F.A.Q.

New Jersey Small Group Health (2-50 Employees)

What is the NJ Small Employer Health Benefits Program Act?

Enacted in 1992, the New Jersey Small Employer Health Benefits Program Act (SEH Act) (N.J.S.A. 17B:27A-17 et seq) has provided significant protections to New Jersey small employers since 1994. Through the years, the SEH Act has been amended by State laws as well as Federal laws. Since 1996, standards regarding privacy and security of health information have been governed by the federal Health Insurance Portability and Accountability Act (HIPAA). Various mandated requirements of the federal Patient Protection and Affordable Care Act (PPACA) became effective starting in 2010 with the most recent requirements becoming effective beginning in January 2014.

Can I purchase small group coverage if I am a self-employed husband and wife with no other employees?

No, a business with only husband and wife does not qualify under the new federal law requirements.

Does the employer have to contribute a certain amount of premium?

The employer must contribute at least 10% of the total groups premium.

Am I required by law to provide health benefits for my employees?

You are not required by law to provide coverage to your employees if you are a small employer. However, if you provide small group health coverage, you are then subject to comply with the requirements of state and federal laws. Only ALEs (Applicable Large Employers) are subject to the Employer Shared Responsibility provision under section 4980H of the Internal Revenue Code (added to the Code by the Affordable Care Act). An ALE, defined in the text of the ACA, is an employer who averaged at least 50 full-time employees (including full-time equivalent employees (FTEs)) on business days during the preceding calendar year.

How does a carrier determine the rates for my group?

Rates are first based on the plan of benefits selected. Age, geography and family status are the only factors used in determining the premium for each group. Gender is no longer a factor under ACA. Carriers use modified community rates for small employer plans. Rates are not based upon the actual or expected claims history of any particular person or persons in the small employer group. In addition, carriers do not rate based on gender and there is no special rate for smokers versus non-smokers. Prior to 2014 carriers rated policies based on the average of all their employees and dependents. This is known as a composite rate. Starting in 2014, carriers were required to use separate rates for each employee and their dependents. This is known as age rating. Carriers now use a child rate for ages 0 through 20. This is incrementally increasing every year from age 21 through 64. Age 64 and over remains the same. Medicare carve out rates have been eliminated. Each carrier must set its rates so that its highest rate is not more than 2 times its lowest adult rate for a specific individual plan. (This is referred to as a 2:1 rate band.)

Will my rates change if I deal directly with the insurance carrier instead of using a broker?

The initial and renewal rates will remain the same whether you go directly to the insurance carrier or use a broker.

What is an employee?

Under the Federal definition, an Employee” means an individual who is an employee under the common law standard as described in 26 CFR 31.3401(c)-1. For purposes of determining whether an employer is a small employer, employee excludes an individual and his or her spouse when the business is owned by the individual or by the individual and his or her spouse, a sole proprietor, a partner in a partnership, and more than a two percent shareholder in a Subchapter S corporation as well as immediate family members of such individuals. Employee also excludes a leased employee.

Do I include employees from other companies that I own?

All persons treated as a single employer under subsection (b), (c), (m) or (o) of section 414 of the Internal Revenue Code of 1986 shall be treated as one employer. In the case of an employer that was not in existence during the preceding Calendar Year, the determination of whether the employer is a small or large employer shall be based on the average number of Employees that it is expected that the employer will employ on business days in the current Calendar Year.

When is an employer subject to the Medicare Secondary Provision (TEFRA/DEFRA)?

The working aged Medicare Secondary Provision applies only to group health plans of employers with 20 or more employees and to multi-employer and multiple employer group health plans in which at least one employer employs 20 or more employees. This requirement is met if an employer has 20 or more full-time and/or part-time employees for each working day in each of 20 or more calendar weeks in the current or preceding year.

When is an employer subject to COBRA?

All employers who had 20 or more employees on 50% of its typical business days during the preceding calendar year are subject to COBRA. The only exceptions are: (a.) The federal government has its own rules regarding continuation coverage and (b.) Church plans (within the meaning of Section 414(e) of the Internal Revenue Code. Full-time and part-time employees count regardless of their eligibility for the group health plan. Under the 2001 Final Regulations, part-time employees are counted as a fraction of a full-time employee.

Am I required to cover a certain percentage of eligible employees?

