SECTION I: ELIGIBILITY, PARTICIPATION AND CONTRIBUTION REQUIREMENTS
If your company meets the
definition of a “small employer” and satisfies the
participation and contribution requirements described below, then you
are guaranteed
access to small group health benefits coverage.
Q1. Am I A Small Employer?
A1. Your business is a “small employer” if
it meets the following requirements:
It employed an average of at least two but
no more than 50 eligible employees on
business days during the preceding calendar year;
It employs at least two employees
on the first day of the plan year; and
A majority of its employees work at a
location in New Jersey.
An “eligible employee” is defined as someone working 25 or more hours per week on a regular basis, but excludes union employees who have collectively bargained for their health plan. While you may have, for other reasons, a different measure of what constitutes a full-time employee, for purposes of health coverage, you must use the law's definition of an “eligible employee.”
If you have affiliated companies, they are treated as one company. Companies are considered affiliates if they are treated as a single employer under the Internal Revenue Code. All eligible employees of all affiliated companies, including employees of out-of-state affiliates, are considered in determining eligibility.
If the number of eligible employees of affiliated companies when combined exceeds 50 eligible employees, the affiliated companies are not eligible for small group coverage. Your agent, broker or carrier can assist you in determining whether your companies are considered “affiliated companies.”
Q2. What Is A Participation
Requirement?
A2. A carrier will require that up to 75
percent of your eligible employees participate in a health benefits
plan your offer. However, an employee who is coverage by a spouse's
health benefits plan (except an individual plan), Medicare or another
group health plan is counted as if they were participating under your
plan, even if the employee declines coverage under your plan. In
addition, if you offer your employees more than one type of health
benefits plan, employees covered under other plans that you sponsor
count toward the 75 percent participation requirement.
Q3. What Is A Contribution
Requirement?
A3. A carrier will require you to pay up to
10 percent of the total cost of a health benefits plan. For example, if
the total cost of a plan for all employees and dependents was $10,000
per year, a carrier could require you, the employer, to contribute up
to $1,000 per year. Of course, you may always pay a greater percentage,
up to 100 percent of the entire premium.
The Following Example Will Help Illustrate These Eligibility Rules:
Calculation Of Size Of Employer
| Company ABC | 25 employees |
| Company XYZ |
34 employees |
|
(companies are affiliated) |
|
| Total | 59 employees |
|
Subtract |
|
| Employees working less than 25 hours per week | 15 employees |
| Employees covered by union benefits plan | 10 employees |
| Total Eligible Employees | 34 employees |
| Calculation Of Participation Requirement Of 75 Percent Requirement | |
| 75% of 34 “eligible employees” |
26 employees |
|
Credit Towards Requirement |
|
| Employees covered by spouse's plan | 5 employees |
| Employees participating in other coverage you offer | 9 employees |
| Minimum number of employees who must enroll to obtain coverage |
12 employees (26-(5+9)) |
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