New Jersey-2010-A992-Introduced

An Act concerning continuation of group coverage for certain former employees and their dependents and amending and supplementing various parts of the statutory law.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. (New section) a. (1) Every hospital service corporation contract that provides hospital or medical expense benefits and is delivered, issued, executed or renewed in this State pursuant to P.L.1938, c.366 (C.17:48-1 et seq.), or approved for issuance or renewal in this State by the Commissioner of Banking and Insurance on or after the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), shall offer continued coverage under the contract to any employee whose employment was terminated for a reason other than for cause.

(2) Every hospital service corporation contract that provides hospital or medical expense benefits and is delivered, issued, executed or renewed in this State pursuant to P.L.1938, c.366 (C.17:48-1 et seq.), or approved for issuance or renewal in this State by the Commissioner of Banking and Insurance on or after the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), shall offer continued coverage under the contract to: (a) any spouse who is a qualified beneficiary under the contract by reason of being the spouse of a covered employee on the day before the qualifying event; and (b) to any dependent child who is a qualified beneficiary under the contract by reason of being the dependent child of a covered employee on the day before the qualifying event, subject to the applicable terms of the contract.

(4) For the purposes of paragraphs (1) and (2) of this subsection, the anniversary date of the contract under which coverage is continued shall be the date the employee, spouse or dependent child becomes covered under the contract.

b. Coverage continued pursuant to this section shall be identical to the coverage provided under the contract to similarly situated employees or qualified beneficiaries. If coverage is modified under the contract for any group of similarly situated employees or qualified beneficiaries, this coverage shall also be modified in the same manner for persons who are entitled pursuant to subsection a. of this section to continued coverage. Continuation
of coverage may not be conditioned upon, or discriminate on the basis of, lack of evidence of insurability.

c. A hospital service corporation may require payment of a premium by the employee, spouse or dependent child having elected continued coverage for any period of the continued coverage pursuant to this section, except that the premium shall not exceed 102% of the applicable premium paid for similarly situated employees or beneficiaries under the contract for the specified period, and may, at the election of the payor, be made in monthly installments. No premium payment shall be due before the 30th day after the day on which the employee, spouse or dependent child made the initial election for continued coverage.

d. Coverage continued pursuant to this section shall continue until the earlier of the following:

(1) The date upon which the employer under whose health benefits coverage is continued ceases to provide any health benefits plan to any employee or qualified beneficiary;

(2) The date on which the continued coverage ceases under the contract by reason of a failure to make timely payment of any premium required under the contract by the employee, spouse or dependent child having elected continued coverage. The payment of any premium shall be considered to be timely if made within 30 days after the due date or within such longer period as may be provided for by the contract; or

(3) The date the employee, spouse or dependent child having elected continued coverage first becomes:

(a) 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 an employee or qualified beneficiary, for such period of the limitation or exclusion; or

(b) Entitled to benefits under Title XVIII of the Social Security Act, Pub.L.89-97 (42 U.S.C.s.1395 et seq.).

e. Notice shall be provided to employees in the certificate of coverage prepared for employees by the hospital service corporation on or about the commencement of coverage, and by the employer at the time of the qualifying event, as to their continuation rights under the contract.

2. (New section) a. (1) Every medical service corporation contract that provides hospital or medical expense benefits and is delivered, issued, executed or renewed in this State pursuant to P.L.1940, c.74 (C.17:48A-1 et seq.), or approved for issuance or renewal in this State by the Commissioner of Banking and Insurance on or after the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), shall offer continued coverage under the contract to any employee whose employment was terminated for a reason other than for cause.

(2) Every medical service corporation contract that provides hospital or medical expense benefits and is delivered, issued, executed or renewed in this State pursuant to P.L.1940, c.74 (C.17:48A-1 et seq.), or approved for issuance or renewal in this State by the Commissioner of Banking and Insurance on or after the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), shall offer continued coverage under the contract to: (a) any spouse who is a qualified beneficiary under the contract by reason of being the spouse of a covered employee on the day before the qualifying event; and (b) to any dependent child who is a qualified beneficiary under the contract by reason of being the dependent child of a covered employee on the day before the qualifying event, subject to the applicable terms of the contract.

b. Coverage continued pursuant to this section shall be identical to the coverage provided under the contract to similarly situated employees or qualified beneficiaries. If coverage is modified under the contract for any group of similarly situated employees or qualified beneficiaries, this coverage shall also be modified in the same manner for persons who are entitled pursuant to subsection a. of this section to continued coverage. Continuation of coverage may not be conditioned upon, or discriminate on the basis of, lack of evidence of insurability.

