New Jersey Health Insurance Continuance

10.5.2017

An employer who has less than 20 employees in New Jersey does not have to provide health insurance continuation coverage to employees, right? Wrong. According to New Jersey law, small employers (2-50 employees) that are not subject to the Consolidated Omnibus Budget Reconciliation Act (COBRA) must offer continuation of medical and hospitalization coverage for qualified employees and their dependents.

New Jersey continuance law requires that New Jersey small employers with as few as 2 employees provide continuance of medical and hospitalization coverage for qualified employees and their dependents. Small employers may, although they are not required to, provide continuation of dental insurance as well.

When is a small employer's duty to provide continuance coverage triggered under New Jersey law? When a "qualifying event" occurs. A qualifying event includes termination of employment, reduction of an employee's hours to less than 25 hours per week, death of an employee, an employee's divorce or the date a dependent child ceases to be an eligible dependent (because of loss of full-time student status or age).

A small employer must notify an employee of his or her rights to continuation of coverage at the time of the qualifying event. The law is not specific on the details of notice, but the New Jersey Small Employer Health Benefits Program Board recommends that an employee be: notified that he or she has thirty (30) days from the qualifying event to elect in writing to the employer to continue coverage; informed that continuation coverage is available for up to 18 months from the qualifying event; and provided with a statement of premium amount. The statement should include to whom the payment should be sent, the monthly premium date and a statement that the first payment of premium is due from the employee within thirty (30) days of his or her written election to continue coverage. Small employers should note that they can charge an administration fee, but that the required premium payment cannot exceed 102% of the premium paid by active employees for the same plan.

Small employers should also be aware that the duration of continuation coverage may differ depending on the former employee's circumstances. Coverage can last up to thirty-six (36) months for the former employee's spouse or dependent child in cases of death or divorce. Coverage can last up to twenty-nine (29) months in cases where an employee is determined to have been disabled under the Social Security Act.

When can a small employer terminate coverage? Other than when time runs out, a small business can terminate coverage in several situations. For instance, an employer can end coverage if the employee does not pay premiums on a timely basis. Payments are considered timely if made within thirty (30) days after the due date or within any longer period that may be provided for by the insurance policy or contract. Also, if the employer ends its group health plan for active employees, or the employee becomes covered under any other health benefits plan, or under Medicare, the small business employer can end continuation coverage.

TAKEAWAY: Under New Jersey law, even small businesses may have to provide continuation coverage of health insurance to employees who leave their employment.

Tags: COBRAMedical CoverageNew Jersey Continuation LawNew Jersey Small Employers

BLOG DISCLAIMER

The postings on this blog were created for general informational purposes only and do not constitute legal advice or a solicitation to provide legal services.  Although we attempt to ensure that the postings are complete, accurate, and current as of the time of publication, we assume no responsibility for their completeness, accuracy, or timeliness.  The information in this blog is not intended to create, and receipt of it does not constitute, a lawyer-client relationship.  Readers should not act upon this information without seeking professional legal counsel.

This blog may contain links to independent third party websites and services, including social media. We provide these links for your convenience, and you access them at your own risk.  We have no control over and do not monitor the content or policies (including privacy policies) of these third-party websites and have no responsibility for, and no liability with respect to, their content, accuracy, or reliability.  Unless expressly stated, we do not endorse any of the linked websites or any product, service, or publication referenced herein or therein.  We will remove a link to any site from this blog upon request of the linked entity.

We grant permission to readers to link to this blog so long as this blog is not misrepresented. This site is not sponsored or associated with any other site unless so identified.

If you wish for Wilentz, Goldman & Spitzer, P.A., to consider representing you, please obtain contact information from the Contact Us area of this blog or go to the firm’s website at www.wilentz.com.  One of our lawyers will be happy to discuss the possibility of representation with you. However, the authors of Wilentz blogs are licensed only in New Jersey and/or New York and do not wish to represent anyone who viewed this site in a state where the site fails to comply with all laws and ethical rules of that state.

Sign Up