a primary care physician (PCP) who generally coordinates the health care services the covered person needs, or refers the covered person to an in-network specialist when necessary. 

HMO Carriers may also offer the HMO Plan as a POS product which is called an HMO-POS plan, which allows an individual to use in-network services, but also allows the option of obtaining services outside of the HMO’s network.  The individual will have to pay more in out-of-pocket costs, and may incur charges in excess of allowed charges when he or she goes out-of-network. 

Some of the network –based plans feature network “tiers.”  When a member selects the services of a provider in the highest tier the cost sharing is generally lower than if services are provided by another network provider.   Whether the provider is in the highest tier or not an individual using a network provider will not be responsible for any charges in excess of what has been negotiated between the carrier and the health care provider. 

A rider is a document that changes the terms of a standard small employer health benefits plan.  Riders add to the number of coverage options available to employers and their employees by offering a benefit not otherwise covered under the standard plan, or revising the way a service is covered under the standard small employer health benefits plan. 

Carriers that offer a rider with a standard plan must offer the rider to all groups who are interested, but the choice to purchase the rider rests with the employer. 
Health Savings Accounts and Other Tax-favored Options

The standard plans can be designed as “high deductible health plans” (HDHP) that may qualify for use with a Health Savings Account (HSA).  An HSA permits money to be set aside in a federally tax-favored savings vehicle for subsequent distribution without a federal tax liability if used to pay for qualifying medical expenses, set forth in IRS Publication 502.  There are differing minimum and maximum deductible and MOOP amounts that an HDHP must meet to qualify for use with an HSA.  Not all plans with high deductibles necessarily qualify as HDHPs.  Carriers may market both the HDHP and the savings account, or an employer may purchase an HDHP from a carrier and obtain the savings account through another financial institution.  For more information, consult IRS Publication 969.  In addition, IRS Publication 969 provides information about other employer-sponsored, federally-tax-favored health accounts, such as Flexible Spending Accounts (FSAs) and Health Reimbursement Arrangements (HRAs), which permit employees to pay for qualified medical expenses using pre-tax dollars.
More about Cost-Sharing Requirements for the Standard Plans

The deductible is the amount of the allowed covered charges that the covered person must satisfy before the carrier agrees to pay anything towards covered charges.  Deductibles are a specified dollar amount, and are usually determined per person and per family when more than one person in a family is covered.  The employer may choose among the options available for the per person deductible.  Although New Jersey law would allow a per person deductible up to $2,500 for a network-based plan, for 2014, Federal law limits the network deductible to $2,000 per person unless the carrier has justified a higher amount.  Thus, it is possible a small employer plan could have a per person network deductible that exceeds $2,000, but in no event could a network deductible exceed $2,500. 

The coinsurance is the percentage of the allowed charges that are shared by the carrier and the covered person after the deductible is satisfied.  The carrier and covered person both contribute a specified percentage to the allowed charges until the MOOP amount is satisfied.  The MOOP is explained below.  Depending upon what plan is chosen, the carrier will pay 50% to 90% of the allowed charges, and the covered person will pay 10% to 50% of the allowed charges until the MOOP amount is reached. 

A copayment is a specified dollar amount that a covered person pays per visit, per day or per service.  In many plan designs copayments are applied to office visits.  A copayment may be applied for each day in the hospital (for a limited number of days).  A copayment applies for use of a hospital’s emergency department (but the copayment – which is more akin to a penalty – is waived if the person is admitted to the hospital).  Copayments accumulate towards the MOOP amount.  Services subject to a copayment may not also be subject to coinsurance.
Maximum Out-of-Pocket (MOOP)

MOOP is the term used to refer to the maximum total amount of covered charges that a covered person is required to pay in a calendar year for health care services before the carrier pays 100% of the covered charges for the remainder of the calendar year.  The MOOP is satisfied by the covered charges incurred by the covered person as part of the deductible, coinsurance and copayments required under the health benefits plan.  The following do not count towards satisfying the MOOP:
  • Charges incurred by the covered person for services that are not covered under the terms of the health benefits plan.
  • Charges that exceed the amount that the carrier considers reasonable and customary (or allowed charges) for the covered services.
Allowed Charges