Yes, this is known as the 75% participation requirement. Credits are available to go towards this requirement. If an employer pays 100% of the cost of coverage, a carrier cannot require greater than 75% participation.

Which employees can waive coverage and be credited towards the group participation requirement?

The law does not allow a carrier to impose a participation requirement of more than 75% of all eligible employees. There is no participation requirement for dependents. A carrier shall count as covered under the small employer’s health benefits plan, for the purpose of satisfying employee participation requirements, a full time employee who:

-Is covered as an employee or dependent under any fully insured health benefits plan offered by the small employer
-Is covered under Medicare
-Is covered under Medicaid or NJ FamilyCare
-Is covered under another group health benefits plan
-Is covered under a spouse’s group health benefits plan
-Is covered under Tricare; or with respect to Small Business Health Options Program coverage only, is covered under an individual plan.

The term employee means an individual who is an employee under the common-law standard. See 31.3401(c)-1(b). For purposes of this paragraph (a)(15), a leased employee (as defined in section 414(n)(2) [26 USCS 414(n)(2)]), a sole proprietor, a partner in a partnership, a 2-percent S corporation shareholder, or a worker described in section 3508 [26 USCS 3508] is not an employee.

Can a small employer cover part-time employees who work less than 25 hours per week?

No, they are not eligible employees.

How do I know if I qualify as a small employer?<br />

An employer that satisfies the requirements of either part one or part two of the definition below is a small employer in New Jersey. “Small employer” means: Any person, firm, corporation, partnership, or political subdivision that is actively engaged in business that employed an average of at least one but not more than 50 eligible employees on business days during the preceding calendar year and who employs at least one eligible employee on the first day of the plan year;

An employer with a business location in the state of New Jersey who employed an average of at least one but not more than 50 employees on business days during the preceding calendar year; and who employs at least one employee on the first day of the plan year. With respect to parts one and two of the definition above, any person treated as a single employer under subsection (b), (c), (m) or (o) of section 414 of the Internal Revenue Code of 1986 (26 U.S.C. 414) shall be treated as one employer.

Note the emphasis to eligible employees in part one of the definition and to employees in part two of the definition.

Can I have different waiting periods for certain employees?

Waiting periods cannot exceed 6 months. Different classes can be established on bona fide conditions of employment, such as hours worked, salary, title, etc.

Can I offer different plans by class of employee?

Different classes can be established on bona fide conditions of employment, such as hours worked, salary, title, etc. By offering a specific plan or plans for a particular class of employees that class of employee will not be eligible to enroll for other plans offered to other classes employees.

Is there a limit to the number of employees that can work outside of NJ?

The majority of its eligible employees must work in a physical location in New Jersey in order for the employer to be eligible to purchase Small Employer Health Program health benefits plans for the group. An employee that works from his or her home located outside of New Jersey is not considered to be working in New Jersey, even if the employers offices are located in New Jersey.

What is an Open Access POS plan?

Open access point of service adds an additional option to the classic POS plan’s referral policies. As in an HMO, you can decide to have your primary care physician refer you to in-network specialists and facilities. This option provides the lowest co-pay level. As an added benefit, open access POS plans also let you ‘self-refer’ to in-network specialists and facilities at what the insurance companies call ‘discounted rates.’ When you ‘self-refer,’ you see a doctor, specialist or use a health care facility without having a written referral from your physician.

What is MOOP (Maximum Out-of-Pocket)?

“Maximum out of pocket” means the annual maximum dollar amount that a covered person must pay as copayment, deductible, and coinsurance for all covered services and supplies in a calendar year. All amounts paid as copayment, deductible, and coinsurance shall count toward the maximum out of pocket. Once the maximum out of pocket has been reached, the covered person has no further obligation to pay any amounts as copayment, deductible, and coinsurance for covered services and supplies for the remainder of the calendar year. Under ACA, prescription copays and deductibles must be applied to MOOP.

ACA MOOP limits:

2016 – $6,550/Individual $13,100/Family
2017 – $7,150/Individual $14,300/Family

Must I offer continuation coverage to an employee and their dependents?

You must offer continuation coverage to an employee and their qualified beneficiaries upon the occurrence of certain qualifying events (Such as termination of employment, divorce or legal separation, dependent ceasing to be a dependent, reduction of hours, etc.)

New Jersey Individual Health

May I purchase an individual plan if I live in another state during part of the year?

