New Jersey Continuation is based on a New Jersey law that allows persons who lose coverage for a variety of reasons to continue coverage under the group plan for fixed periods of time. Generally, New Jersey Continuation applies to employer groups where there are fewer than 20 employees.
There are some exceptions to the 20 or more guideline for COBRA and less than 20 guideline for New Jersey Continuation, so the best way to find out which law applies is to ask the employer or benefits administrator.
For information regarding ARRA as it specifically pertains to New Jersey Continuation – keep reading! Except as identified below, COBRA and New Jersey Continuation operate in the same manner and the information as it pertains to COBRA would apply.
To be eligible for the premium reduction an employee must:
- have lost group health coverage because of the employee’s involuntary termination of employment between September 1, 2008 and December 31, 2009; and
- be eligible for New Jersey Continuation.
Generally, a terminated employee is eligible for continuation provided the person was not terminated for cause, and the person was actually covered under the group health coverage on the date employment was terminated. For more information on eligibility for New Jersey Continuation please visit: http://www.state.nj.us/dobi/division_insurance/ihcseh/bulletins/sehblt07_02.pdf
There is an income threshold such that the full premium reduction is only available to individuals whose same year income will not exceed $125,000 for individual filers and $250,000 for joint filers. (If an individual takes advantage of the subsidy and in the same year exceeds the income limit, he or she will be required to repay the subsidy.)
Are dependents also eligible for the premium reduction?
Under the New Jersey Continuation law only the former employee has a right to elect continuation when there is a loss of coverage due to involuntary termination of employment. When the former employee elects continuation the former employee can elect coverage for the former employee and all eligible dependents. The premium reduction applies to coverage for all persons the former employee elects to cover who qualify as assistance eligible individuals. Dependents to not have an independent right to elect continuation when the loss of coverage is due to involuntary termination of employment but may independently be eligible as assistance eligible individuals.
What if an employer goes out of business? Is New Jersey Continuation still available?
No. New Jersey Continuation is only available to the extent that an employer continues to offer coverage under a group health plan.
How do former employees sign up for the premium reduction?
For employer groups subject to New Jersey Continuation, the carrier is required to send a notice to terminated employees so that the former employees whose employment was/is terminated between September 1, 2008 and December 31, 2009 can elect to continue their group coverage and receive the premium reduction. This is different than for COBRA eligible groups where the employer is required to send the notice.
The model notices that were released by the United States Department of Labor on March 19, 2009 are available on the agency’s website. The model notices include a notice that could be used for State continuation.
However, since New Jersey Continuation includes some provisions that are not contemplated by the model notice, we developed a notice for carriers to use to notify terminated employees of the premium reduction and it will be posted soon. Please visit the Latest News section of the Small Employer Health Benefits Program Board website for the text of the sample notice carriers may use.
Involuntary Termination between September 1, 2008 and February 16, 2009
Employees who were involuntarily terminated between September 1, 2008 and February 16, 2009 must elect the premium reduction no later than 30 days following receipt of the notice. This is a special election period. The premium reduction may apply to periods of coverage on or after February 17, 2009. However, for plans where the period of coverage begins on the first of the month, the premium reduction will first be available as of March 1. Neither the continuation coverage nor the premium reduction will be retroactive to the date coverage ended. For example, if an employee was involuntarily terminated September 1, 2008, and elects New Jersey Continuation and the premium reduction on April 10, 2009, the continuation coverage and premium reduction will not be retroactive to September 1, 2008. Rather, the continuation coverage and premium reduction will be effective March 1, 2009 if the coverage period began as of the first of the month.
Involuntary termination between February 17, 2009 and December 31, 2009
Employees who are involuntarily terminated between February 17, 2009 and December 31, 2009 must elect New Jersey Continuation within 30 days after coverage ended due to involuntary termination of employment and must elect the reduction within that same 30 day period.
How will the reduction be applied to New Jersey Continuation Coverage premium?
Former employees who qualify for the reduction will only be required to pay 35% of the New Jersey Continuation premium. The insurance carrier is initially responsible for the remaining 65%, and the government will later reimburse the carrier.
What happens if an employee was terminated between September 1, 2008 and February 16, 2009 but either did not elect New Jersey Continuation at that time, or elected it then lapsed due to non-payment?
If a former employee initially declined to elect New Jersey Continuation coverage, or elected New Jersey Continuation coverage and later stopped paying premiums, the employer should notify the former employee of an additional opportunity to elect New Jersey Continuation coverage and receive the subsidy. The former employee will have until April 18, 2009 to enroll.
What about Pre-Existing Condition Exclusions?
When providing coverage to former employees who elect group continuation coverage during this special election period, carriers may not apply pre-existing condition coverage limitations based on a gap in the coverage between the termination of coverage and the commencement of the New Jersey Continuation coverage.
Can an individual lose eligibility for the reduction?
Yes, in two ways. First, the reduction lasts no longer than 9 months. Second, a former employee become ineligible for the reduction when her or she becomes eligible for new group health coverage or Medicare.
What if a carrier refuses to allow a former employee whose coverage terminated between September 1, 2008 and February 16, 2009 to now elect New Jersey Continuation?
The New Jersey Department of Banking and Insurance will take appropriate action to ensure carrier cooperation. Please contact Ellen DeRosa at 609-633-1882 ext 50302 or by email at ellen.derosa@dobi.state.nj.us.
What if a carrier refuses to “pay” the 65% for a former employee electing New Jersey Continuation?
The New Jersey Department of Banking and Insurance will take appropriate action to ensure carrier cooperation. Please contact Ellen DeRosa at 609-633-1882 ext 50302 or by email at ellen.derosa@dobi.state.nj.us.
What if a New Jersey small employer refuses to provide New Jersey Continuation coverage or fails to provide notice of the subsidy?
The New Jersey Department of Labor and Workforce Development will take appropriate action in the event of an employer’s failure to comply with this law. Workers who have concerns about their employer’s compliance with New Jersey Continuation Coverage requirements under the ARRA may contact the New Jersey Department of Labor and Workforce Development, Division of Wage and Hour Compliance, in writing at P.O. Box 389, Trenton, NJ 08625-0389, by telephone at (609) 292-1704 or via e-mail at wage.hour@dol.state.nj.us. Workers whose employer is covered under federal COBRA should contact the U.S. Department of Labor, Employee Benefits Security Administration, at (866) 444-3272.
Where can I get more information on the reduction as it applies to New Jersey Continuation?
The following website has information on the reduction:
http://www.state.nj.us/dobi/division_consumers/insurance/arra.html
The following website has general information on New Jersey Continuation
http://www.state.nj.us/dobi/division_insurance/ihcseh/bulletins/sehblt07_02.pdf