c. A medical service corporation may require payment of a premium by the employee, spouse or dependent child having elected continued coverage for any period of the continued coverage pursuant to this section, except that the premium shall not exceed 102% of the applicable premium paid for similarly situated employees or beneficiaries under the contract for the specified period, and may, at the election of the payor, be made in monthly installments. No premium payment shall be due before the 30th day after the day on which the employee, spouse or dependent child made the initial election for continued coverage.

d. Coverage continued pursuant to this section shall continue until the earlier of the following:

(1) The date upon which the employer under whose health benefits coverage is continued ceases to provide any health benefits plan to any employee or qualified beneficiary;

(3) The date the employee, spouse or dependent child having elected continued coverage first becomes:

(b) Entitled to benefits under Title XVIII of the Social Security Act, Pub.L.89-97 (42 U.S.C.s.1395 et seq.).

e. Notice shall be provided to employees in the certificate of coverage prepared for employees by the medical service corporation on or about the commencement of coverage, and by the employer at the time of the qualifying event, as to their continuation rights under the contract.

3. (New section) a. (1) Every health service corporation contract that provides hospital or medical expense benefits and is delivered, issued, executed or renewed in this State pursuant to P.L.1985, c.236 (C.17:48E-1 et seq.), or approved for issuance or renewal in this State by the Commissioner of Banking and Insurance on or after the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), shall offer continued coverage under the contract to any employee whose employment was terminated for a reason other than for cause.

(2) Every health service corporation contract that provides hospital or medical expense benefits and is delivered, issued, executed or renewed in this State pursuant to P.L.1985, c.236 (C.17:48E-1 et seq.), or approved for issuance or renewal in this State by the Commissioner of Banking and Insurance on or after the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), shall offer continued coverage under the contract to: (a) any spouse who is a qualified beneficiary under the contract by reason of being the spouse of a covered employee on the day before the qualifying event; and (b) to any dependent child who is a qualified beneficiary under the contract by reason of being the dependent child of a covered employee on the day before the qualifying event, subject to the applicable terms of the contract.

b. Coverage continued pursuant to this section shall be identical to the coverage provided under the contract to similarly situated employees or qualified beneficiaries. If coverage is modified under the contract for any group of similarly situated employees or qualified beneficiaries, this coverage shall also be modified in the same manner for persons who are entitled pursuant to subsection a. of this section to continued coverage. Continuation of coverage may not be conditioned upon, or discriminate on the basis of, lack of evidence of insurability.

c. A health service corporation may require payment of a premium by the employee, spouse or dependent child having elected continued coverage for any period of the continued coverage pursuant to this section, except that the premium shall not exceed 102% of the applicable premium paid for similarly situated employees or beneficiaries under the contract for the specified period, and may, at the election of the payor, be made in monthly installments. No premium payment shall be due before the 30th day after the day on which the employee, spouse or dependent child made the initial election for continued coverage.

d. Coverage continued pursuant to this section shall continue until the earlier of the following:

(1) The date upon which the employer under whose health benefits coverage is continued ceases to provide any health benefits plan to any employee or qualified beneficiary;

(3) The date the employee, spouse or dependent child having elected continued coverage first becomes:

(b) Entitled to benefits under Title XVIII of the Social Security Act, Pub.L.89-97 (42 U.S.C.s.1395 et seq.).

e. Notice shall be provided to employees in the certificate of coverage prepared for employees by the health service corporation on or about the commencement of coverage, and by the employer at the time of the qualifying event, as to their continuation rights under the contract.

4. (New section) a. (1) Every group health insurance policy that provides hospital or medical expense benefits and is delivered, issued, executed or renewed in this State, or approved for issuance or renewal in this State by the Commissioner of Banking and Insurance on or after the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), shall offer continued coverage under the policy to any employee whose employment was terminated for a reason other than for cause.

(2) Every group health insurance policy that provides hospital or medical expense benefits and is delivered, issued, executed or renewed in this State, or approved for issuance or renewal in this State by the Commissioner of Banking and Insurance on or after the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), shall offer continued coverage under the policy to: (a) any spouse who is a qualified beneficiary under the policy by reason of being the spouse of a covered employee on the day before the qualifying event; and (b) to any dependent child who is a qualified beneficiary under the policy by reason of being the dependent child of a covered employee on the day before the qualifying event, subject to the applicable terms of the policy.