A New Jersey resident is defined as someone whose primary residence is in New Jersey (at least 6 months out of the year). For non-Health Maintenance Organization (HMO) coverage, residency requirements apply only to the individual who applies for coverage the policyholder. The policyholders spouse, children or other dependent(s) must reside in the United States, but do not have to reside in New Jersey. If you choose to purchase coverage from a Health Maintenance Organization (HMO), in addition to meeting the New Jersey residency requirement, all covered persons must ALSO reside in that HMO’s service area.

May I keep my New Jersey individual plan if I become Medicare eligible?

You are not eligible to purchase an individual plan if you are already covered under Medicare, regardless of whether you have Parts A and B or only have Part A of Medicare. Thus, if you are age 65 and eligible for Medicare, but do not sign up for Medicare, you are not covered for Medicare, so you are eligible to purchase an individual plan. If you are eligible for Medicare and thinking of buying an individual policy instead of enrolling for Medicare, there are two important facts you should consider. The individual plan will coordinate benefits with Medicare. The individual plan will be the secondary payor even though you do not have coverage under Medicare. For example, for a physician bill of $1000, assuming Medicare allows the full, $1,000 charge; Medicare Part B would pay $800. The individual policy will consider the $800 benefit Medicare would have paid and only pay benefits based on the $200 difference. In other words, you will be out of pocket whatever Medicare would have paid for your services. If you are eligible for Medicare but do not enroll when you are first eligible, when you later enroll for Medicare your monthly cost will be increased because you enrolled after you were first eligible.

If I waive coverage under Medicare, may I purchase an individual plan?

If you have an individual plan when you become eligible for Medicare, you may choose to keep your individual plan. But note: The individual plan will coordinate benefits as the secondary payor whether or not you enroll in Medicare. In other words, the individual plan always pays assuming Medicare pays first. You will have to pay the full premium for the individual plan even though it is always the secondary payor. For these reasons, the individual plan is not a substitute for Medicare and it is not a Medicare Supplement Plan. People covered under an individual plan who become eligible for Medicare should consider all of their options. For help, you can: Contact your County Office on Aging Contact New Jerseys Division of Aging and Community Services at 1-800-792-8820 or go to www.state.nj.us/humanservices/doas/services/ship/ Go to www.Medicare.gov If you are age 65 or older and state that you are not eligible for Medicare, you will be asked for proof that you are not eligible.

To what age can my children be covered as a dependent on my individual plan?

Typically, you may cover your child up to the child’s 26th birthday. Dependent children who are incapacitated may be covered indefinitely, provided documentation is supplied to the carrier as requested, and your plan remains in effect. They may be eligible to continue coverage under your group plan as a dependent under 31 years old based on New Jersey law (P.L. 2005, c. 375, as amended).

Can I purchase an individual plan if I am eligible for coverage under COBRA or NJ Continuation?

Yes. Eligibility for coverage under COBRA or New Jersey State continuation does not prevent you from purchasing an individual plan. Once an individual plan is purchased you may not maintain health coverage under COBRA or New Jersey State continuation and as a result will have to cancel your health coverage under COBRA or New Jersey State continuation. If you are eligible for COBRA you may elect to maintain your dental or vision coverage, if available, since dental and vision coverage is not available with individual plans.

If I have group coverage may I purchase an individual plan?

The law normally prohibits you from purchasing an individual plan if you are covered or The law normally prohibits you from purchasing an individual plan if you are covered or eligible for a group health plan. However, you may be eligible to purchase an individual plan during the open enrollment period in November of each year, subject to certain restrictions. You would be required to terminate your group coverage no later than December 31st since the individual policy would become effective on January 1st. Even though you are eligible for an individual plan, you may not purchase an individual plan that provides the same or similar level of coverage as your group plan for which you are eligible.

Can I be eligible for individual coverage if I don't have a social security number?

Yes. Most carriers will usually require a copy of the VISA or passport along with proof of residency such a copy of your utility bill or drivers license.

How many months of prior credible coverage is required so I will not be subject to pre-existing conditions?

A new participant must have at least 12 months of continuous coverage that was terminated within 31 days prior to the new individual plan’s effective date in order to have the pre-existing condition waiting period waived.

A “federally defined eligible individual” will be allowed a 63-day break between plans. The following criteria must be met: the person must have had at least 18 months of prior credible coverage, the most recent being a group plan. In addition, if COBRA or NJ continuation was offered the individual must have elected and exhausted that coverage

What is a "federally defined eligible individual"?

