Sponsored by:
Assemblyman LOUIS D. GREENWALD
District 6 (Camden)
Assemblyman MATTHEW W. MILAM
District 1 (Cape May, Atlantic and Cumberland)
SYNOPSIS
Provides for the continuation of health insurance coverage for certain employees and their dependents when an employer ceases to exist.
CURRENT VERSION OF TEXT
As introduced.
An Act concerning continuation of health benefits coverage for certain persons and supplementing P.L.1992, c.162 (C.17B:27A-17 et seq.) and chapter 27 of Title 17B of the New Jersey Statutes.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. a. (1) Notwithstanding the provisions of any law to the contrary, whenever the employment of a covered employee under a small employer health benefits plan is terminated because the employer ceases to exist, the benefits of the plan may be continued, as provided in this section, for the covered employee and any spouse or dependent child who is a qualified beneficiary under the plan on the day prior to the employee's termination, for a period of up to 18 months from the employee's termination date.
(2) The period of continued coverage for the employee, spouse, or dependent child shall continue until the earlier of the following:
(a) The date upon which the 18-month period expires;
(b) The date upon which the continued coverage ceases under the small employer health benefits plan by reason of a failure to make timely payment of any premium required under the plan by the employee as required under subsection c. of this section. The payment of any premium shall be considered to be timely if made within 30 days after the due date or within a longer period as may be provided for by the plan; or
(c) The date after a date of election, by the employee, spouse, or dependent child, on which that particular individual first becomes:
(i) covered under any other health benefits plan, as an employee or otherwise, which does not contain a provision which limits or excludes coverage with respect to any preexisting condition of a covered employee or any spouse or dependent child who is included under the coverage provided, for the period of the limitation or exclusion; or
(ii) entitled to benefits under Title XVIII of the Social Security Act (42 U.S.C. s.1395 et seq.).
b. The extended coverage for the period provided in subsection a. of this section shall be available to the terminated employee and any spouse or dependent child who is a qualified beneficiary under the small employer health benefits plan on the day prior to the covered employee's termination because the employer ceases to exist, at the monthly premium rate not to exceed 102% of the premium in effect on the day prior to the employer ceasing to exist or as changed on the anniversary date of the small employer health benefits plan. A carrier may increase rates on the plan anniversary of the discontinued plan using the filed small employer health benefits plan rates for the plan of benefits; however, the increase shall not exceed the lower of 15% or the medical trend assumption used in developing small employer health benefits plan rates.
c. An employee who was covered under the small employer health benefits plan that was terminated because the employer ceases to exist, shall elect to continue the extended coverage provided in this section no later than 30 days after the employee receives notice from the carrier, as provided in subsection d. of this section, about the availability of extended coverage. The election shall apply to the covered employee and any spouse or dependent child who is a qualified beneficiary under the plan on the day prior to the employee's termination. The covered employee shall be responsible for the payment of monthly premiums directly to the carrier and shall not be required to pay more than a monthly premium at one time.
d. (1) Whenever a small employer health benefits plan is delivered, issued, renewed, or continued to an employer and that employer ceases to exist on or after 90 days next preceding the effective date of this section, the small employer carrier shall make available to a covered employee and any spouse or dependent child who is a qualified beneficiary under the plan on the day prior to the employee's termination, the same benefits under the plan in effect on the day prior to the date the employer ceases to exist.
(2) Upon receipt of information that an employer ceases to exist, the small employer carrier shall promptly notify all covered employees of that employer, in writing, about the availability of extended coverage pursuant to this section.
e. The provisions of this section shall be in effect for the duration of federal premium assistance for continuation coverage, as provided in section 3001(a)(12)(A) of title III of division B of the "American Recovery and Reinvestment Act of 2009," Pub.L.111-5 (26 U.S.C. s.6432).
2. a. (1) Notwithstanding the provisions of any law to the contrary, whenever the employment of a covered employee under a group health benefits plan is terminated because the employer ceases to exist, the benefits of the plan may be continued, as provided in this section, for the covered employee and any spouse or dependent child who is a qualified beneficiary under the plan on the day prior to the employee's termination, for a period of up to 18 months from the employee's termination date.
