— Background —
New Jersey law1 requires that small employers (1-50 employees) provide expanded continuation of healthcare benefits for persons who lost eligibility under an employer’s health plan. New Jersey’s continuation coverage law generally applies to employers who employ fewer than 20 employees.
Employers with 20 or more employees are covered by the federal COBRA law. Employers with 20-50 eligible employees are covered by both COBRA and New Jersey’s group continuation requirements.
— Employee Eligibility for Continuation —
Any employee is eligible to receive continuing coverage as long as employment is terminated for a reason “other than for cause” or because their hours of employment were reduced to less than 25 per week.
Spouses and dependent children are also eligible for coverage. In the event of an employee’s death or divorce, his/her spouse and dependent children can continue coverage under the employer’s health plan.
These situations are referred to as “qualifying events.” More information can be found here.
— Time Limits —
An employee is entitled to a continuation period under their employer’s health benefits plan for up to 18 months. A spouse or dependent children are eligible for up to 36 months in the event of the death of the employee or divorce. An employee disabled under the Social Security Act is eligible to continue coverage for up to 29 months.
Eligible participants can receive coverage until the employer stops providing a health benefits plan; the employee fails to make timely premium payments; the participant becomes covered under another health plan; or the beneficiary becomes eligible for Medicare.
— Frequently Asked Questions —
How much can the former employer charge the qualified beneficiary for coverage?
The beneficiary can be required to pay the premium, but it may not exceed 102% of the applicable premium (or 150% for a disabled beneficiary). Premium payments should be made within 30 days after the due date, or within a longer period if provided by the policy.
What are the responsibilities of the former employee?
Former employees that choose State continuation of coverage must notify employers in writing within 30 days of termination or within 30 days of assuming part-time status.
What type of benefits must be offered under State continuation of coverage?
The coverage must be identical to that provided to “similarly situated qualified beneficiaries.” In other words, if an employer’s plan is altered for any group of beneficiaries, the continuation coverage must be modified in the same manner.
What if the cost of the premium goes up during the time of coverage?
Employers may ask qualified beneficiaries to pay an increased cost, but the rate must be established before each 12-month cycle.
When does coverage begin?
State continuation of coverage begins on the date that the benefits would have otherwise been lost due to termination of employment or the date when part-time hours begin.
What are employers’ responsibilities under the State continuation of coverage requirement?
Employers are required to notify qualified beneficiaries of their right to continue coverage at the time of termination of employment or when an employee’s hours are reduced to part-time status.
— Additional Resources —
More detailed information about New Jersey’s continuation of coverage law issued by the Small Employer Health Benefits Program is available by visiting
http://www.nj.gov/dobi/division_insurance/ihcseh/sehmain.htm
You can also contact Ellen DeRosa at ellen.derosa@dobi.state.nj.us or call 609-633-1882, ext. 50302.
For more information on the federal COBRA law, the U.S. Department of Labor has an employer’s guide available by visiting An Employer’s Guide to Group Health Continuation Coverage Under COBRA (dol.gov)
— For More Information —
If you need additional information, please contact NJBIA’s Member Action Center at 1-800-499-4419, ext. 3 or member411@njbia.org.
This information should not be construed as constituting specific legal advice. It is intended to provide general information about this subject and general compliance strategies. For specific legal advice, NJBIA strongly recommends members consult with their attorney.