(4) For the purposes of paragraphs (1) and (2) of this subsection, the anniversary date of the policy under which coverage is continued shall be the date the employee, spouse or dependent child becomes covered under the policy.

b. Coverage continued pursuant to this section shall be identical to the coverage provided under the policy to similarly situated employees or qualified beneficiaries. If coverage is modified under the policy for any group of similarly situated employees or qualified beneficiaries, this coverage shall also be modified in the same manner for persons who are entitled pursuant to subsection a. of this section to continued coverage. Continuation of coverage may not be conditioned upon, or discriminate on the basis of, lack of evidence of insurability.

c. A insurer may require payment of a premium by the employee, spouse or dependent child having elected continued coverage for any period of the continued coverage pursuant to this section, except that the premium shall not exceed 102% of the applicable premium paid for similarly situated employees or beneficiaries under the policy for the specified period, and may, at the election of the payor, be made in monthly installments. No premium payment shall be due before the 30th day after the day on which the employee, spouse or dependent child made the initial election for continued coverage.

d. Coverage continued pursuant to this section shall continue until the earlier of the following:

(1) The date upon which the employer under whose health benefits coverage is continued ceases to provide any health benefits plan to any employee or qualified beneficiary;

(2) The date on which the continued coverage ceases under the policy by reason of a failure to make timely payment of any premium required under the policy by the employee, spouse or dependent child having elected continued coverage. The payment of any premium shall be considered to be timely if made within 30 days after the due date or within such longer period as may be provided for by the policy; or

(3) The date the employee, spouse or dependent child having elected continued coverage first becomes:

(b) Entitled to benefits under Title XVIII of the Social Security Act, Pub.L.89-97 (42 U.S.C.s.1395 et seq.).

e. Notice shall be provided to employees in the certificate of coverage prepared for employees by the insurer on or about the commencement of coverage, and by the employer at the time of the qualifying event, as to their continuation rights under the policy.

5. Section 11 of P.L.1992, c.162 (C.17B:27A-27) is amended to read as follows:

11. a. (1) Every policy or contract issued to a small employer in this State, including, but not limited to, policies or contracts which are subject to this act and which are delivered, issued, renewed, or continued on or after January 1, 1994, shall offer continued coverage under the plan to any employee whose employment was terminated for a reason other than for cause and to any employee covered by such plan whose hours of employment were reduced to less than 25 subsequent to the effective date of coverage for that employee.

(2) Every policy or contract issued to a small employer in this State, including, but not limited to, policies or contracts which are subject to P.L.1992, c.162 (C.17B:27A-17 et seq.) and which are delivered, issued, renewed, or continued on or after the effective date of P.L.2004, c.162, shall offer continued coverage under the plan to: (a) any spouse who is a qualified beneficiary under the plan by reason of being the spouse of a covered employee on the day before the qualifying event; (b) to any dependent child who is a qualified beneficiary under the plan by reason of being the dependent child of a covered employee on the day before the qualifying event, subject to the applicable terms of the plan; and (c) to any such spouse or dependent child who is a qualified beneficiary under the plan whenever that spouse or dependent child is no longer entitled to coverage under the plan by reason of the death of the employee or the divorce of the employee from the spouse.

(3) The employee, spouse or dependent child shall make a written election for continued coverage within 30 days of a qualifying event. For the purposes of this section, "qualifying event" shall mean: (a) the date of termination of employment; (b) the date on which a reduction in an employee's hours of employment becomes effective; (c) the date of death of the employee; (d) the date of the divorce of the employee from the employee's spouse; or (e) the date the dependent child ceases to be an eligible dependent.

(4) For the purposes of paragraphs (1) and (2) of this subsection a., the date on which a health benefits plan is continued shall be the anniversary date of the issuance of the plan.

b. Coverage continued pursuant to [subsection a. of] this section shall consist of coverage which is identical to the coverage provided under the policy or contract to similarly situated employees or qualified beneficiaries. If coverage is modified under the policy or contract for any group of similarly situated employees or qualified beneficiaries, this coverage shall also be modified in the same manner for persons who are qualified employees or beneficiaries entitled pursuant to subsection a. of this section to continued coverage. Continuation of coverage may not be conditioned upon, or discriminate on the basis of, lack of evidence of insurability.

c. The health benefits plan may require payment of a premium by the employee, spouse or dependent child having elected continued coverage for any period of [continuation] the continued coverage as provided for in this section, except that the premium shall not exceed 102%[, or 150% in the case of continuation of coverage pursuant to paragraph (2) of subsection g. of this section,] of the applicable premium paid for similarly situated employees or beneficiaries under the health benefits plan for [a] the specified period, and may, at the election of the payor, be made in monthly installments. No premium payment shall be due before the 30th day after the day on which the [covered] employee, spouse or dependent child made the initial election for continued coverage.

d. Coverage continued pursuant to this section shall continue until the earlier of the following:

