A MEMO TO THE SMALL EMPLOYER WITH BETWEEN 2

A MEMO TO THE SMALL EMPLOYER WITH BETWEEN 2 – 49 EMPLOYEES

If you are a small employer in the state of New Jersey, there are several things you should be aware of when it comes to health insurance. By law, you are not required to offer a group health insurance plan; however, it behooves you significantly to do so. First, you may need health insurance for your family, and this is the best way to get it. If not for that reason, offering a group health insurance plan will help you to attract and retain quality employees. Keep in mind employees can contribute up to 90% of the premium. The employer is responsible for paying a minimum of ten percent. Generally speaking, group health insurance provides greater coverage for less money than anything on the individual market.

2 employees can equal a small group!

Many employers are not aware of the fact that even if they have as few as one other employee besides themselves, they may qualify for a small group health insurance plan. Furthermore, you may need health insurance for your family, but your secretary may not need coverage as she has excellent health insurance benefits available to her from her husband’s employer. In this scenario, she can “waive” her right to benefits, and while she counts in bringing your total employee count to two, she does not count against the participation requirements as she has waived. If she does not have other coverage, and does not want to be a part of your group plan, you would not meet eligibility requirements and would not be able to proceed. Many people also ask if a spouse can be considered the second employee. If you own your own business and both spouses work for the business at least 25 hours per week and are each compensated, then yes, your spouse would count as employee number 2.

NJ Continuation

This state law is also referred to as “Mini-COBRA”. It gives your employees the right to continue health insurance coverage for a period of 12 months from the date of termination. As the employer, you have the right to charge an additional 2% of the premium to cover your administrative costs in keeping this person on your group plan when they are no longer an employee. You can elect to waive this 2% fee if you choose. When benefits are continued under either COBRA or NJ Continuation, the former employee must make a check payable to the former employer (or the company administrating COBRA if there is one). The employer will pay the health insurance premium to the insurance company for all active and continuing employees. Frequently, we get asked if the employee can send the check directly to the insurance company, and the answer to that is no.

COBRA

If you employ more than 20 employees you will be COBRA eligible. This federal law gives your employees the right to continue their group health insurance benefits when they would have otherwise terminated due to a number of different events, and for varying times frames depending on the reason. If you are the employee and you lose your job or your hours are reduced to the point that you would no longer be eligible to stay on the health insurance plan, you and your dependents can continue benefits for 18 months. If you become divorced, or the employee dies, the surviving spouse can continue benefits for 36 months. If your children become of age when they are no longer eligible to stay on the plan they too, can continue benefits for 36 months.

New Hires, Terminations, Births, Deaths

The most important message we can relay to you on these items is that life events almost always require some change to the health insurance. There are time requirements for timely filing, and the best thing to remember is this: If you hire someone, fire someone, an employee has a baby, or dies, a dependent child goes off to college, or graduates high school or college, call your insurance agent immediately. Just remember – life event, call your insurance agent. Your agent should be able to advise you of what paperwork needs to be done and in what timeframe so as to keep you within compliance of health insurance laws, and to keep your employees properly insured. Not doing the proper paperwork in a timely fashion can render negative consequences, such as a new hire having a one year waiting period for any pre-existing conditions. We recently had the employee of one of our groups call us to say his wife had a baby 7 weeks ago. Unfortunately, there will be a six month waiting period for any preexisting conditions for this baby because he was not added to the plan within 30 days of birth.

Keep in mind that when you set up your small group plan, you had to choose a waiting period for new-hires. When you hire someone mark your calendar for a month out from whatever your waiting period is, and do the necessary paperwork at that time. The waiting periods are anywhere from zero days to six months. Doing the paperwork in a timely fashion will simplify life for everyone. Likewise, when you terminate the employment of someone, remember that you MUST notify them in writing of their rights to continue their group health insurance benefits under either NJ Continuation or COBRA – whichever law pertains to your company. If you are uncertain of which law pertains to you or how to go about this properly, call your health insurance agent. If you do not have one, call our office and we will be happy to guide you accordingly.

Disability

A disabled employee may continue on a group health insurance plan indefinitely at their own expense. Information on state disability can be found by contacting NJ Department of Labor at 609-292-7060.

Irene Card & Betsy Chandler share the responsibilities of running Medical Insurance Claims, Inc. a health insurance services company. If you have questions relative to this column or other related topics, we invite you to call (973) 492-2828, browse our past columns on our web site at www.micinsurance.com.

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