Carriers will not cover or pay for charges associated with services or supplies that:
  • are excluded under the terms of the health benefits plan;
  • exceed limits set forth for the services or supplies in the health benefits plan; or
  • are not considered medically necessary and appropriate by the carrier.  (Remember, the covered person may appeal the determination.)
If a health care service or supply is excluded or exceeds the limitations under the health benefits plan, the covered person is responsible for the charges related to the health care service. 

The carrier will issue the covered person an explanation of benefits (EOB) indicating whether costs for services and supplies are the responsibility of the covered person when the carrier determines the health care services or supplies are not medically necessary and appropriate.  An individual may appeal the carrier’s medical necessity determination.

In addition, a carrier will only pay for what the carrier determines are reasonable costs for the covered services.  Carriers and in-network health care providers come to an agreement on reasonable compensation for health care services as part of the contract between them.  Health care providers that are not in a carrier’s network may charge fees as they see fit for the services they provide.  However, carriers may only pay what they consider to be a “reasonable and customary” charge for the services.  Currently, the SEH Program requires carriers to use the 80th percentile of the Prevailing Healthcare Charges Schedule (PHCS), for charges billed using the Current Procedural Terminology (CPT) codes developed and owned by the American Medical Association.

In New Jersey, under the terms of the contract between the carrier and in-network health care providers, health care providers may not try to collect from a carrier’s covered person charges that are more than the fees agreed to between the carrier and the health care provider.  However, a non-network health care provider may bill charges in excess of the 80th percentile of the PHCS.  The carrier will determine its payment using the 80th percentile of the PHCS, and the covered person is responsible for any amounts that exceed the 80th percentile of the PHCS.
Obtaining and Renewing Coverage

After reviewing this Buyers’ Guide, review the list of participating carriers and the premium information.  Contact the carriers offering coverage in the small group market for specific plan information, or a licensed insurance producer (agent or broker), who can help you evaluate choices for your group’s needs.  Note:  not all carriers use agents or brokers, and no agent or broker offers information about all carriers.  Review the materials you receive from the carrier(s) or agent(s) and select the carrier and health benefits plan that best meets your group’s needs.  Obtain a price quote from the carrier or its agent before making any decisions.  A carrier should provide a price quote within 10 business days after you give the carrier all necessary information.

Complete the selected carrier’s application form.  Carriers’ forms may look differently, but the information requested is standardized.  Submit completed employee enrollment forms (sometimes called the HINT form) and any waiver forms with the initial application, if required.  Employee enrollment forms are also standard from one carrier to another.  Send your completed application, completed employee enrollment forms and/or waivers, and the required premium (typically, one month of premium) to the carrier.  Carriers should approve or deny an employer’s application within 15 business days after receiving it.  If approved, the group’s effective date of coverage will be no later than the first of the month following the date of notice of approval, unless you request a later effective date.

The carrier will issue ID cards to covered employees (and dependents, if appropriate) as proof of the group coverage.  Remember to inform the carrier or its agent as employees’ circumstances change.  Note: you may request a waiting period of up to 90 days for employees to be considered eligible for enrollment.

Every year thereafter, in order to renew your coverage, the carrier will ask you to verify:

  • Whether you still meet the definition of a small employer;
  • Whether your group continues to meet employee participation requirements; and
  • Whether your group continues to meet employer contribution requirements.

At the time of initial application and upon annual renewal, the carrier may require documentation verifying an employee’s employment status.  If you fail to meet the requirements to keep your coverage in effect, or if you fail to return the employer certification, then the policy will not be renewed.  However, if a small employer fails to meet the participation or contribution requirements, the small employer may apply during the Employer Open Enrollment Period as discussed earlier. 

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