(1) The date upon which the employer under whose health benefits plan coverage is continued ceases to provide any health benefits plan to any employee or other qualified beneficiary;

(2) The date on which the continued coverage ceases under the health benefits plan by reason of a failure to make timely payment of any premium required under the plan by the [former] employee, spouse[,] or dependent child having the continued coverage. The payment of any premium shall be considered to be timely if made within 30 days after the due date or within such longer period as may be provided for by the policy or contract; or

(3) The date after the date of election on which the [qualified beneficiary] employee, spouse or dependent child having the continued coverage first becomes:

(a) 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 the covered employee, for such period of the limitation or exclusion; or

(b) Entitled to benefits under Title XVIII of the Social Security Act, Pub.L.89-97 (42 U.S.C.s.1395 et seq.).

e. Notice shall be provided to employees in the certificate of coverage prepared for employees by the carrier on or about the commencement of coverage and by the small employer at the time of the qualifying event as to their continuation rights under the plan. [A qualified beneficiary may elect continuation coverage offered pursuant to this section no later than 30 days after the qualifying event. For the purposes of this section, "qualified beneficiary" means any person covered under a small employer group policy who has a qualifying event.]

f. [The provisions of this section shall not apply to any person who is a qualified beneficiary for the purposes of continuation of coverage as provided in accordance with section 10002 of Title X of Pub.L.99-272 (29 U.S.C.s.1161 et seq.).] (Deleted by amendment, P.L. , c. .)

g. [Continuation of] Continued coverage shall be provided [for] under this section [shall not exceed 18 months from the qualifying event], except [that:

(1) In] as provided for in subsection d. of this section or in the case of a spouse or dependent child who is a qualified beneficiary, continuation of coverage shall extend until the date 36 months after the date the spouse's or dependent child's benefits under the policy or contract would otherwise have terminated by reason of the death of the employee, the divorce of the employee from the spouse or a dependent child ceasing to be a dependent child under the applicable provisions of the policy or contract[; and

(2) In the case of an employee who is determined to have been disabled under Title II or XVI of the Social Security Act (42 U.S.C.ss.401-433 or 42 U.S.C.ss.1381-1383) at the time of termination of employment or at any time during the first 60 days of continuation of coverage, 29 months after the date benefits under the policy or contract would have terminated pursuant to paragraph (1) of subsection a. of this section; provided, however, that if the employee is no longer disabled, continuation of coverage shall terminate on the later date of 18 months or the month that begins more than 31 days after the date of final determination under Title II or Title XVI of the Social Security Act (42 U.S.C.ss.401-433 or 42 U.S.C.ss.1381-1383) that the employee is no longer disabled. The employee shall provide notification of the disability determination under Title II or XVI of the Social Security Act (42 U.S.C.ss.401-433 or 42 U.S.C.ss.1381-1383) to the carrier within 60 days of the date of that determination, and within 18 months of the date benefits under the policy or contract would have terminated pursuant to paragraph (1) of subsection a. of this section].

(cf: P.L.2004, c.162, s.1)

6. (New section) a. (1) A certificate of authority to establish and operate a health maintenance organization in this State pursuant to P.L.1973, c.337 (C.26:2J-1 et seq.) shall not be issued or continued by the Commissioner of Banking and Insurance on or after the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill) unless the health maintenance organization offers continued coverage under the contract to any employee whose employment was terminated for a reason other than for cause.

(2) A certificate of authority to establish and operate a health maintenance organization in this State pursuant to P.L.1973, c.337 (C.26:2J-1 et seq.) shall not be issued or continued by the Commissioner of Banking and Insurance on or after the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill) unless the health maintenance organization offers continued coverage under the contract to: (a) any spouse who is a qualified beneficiary under the contract by reason of being the spouse of a covered employee on the day before the qualifying event; and (b) to any dependent child who is a qualified beneficiary under the contract by reason of being the dependent child of a covered employee on the day before the qualifying event, subject to the applicable terms of the contract.

b. Coverage continued pursuant to this section shall be identical to the coverage provided under the contract to similarly situated employees or qualified beneficiaries. If coverage is modified under the contract for any group of similarly situated employees or qualified beneficiaries, this coverage shall also be modified in the same manner for persons who are entitled pursuant to subsection a. of this section to continued coverage. Continuation of coverage may not be conditioned upon, or discriminate on the basis of, lack of evidence of insurability.

c. A health maintenance organization may require payment of a premium by the employee, spouse or dependent child having elected continued coverage for any period of the continued coverage pursuant to this section, except that the premium shall not exceed 102% of the applicable premium paid for similarly situated employees or beneficiaries under the contract for the specified period, and may, at the election of the payor, be made in monthly installments. No premium payment shall be due before the 30th day after the day on which the employee, spouse or dependent child made the initial election for continued coverage.

