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SECTION II: HOW YOUR COVERAGE IS AFFECTED

All small employer health benefits plans must meet certain minimum requirements referred to in this Guide as “features of reform.” These features of reform include the following:

F1. Guaranteed Issuance
No eligible small employer group (as described in Section I) or member of the group may be denied coverage, regardless of health, prior claims experience, age, gender, occupation, nature of business, location of the business in New Jersey, or any other factor.

F2. Guaranteed Renewal
No eligible small employer group (as described in Section I) may be denied renewal of coverage, except for nonpayment of premium, fraud, or failure to meet a carrier's participation or contribution requirements.

F3. Limits On Pre-Existing Condition Exclusions
A “pre-existing condition” is a medical condition which manifests itself within six months of a person's enrollment date and which was diagnosed or treated during that six-month period. Carriers may not consider a pregnancy to be a pre-existing condition. If your group consists of two to five eligible employees, a carrier may refuse to cover pre-existing conditions for persons covered under your plan for the first six months your coverage is in effect.

If your group consists of six to 50 eligible employees, a carrier may not impose a pre-existing condition coverage exclusion on any member of your group, with the exception of a person who is considered a late enrollee, who may be required to satisfy a pre-existing condition exclusion for up to six months. A “late enrollee” essentially is someone who requests enrollment in your health benefits plan following the initial 30-day enrollment period. A late enrollee does not include a person who was covered under another employer's plan at the time he or she first becomes eligible under your plan, who then lost coverage under that other employer's plan, and requests coverage under your plan.

If a pre-existing condition limitation period is applied to an eligible employee or dependent, that person is covered under the plan for those first six months for all conditions, except for the pre-existing condition. Generally, if a covered person were subject to a pre-existing condition exclusion under the circumstances described above, he or she would receive credit towards the pre-existing condition waiting period if he or she had prior coverage. Credit for prior coverage provides for portability, enabling a small employer to switch carriers without having to worry about new pre-existing condition exclusions. Creditable coverage includes individual or group insurance, self-funded health coverage, and any federally funded health benefits program (e.g. Medicare, Medicaid), that had not lapsed more than 90 days prior to the effective date of the new coverage.

F4. Rating Restrictions
Carriers may consider only the age, gender, and family status of eligible employees, and the location of the employer in New Jersey in determining the premium for the group. Carriers may not consider any other factor, including health status or prior claims history of eligible employees or the type of business. Carriers are required to limit the range of premiums from the highest risk group and the lowest risk group to a two-to-one ratio.

F5. Continuation Of Coverage (as applicable to plans issued or renewed prior to March 7, 2005)
Small employers with between two and 19 employees, and other small employers not eligible for continuation under the federal “COBRA” law, must offer employees the option to continue their group health coverage, at the expense of the employee, when an employee is terminated for reasons other than cause, when he or she goes to a part-time status, or if an employee ends employment. An employee on continuation would pay his or her premium to you, which you would remit as part of your regular premium payment. Employers have the legal obligation to notify their employees of the right to continue coverage at the time of termination or at the time the employee assumes part-time status. An employee has the right to continue coverage for up to 12 months.

The policy or contract issued to you and the certificate or evidence of coverage issued to the covered employees outlines the procedures that the employer and employee must follow for continuation of coverage.

Small employers with 20 or more employees generally must offer continuation of coverage under a federal law, commonly referred to as “COBRA,” which contains provisions that differ from those described above.

F6. Employer Contribution
As described in Section I, carriers will require you to pay up to 10 percent of the cost of a group health benefits plan.

F7. Minimum Participation
As described in Section I, carriers will require that up to 75 percent of your eligible employees participate in the health benefits plan or plans you offer. Employees covered by a spouse's health benefits plan (except an individual plan) may decline coverage under your plan and still be counted as participating.

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