The New Jersey Small Employer Health Benefits Program BUYER’S GUIDE
The New Jersey Small Employer Health
Benefits Program BUYER'S GUIDE
Published by: The Small Employer Health Benefits Program P.O. Box 325 Trenton, NJ 08625-0325 Visit Us on the Web At: dobi.seh/
2021 Edition 1
Introduction
Purpose of this Buyer's Guide
This Buyer's Guide provides explanations of the basic rules governing the purchase of health coverage by small employers in New Jersey. The Buyer's Guide includes frequently asked questions along with responses to the questions.
The Buyer's Guide can help you determine if your business qualifies for coverage in the New Jersey small employer market. For those businesses that qualify for small employer coverage the Buyer's Guide offers some general descriptions of the many coverage options that are available to businesses that qualify as small employers in New Jersey.
Please note: The rules discussed in this Buyer's Guide apply to the purchase of small employer coverage in the state-regulated small employer market. For information regarding the Small Business Health Options Program (SHOP) visit getcovered..
Laws Governing Small Employer Health Benefits Plans
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.
Overview of Small Employer Health Benefits Program
The Small Employer Health Benefits Program (SEH Program) defines a small employer as an employer with at least one but not more than 50 employees. The rules for counting employees are explained in the Eligibility section of this Buyer's Guide. Generally, small employers must satisfy participation and contribution requirements.
Although many businesses will qualify as small employers, some businesses will not. Businesses that do not qualify as small employers may purchase health coverage through the Individual Health Coverage Program. See getcovered. for more information.
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Eligibility
What is a Small Employer?
An employer that satisfies the requirements of the definition below is a small employer in New Jersey.
Small Employer means in connection with a Group Health Plan with respect to a Calendar Year and a Plan Year, an employer who employed an average of at least 1 but not more than 50 Employees on business days during the preceding Calendar Year and who employs at least 1 Employee on the first day of the Plan Year.
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 which was not in existence throughout the preceding Calendar Year, the determination of whether such employer is a small or large employer shall be based on the average number of Employees that it is reasonably expected such Employer will employ on business days in the current Calendar Year.
Please note: Small Employer includes an employer that employs more than 50 full-time Employees if the employer's workforce exceeds 50 full-time employees for no more than 120 days during the calendar year and the Employees in excess of 50 who were employed during such 120-day or fewer period were seasonal workers.
The key elements? 1 ? 50 employees on business days in the preceding calendar year At least 1 employee on the first day of the plan year
Who Counts as an Employee?
First, the technical definition
Employee means an Employee of the Policyholder under the common law standard as described in 26 CFR 31.3401(c)-1. An individual and his or her legal spouse when the business is owned by the individual or by the individual and his or her legal spouse, partners in a partnership, two percent shareholders in a Subchapter S corporation, sole proprietors and independent contractors are not employees of the Policyholder. Employee also excludes a leased employee. Now, let's break it down.
The definition counts common law employees
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Please note: Employees are paid and must be paid at least minimum wage. Carriers may ask for proof.
Pay attention to who is NOT an employee:
? Individual and spouse when one or both own the business ? Partners in a partnership ? 2% shareholders in S-corp ? Sole proprietors ? Independent contractors ? Leased employees And note that employees who are members of a union and covered under a union welfare arrangement ARE employees and must be counted the same as any other employee.
What happens if the employer is just starting in business?
If an employer 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 reasonably expected that the employer will employ on business days in the current calendar year.
Redetermination of Eligibility
Once a health benefits plan has been issued to a small employer the size of a small employer will be reviewed annually. Please refer to the discussion of guaranteed renewability in Advisory Bulletin 17-SEH-01.
Who can be covered under a Small Employer Plan?
Although the definition of Small Employer and Employee considers full-time to be 30 hours per week that definition of full-time is used solely for determining whether an employer is a Small Employer.
For purposes of determining which employees are eligible for insurance under a Small Employer plan and whether the Small Employer meets the participation requirement, full-time is defined as 25 hours per week.
Coverage tip 1: Although employee excludes an individual and spouse when one or both own the business, partners of partnerships, and a two percent shareholder in a Subchapter S corporation, and sole proprietors, such persons may be covered under a small employer plan provided they work at least 25 or more hours per week in the business and the employer has at least one but not more than 50 workers who qualify as employees and at least one employee will be covered under the plan. Under no circumstances may independent contractors and leased employees be covered under a small employer plan.
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Coverage tip 2: While full time is defined as 25 hours per week for eligibility, if the employer has only one employee, that employee would have to work at least 30 hours per week in order for the employer to qualify as a small employer. Thus, businesses that employ only one employee can buy a small employer plan only if that employee works at least 30 hours per week. Additionally, unless that employee will be covered under the plan there can be no group plan.
Participation and Contribution Requirements
Participation Requirement
At least 75 percent of the full-time employees (25 hours per week) must be covered under the small employer health benefits plan the employer is offering or covered under one of the following:
1. any fully insured health benefits plan offered by the small employer;
2. Medicare;
3. Medicaid or NJ FamilyCare;
4. another group health benefits plan;
5. a spouse's group health benefits plan; or
6. Tricare.
Note that coverage under an individual health benefits plan does not count toward satisfaction of the 75% participation requirement.
Tip: When calculating participation consider employees only. Do not count anyone else.
A carrier is not required to give participation credit for those employees who are covered under another carrier's contract issued to the same employer.
A carrier must offer at least one policy to a small employer's group if the employer meets the participation requirements. A carrier may permit a small employer to offer more than one of the carrier's small group health benefits policies to employees; however, the carrier may limit the number of additional policies it will issue, based on the carrier's "underwriting guidelines" available on the SEH Board's website (state.nj.us/dobi/division_insurance/ihcseh/shop_seh.htm). If a carrier has not provided underwriting guidelines to the SEH Board for posting, then the carrier does not limit the number of policies it will issue to a small employer's group.
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