1. A resident of New Jersey; and
2. Not eligible for coverage under Medicare

Are rates locked-in for any length of time?

All individual plan premium rates are based on a calendar year, and will not change until January 1 of the following calendar year. If you buy a plan on February 1, the rate will be locked-in until the following January 1.

Can I change to another individual plan whenever I want during the year?

No, if you do not purchase or renew coverage during the Annual Open Enrollment Period, you will not be able to buy coverage in the individual market until the next Annual Open Enrollment Period, unless you have a triggering event that creates a Special Enrollment Period for you.

Medicare

What is Medicare?

-People 65 or older
-People under 65 with certain disabilities
-People of any age with End-Stage Renal Disease (ESRD) (permanent kidney failure requiring dialysis or a kidney transplant)

What is Medicare Part A?

-Inpatient care in hospitals
-Skilled nursing facility (SNF) care
-Hospice care
-Home health care usually, you dont pay a monthly premium for Part A coverage if you or your spouse paid Medicare taxes while working. This is sometimes called premium-free Part A. If you arent eligible for premium-free Part A, you may be able to buy Part A, and pay a premium.

What is Medicare Part B?

-Services from doctors and other health care providers
-Outpatient care
-Home health care
-Durable medical equipment (DME)
-Some preventive services Most people pay the standard monthly Part B premium. Note: You may want to get coverage that fills gaps in Original Medicare coverage. You can choose to buy a Medicare Supplement Insurance (Medigap) policy from a private company.

What is Medicare Part C?

-Includes all benefits and services covered under Parts A and B
-Usually includes Medicare prescription drug coverage (Part D) as part of the plan
-Run by Medicare-approved private insurance companies
-May include extra benefits and services for an extra cost

What is Medicare Part D?

-Helps cover the cost of prescription drugs
-Run by Medicare-approved private insurance companies
-May help lower your prescription drug costs and help protect against higher costs in the future

How much does Medicare pay?

Part A premium
-Most people don’t pay a monthly premium for Part A (sometimes called “premium-free Part A”). If you buy Part A, you’ll pay up to $411 each month.

Part A hospital inpatient deductible and coinsurance
You pay:
-$1,288 deductible for each benefit period
-Days 1-60: $0 coinsurance for each benefit period
-Days 61-90: $322 coinsurance per day of each benefit period
-Days 91 and beyond: $644 coinsurance per each “lifetime reserve day” after day 90 for each benefit period (up to 60 days over your lifetime)
-Beyond lifetime reserve days: all costs

Part B premium
-Most people pay $104.90 each month.

Part B deductible and coinsurance
-$166 per year. After your deductible is met, you typically pay 20% of the amount for most doctor services (including most doctor services while you’re a hospital inpatient), outpatient therapy, and durable medical equipment.

Part C premium
-The Part C monthly premium varies by plan.

Part D premium
-The Part D monthly premium varies by plan (higher-income consumers may pay more

Who can get Medicare Part D?

Everyone with Medicare is eligible for this coverage, regardless of income and resources, health status, or current prescription expenses.Everyone with Medicare is eligible for this coverage, regardless of income and resources, health status, or current prescription expenses.

How does Medicare Part D coverage work?

Your decision about Medicare prescription drug coverage depends on the kind of health care coverage you have now. There are two ways to get Medicare prescription drug coverage. You can join a Medicare prescription drug plan or you can join a Medicare Advantage Plan or other Medicare Health Plan that offers drug coverage.

Whatever plan you choose, Medicare drug coverage will help you by covering brand-name and generic drugs at pharmacies that are convenient for you.

Like other insurance, if you join, generally you will pay a monthly premium, which varies by plan, and a yearly deductible. You will also pay a part of the cost of your prescriptions, including a copayment or coinsurance. Costs will vary depending on which drug plan you choose. Some plans may offer more coverage and additional drugs for a higher monthly premium. If you have limited income and resources, and you qualify for extra help, you may not have to pay a premium or deductible.

Why should I get Medicare Part D coverage?

Medicare prescription drug coverage provides greater peace of mind by protecting you from unexpected drug expenses. Even if you don’t use a lot of prescription drugs now, you should still consider joining. As we age, most people need prescription drugs to stay healthy. For most people, joining now means protection from unexpected prescription drug bills in the future.