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SECTION III: COMMONLY ASKED QUESTIONS FROM EMPLOYERS

Q1. Does The Law Require That I Provide Health Benefits For My Employees?
A1. No. However, if you provide group coverage, you must comply with the requirements of the law.

Q2. If I Offer Coverage, Must I Offer It To All Employees?
A2. No. However, if you do not offer coverage to all employees, any distinctions in deciding which employees will be offered coverage must be based on classes of employees, and the classes of employees must be based on conditions pertaining to employment (e.g. job title, length of service, salary, etc.). Other kinds of distinctions may not be legal.

In addition, you must still meet the 75 percent participation requirements based on the total number of eligible employees (i.e., employees working more than 25 hours per week). For example, in a group of ten employees, you would need eight or more employees covered either under your health benefits plan or plans or their spouses' plans (so long as their spouses' plans are not individual plans).

Q3. May A Self-Employed Husband And Wife Obtain Group Coverage Under The Small
Employer Health Benefits Program?
A3.Only if both are full-time eligible employees of the business. A carrier may ask for tax records for you and your spouse as proof that you are both bona fide employees. If only one spouse is working full-time and there are no other eligible employees, the couple may obtain only individual health coverage.

Q4. May A Small Employer Provide Coverage To Independent Contractors?
A4. A small employer may elect either to cover all independent contractors or not to cover independent contractors. A person is an independent contractor if he/she: (1) is performing a service for the employer pursuant to a written contract for monetary or other legal consideration; (2) is working exclusively for the employer; (2) works 25 or more hours per week for the employer; (4) works on other than a temporary or substitute basis; and (5) the independent contractor relationship has been established to serve a substantial business need of the employer and is not intended primarily to obtain insurance coverage.

Q5. If I Offer My Employees A Health Benefits Plan, May I Impose A Waiting Period Before They Can Enroll?
A5. You have the option of requiring a service waiting period of up to six months.

Q6. What If My Definition Of A “Part-Time Employee” Is More Or Less Than 25 Hours?
A6. The law requires that you use the 25-hour standard for determining eligibility for health benefits plans. You may use another definition for other purposes, but not for health benefits eligibility.

Q7. Under What Circumstances May A Carrier Impose A Pre-Existing Condition Exclusion On Any Members Of My Group?
A7. If your group contains six or more employees, the carrier is prohibited from imposing a pre-existing condition exclusion, except, in the case of late enrollees. If your group consists of two to five eligible employees, the carrier may decline to pay, for six months following the covered person's eligibility date for coverage, or the beginning of an employee's waiting period imposed by an employer, for treatment of a medical condition which was diagnosed and/or treated in the preceding six months. The “eligibility date” for an employee serving an employer's waiting period is the first day of the employer's waiting period.

Q8. Does Prior Coverage Protect A Member Of My Group From A Pre-Existing Condition Exclusion?
A8. Yes, under most circumstances. An employee will be credited for any “creditable coverage.” Creditable coverage includes individual or group insurance, and self-funded, or government funded (e.g., Medicare, Medicaid) health coverage so long as the coverage has not lapsed for more than 90 days. There are some exceptions in the law, so consult your agent, broker, carrier or lawyer.

Q9. May A Carrier Ask My Employees For Health Information?
A9. Yes. However, health information cannot affect the premium and may not be used as a basis for denying coverage. It may only be used for the purpose of determining pre-existing conditions.

Q10. Once I Have Purchased A Small Employer Health Benefits Plan, May A Carrier Continue To Require Me To Complete Forms?
A10. Yes. The carrier must require you to fill out an annual employer certification form in order to determine the number of employees and your participation rate. Failure to provide this information will result in non-renewal of coverage.

Q11. May I Offer My Employees More Than One Health Benefits Plan?
A11. Yes. For instance, you could offer your employees an HMO plan, a PPO plan, and an indemnity plan.

Q12. How Would Carriers Determine The Premium For My Group?
A12. Carriers may consider the age, gender, and family status of employees in the group, and the location of the business in New Jersey in determining the premium. Carriers may not consider the health status, nature of business, or past claims experience of a group in determining premium.

Q13. Are Rates Guaranteed For A Specific Period?
A13. That is up to the carrier. Ask the carrier or your broker or agent if rates are guaranteed and for how long.

Q14. What Can I Do If I Am Unhappy With The Rates Being Charged By My Current Carrier?
A14. You may be able to switch to a lower cost plan offered by your current carrier, or switch to another carrier offering lower rates. One of the goals of the reforms was to provide for “portability.” Portability enables you to shop around for coverage from another carrier without having to worry about new pre-existing condition exclusions. Remember, even if your employees or their dependents are considered poor health risks, all carriers must accept your group for coverage, and the premiums charged may not be based on health status or prior claims history.

Q15. What Is “Self-Insurance” And “Stop Loss” Or “Excess Risk” Insurance?
A15. Some employers, especially large employers, opt to provide health coverage to their employees through a self-funded arrangement. Under such an arrangement, the employer is liable for expenses for the health coverage offered to the employees. Most employers that self-fund elect to purchase “stop-loss” or “excess risk” insurance for some portion of their potential liability from claims under the contract for health coverage.

Stop loss and excess risk insurance is designed to reimburse the self-funded arrangement for catastrophic, excess or unexpected claims expenses. If an entity offers you a stop loss or excess risk plan and you are a small employer, make sure the limits in the plan, which are called “attachment points,” are at least $20,000 per person and 125 percent of expected claims per year. If a plan is offered to you with lower attachment points, the plan should not be offered or renewed and you should contact the Small Employer Health Board.

Q16. What Is The Impact On A Small Employer Group With Fewer Than 20 Employees With A Full-Time Employee Turning Age 65 And Becoming Eligible For Medicare?
A16. There are several issues to consider, from the employee perspective as well as the employer perspective. First, eligibility for Medicare does not preclude eligibility for coverage under the employer plan. Thus, the employee may be covered under both Medicare and the group plan. Second, while the employee may be covered under both Medicare and the group plan, there will be a coordination of benefits. There are rules to determine which plan pays first and which plan pays second. In this example where the employer has less than 20 employees, Medicare is the primary carrier, and must pay first. The employer plan will be the secondary carrier.

The purpose of a coordination of benefits is to allow a person to claim benefits from both Medicare and the employer plan, with the primary carrier paying benefits as if there were no other coverage, and the secondary carrier paying up to the difference between what the primary carrier paid and the amount of the allowable charge. Lastly, there may be an impact to the group rate. Carriers may, bur are not required to, consider Medicare eligibility in establishing rates, recognizing the fact that as the secondary payer, there is a reduced liability.

Q17. What Should I Do If I Have Questions That Are Not Answered Here?
A17. Contact your broker, agent or carrier for clarification or assistance. You can also visit the Small Employer Health Board's Web site at www.nj.gov/dobi/reform.htm . If you receive conflicting information from a carrier, broker or agent, contact the New Jersey Small Employer Health Benefits Program, P.O. Box 325, Trenton, NJ 08625 or you may fax your inquiry to (609) 633-2030