In New Jersey, employees who are separated from their jobs for a variety of reasons may be eligible for a continuation of coverage under the federal Consolidated Omnibus Budget Reconciliation Act or COBRA. However, this federal law only covers employers that have had 20 or more employees working for at least one-half of the previous calendar year’s business days, meaning that many workers at small businesses may not be eligible for continuation coverage of their health benefits when they leave their jobs. However, New Jersey has its own law that provides for continuation of the health insurance coverage for employees, spouses, and dependent children at employers with fewer than 20 employees in some cases. Here is what the attorneys at Swartz Swidler believe you need to know about the New Jersey Continuation Coverage Rules or NJCCR.
What is the New Jersey Continuation Coverage Rules law?
The NJCCR is a state law that mandates that certain small businesses offer continued coverage of health insurance benefits for some employees, their dependent children, and their spouses. The federal law, COBRA, mandates that employers with 20 or more employees for at least one-half of the previous calendar year who offer health coverage to their employees offer continuing health coverage after their employees are terminated from their positions for set periods. The employers do not have to subsidize the coverage, and employees who elect to take it must pay the premiums out of pocket and a 2% administrative fee.
The NJCCR is also called the New Jersey mini-COBRA law because it applies to employers in New Jersey that offer health insurance to their employees that have from two and 50 workers when the majority of the employees work in New Jersey for at least one-half of the days in the previous year’s last quarter. Workers who qualify for continued coverage under COBRA are not eligible for coverage under the NJCCR.
Eligibility under the NJCCR
The following workers are eligible for continued health coverage under the NJCCR:
- Workers who are terminated for reasons that don’t include for-cause firings
- Workers whose scheduled hours have been dropped to less than 25 hours per week
- Dependent children and spouses of employees who die
- Dependent children and spouses in the event of a divorce
- Dependent children who age out or lose their full-time status as students
How long does the coverage last under the NJCCR?
For workers who are terminated or who have their hours reduced to below 25 per week, they can receive up to 18 months of continued health coverage. The dependent children and spouses of workers who lose their coverage because of divorce or the death of the employee or because the dependent children are no longer eligible can receive 36 months of continued health coverage. Employees who have been found to be disabled by the Social Security Administration when they are terminated or during the 60 days following the continued coverage can continue coverage for 29 months. Finally, if the worker is no longer disabled, his or her continued coverage will end at 18 months or the month that starts 31 days after the date that the determination the employee is not disabled is made, whichever is later.
All employees must be notified by the employer’s health insurance carrier that they have rights to continued coverage when they enroll. Employers must notify workers that they have the right to continue coverage when a qualifying event occurs. This notice must be in writing and include information about the duration of the continued coverage, the date when the workers should return their election to continue coverage, the monthly premium amount that they will have to pay, and the date each month when the payments will be due. They must also notify the employees how they are supposed to make their monthly premium payments. Eligible employees and their dependent children or spouses must make written elections to continue coverage no later than 30 days after their qualifying events.
Employers are allowed to charge 100% of the premiums plus a 2% administrative fee. For employees who have been declared to be disabled, the employers are allowed to charge 150% of the premium from month 19 to 29.
Terminating continued coverage
Employers are allowed to terminate the continued coverage of workers in several situations. If the employer stops providing health insurance to their employees, they can terminate the coverage of any former employees or their dependents who are receiving continued coverage. The coverage can also be terminated if the employee, child, or spouse does not make their payments on time. Continued coverage can also be terminated if the beneficiaries gain coverage under a new plan as long as the new plan does not exclude coverage for pre-existing conditions. Finally, NJCCR coverage can end when the beneficiaries become eligible for Medicare.
Get help from the attorneys at Swartz Swidler
If you believe that your employer should have offered continued health insurance coverage when one of the previously described qualifying events occurred but failed to do so, you may have legal rights. Talk to the employment law attorneys at Swartz Swidler by filling out our online contact form.