(2) The period of continued coverage for the employee, spouse, or dependent child shall continue until the earlier of the following:
(a) The date upon which the 18-month period expires;
(b) The date upon which the continued coverage ceases under the group health benefits plan by reason of a failure to make timely payment of any premium required under the plan by the employee as required under subsection c. of this section. The payment of any premium shall be considered to be timely if made within 30 days after the due date or within a longer period as may be provided for by the plan; or
(c) The date after a date of election, by the employee, spouse, or dependent child, on which that particular individual first becomes:
(i) covered under any other health benefits plan, as an employee or otherwise, which does not contain a provision which limits or excludes coverage with respect to any preexisting condition of a covered employee or any spouse or dependent child who is included under the coverage provided, for the period of the limitation or exclusion; or
(ii) entitled to benefits under Title XVIII of the Social Security Act (42 U.S.C. s.1395 et seq.).
b. The extended coverage for the period provided in subsection a. of this section shall be available to the terminated employee and any spouse or dependent child who is a qualified beneficiary under the group health benefits plan on the day prior to the covered employee's termination because the employer ceases to exist, at the monthly premium rate not to exceed 102% of the premium in effect on the day prior to the employer ceasing to exist or as changed on the anniversary date of the group health plan. A health insurer may increase rates on the plan anniversary of the discontinued plan; however, the increase shall not exceed the lower of 15% or the medical trend assumption used in developing group health plan rates for comparable plans issued by the insurer. A health insurer that increases rates shall promptly notify the Department of Banking and Insurance, in writing, concerning the medical trend assumption that it used in developing the rates.
c. An employee who was covered under the group health plan that was terminated because the employer ceases to exist shall elect to continue the extended coverage provided in this section no later than 30 days after the employee receives notice from the health insurer, as provided in subsection d. of this section, about the availability of extended coverage. The election shall apply to the covered employee and any spouse or dependent child who is a qualified beneficiary under the plan on the day prior to the employee's termination. The covered employee shall be responsible for the payment of monthly premiums directly to the health insurer and shall not be required to pay more than a monthly premium at one time.
d. (1) Whenever a group health benefits plan is delivered, issued, renewed, or continued to an employer and that employer ceases to exist on or after 90 days next preceding the effective date of this section, the health insurer shall make available to a covered employee and any spouse or dependent child who is a qualified beneficiary under the plan on the day prior to the employee's termination, the same benefits under the plan in effect on the day prior to the date the employer ceases to exist.
(2) Upon receipt of information that an employer ceases to exist, the health insurer shall promptly notify all covered employees of that employer, in writing, about the availability of extended coverage pursuant to this section.
e. As used in this section, "health insurer" shall have the same meaning as provided in section 14 of P.L.1997, c.146 (C.17B:27-54).
f. The provisions of this section shall be in effect for the duration of federal premium assistance for continuation coverage, as provided in section 3001(a)(12)(A) of title III of division B of the "American Recovery and Reinvestment Act of 2009," Pub.L.111-5 (26 U.S.C. s.6432).
3. This act shall take effect immediately.
STATEMENT
This bill provides for the continuation of health insurance coverage for employees and their dependents covered under small employer (between 2 and 50 employees) and larger group health benefits plans when an employer ceases to exist. Based on this coverage extension, the bill may enable such individuals to benefit from federal subsidies that cover 65% of the premium cost for such coverage, if they are deemed "assistance eligible individuals" under the federal law. The federal subsidy and its eligibility requirements are set forth in section 3001(a)(12)(A) of title III of division B of the "American Recovery and Reinvestment Act of 2009," Pub.L.111-5 (26 U.S.C. s.6432).
Under the bill, whenever, on or after 90 days next preceding its effective date, an employer ceases to exist, the insurer for that employer's health benefits plan shall make available the same benefits under that plan to a covered employee and any spouse or dependent child who is a qualified beneficiary on the day prior to the employer ceasing to exist. Notice of such available coverage extension shall be provided by the insurer to the employees of that employer upon receipt of information that the employer ceases to exist. An employee shall elect the coverage extension no later than 30 days after the employee receives the insurer's notice.
If elected, the period of continued coverage provided under the bill shall extend for 18 months. However, within that 18-month period, coverage shall discontinue: (1) for all covered individuals if there is a failure to make timely premium payments as required under the plan; and (2) with respect to each individual, if that particular individual becomes covered under any other health benefits plan, as an employee or otherwise, or is entitled to Medicare benefits under Title XVIII of the federal Social Security Act (42 U.S.C. s.1395 et seq.).
The monthly premium rate charged for the continued coverage shall not exceed 102% of the premium in effect on the day prior to the employer ceasing to exist or as changed on the previously measured anniversary date of the plan. Any such anniversary change in the premium shall not exceed the lower of 15% or the medical trend assumption used in developing the plan's rates. The covered employee shall be responsible for the payment of monthly premiums directly to the insurer and shall not be required to pay more than a monthly premium at one time.
The provisions of the bill shall be in effect for the duration of federal premium assistance for health insurance continuation coverage, as provided in section 3001(a)(12)(A) of title III of division B of the "American Recovery and Reinvestment Act of 2009," Pub.L.111-5 (26 U.S.C. s.6432).