d. Coverage continued pursuant to this section shall continue until the earlier of the following:

(1) The date upon which the employer under whose health benefits coverage is continued ceases to provide any health benefits plan to any employee or qualified beneficiary;

(3) The date the employee, spouse or dependent child having elected continued coverage first becomes:

(b) Entitled to benefits under Title XVIII of the Social Security Act, Pub.L.89-97 (42 U.S.C.s.1395 et seq.).

e. Notice shall be provided to employees in the certificate of coverage prepared for employees by the health maintenance organization on or about the commencement of coverage, and by the employer at the time of the qualifying event, as to their continuation rights under the contract.

7. (New section) a. (1) The State Health Benefits Commission shall ensure that every contract purchased or renewed by the commission on or after the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill) offers continued coverage to any employee whose employment was terminated for a reason other than for cause.

(2) The State Health Benefits Commission shall ensure that every contract purchased or renewed by the commission on or after the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill) offers continued coverage to: (a) any spouse who is a qualified beneficiary under the contract by reason of being the spouse of a covered employee on the day before the qualifying event; and (b) to any dependent child who is a qualified beneficiary under the contract by reason of being the dependent child of a covered employee on the day before the qualifying event, subject to the applicable terms of the contract.

b. Coverage continued pursuant to this section shall be identical to the coverage provided under the contract to similarly situated employees or qualified beneficiaries. If coverage is modified under the contract for any group of similarly situated employees or qualified beneficiaries, this coverage shall also be modified in the same manner for persons who are entitled pursuant to subsection a. of this section to continued coverage. Continuation of coverage may not be conditioned upon, or discriminate on the basis of, lack of evidence of insurability.

c. The State Health Benefits Commission may require payment of a premium by the employee, spouse or dependent child having elected continued coverage for any period of the continued coverage pursuant to this section, except that the premium shall not exceed 102% of the applicable premium paid for similarly situated employees or beneficiaries under the contract for the specified period, and may, at the election of the payor, be made in monthly installments. No premium payment shall be due before the 30th day after the day on which the employee, spouse or dependent child made the initial election for continued coverage.

d. Coverage continued pursuant to this section shall continue until the earlier of the following:

(1) The date upon which the State Health Benefits Commission under whose health benefits coverage is continued ceases to provide any health benefits plan to any employee or qualified beneficiary;

(3) The date the employee, spouse or dependent child having elected continued coverage first becomes:

(b) Entitled to benefits under Title XVIII of the Social Security Act, Pub.L.89-97 (42 U.S.C.s.1395 et seq.).

e. Notice shall be provided to employees in the certificate of coverage prepared for employees by the State Health Benefits Commission on or about the commencement of coverage, and at the time of the qualifying event, as to their continuation rights under the contract.

8. This act shall take effect on the 90th day after enactment.

STATEMENT

This bill requires hospital, medical and health service corporations, group insurers, health maintenance organizations and the state Health Benefits Commission to provide continuation of health insurance coverage to qualified former employees and their beneficiaries (the employee's spouse and dependent child). A qualified former employee includes any employee whose employment was terminated for a reason other than for cause.

The continuation of coverage would be available to the employees and beneficiaries indefinitely, as long as the employee or beneficiary elects to maintain the coverage, or until:

(1) the employer ceases to provide any group health plan to any employee or other beneficiary;

(2) the continuation of coverage ceases because the employee or beneficiary failed to make a timely payment of any premium required under the plan;

(3) employee or beneficiary obtains coverage under any other health benefits or group health plan, which does not contain a provision which limits or excludes coverage with respect to any preexisting condition of the employee or beneficiary; or

(4) the employee or beneficiary becomes entitled to Social Security disability benefits.

The premium for the continuation of coverage may be up to 102% of the applicable premium paid for similarly situated employees or beneficiaries under the group health plan.

This bill amends P.L.1992, c.162 (C.17B:27A-17 et seq.) regarding small employer health benefits plans, which provides that employees covered under a contract issued to a group with fewer than 50 employees may purchase continued health benefits coverage for themselves or qualified beneficiaries. The bill removes provisions that limited the amount of time which coverage could be continued and allows employees or beneficiaries to continue the coverage indefinitely or until the:

(1) the employer ceases to provide any group health plan to any employee or other beneficiary;

(2) the continuation of coverage ceases because the employee or beneficiary failed to make a timely payment of any premium required under the plan;

(4) the employee or beneficiary becomes entitled to Social Security disability benefits.