New Jersey-2012-S1442-Introduced

An Act concerning health benefits plans continuation coverage 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. 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 per week 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; or (f) the date that the continuation of coverage period ends for any person who is a qualified beneficiary for the purposes of federal 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.).

(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 qualified beneficiaries. If coverage is modified under the policy or contract for any group of similarly situated qualified beneficiaries, this coverage shall also be modified in the same manner for persons who are qualified 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 for any period of continuation 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 beneficiaries under the health benefits plan for a 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 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 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] Except as provided in paragraph (2) of subsection h. of this section, 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.).

g. [Continuation] Except as provided in subsection h. of this section, continuation of coverage provided for a qualified beneficiary who has a qualifying event pursuant to subparagraphs (a) through (e) of paragraph (3) of subsection a. of [under] this section shall [not exceed] be provided for up to 18 months from the qualifying event, except that:

(1) 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] U.S.C.s.401 et seq. or 42 [U.S.C.ss.1381-1383] U.S.C.s.1381 et seq.) 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] U.S.C.s.401 et seq. or 42 [U.S.C.ss.1381-1383] U.S.C.s.1381 et seq.) 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] U.S.C.s.401 et seq. or 42 [U.S.C.ss.1381-1383] U.S.C.s.1381 et seq.) 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.

h. (1) Continuation of coverage provided for a qualified beneficiary who has a qualifying event pursuant to subparagraphs (a) through (e) of paragraph (3) of subsection a. of this section, under a policy or contract delivered, issued, renewed, or continued on or after the effective date of P.L. , c. _(C. )_(pending before the Legislature as this bill) shall be provided for up to 36 months from the qualifying event.

(2) Continuation of coverage provided for a qualified beneficiary who has a qualifying event pursuant to subparagraph (f) of paragraph (3) of subsection a. of this section, under a policy or contract delivered, issued, renewed, or continued on or after the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), shall be provided from the date of the qualifying event, for up to 36 months after the date that federal continuation of coverage began as provided in accordance with section 10002 of Title X of Pub.L.99-272 (29 U.S.C.s.1161 et seq.).

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

2. (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 or whose hours of employment were reduced to less than 25 hours per week subsequent to the effective date of coverage of that employee.

(2) Continued coverage under the policy shall be offered 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.

(3) The employee, spouse or dependent child shall make a written election for continued coverage within 30 days of the qualifying event. For the purposes of this section, "qualifying event" shall mean the date that the continuation of coverage period ends for any person who is a qualified beneficiary for the purposes of federal 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.).

(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. Continued coverage shall be provided from the date of the qualifying event, for up to 36 months after the date the federal continuation of coverage began as provided in accordance with section 10002 of Title X of Pub.L.99-272 (29 U.S.C.s.1161 et seq.). 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:

(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, (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.

3. (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 or whose hours of employment were reduced to less than 25 hours per week subsequent to the effective date of coverage of that employee.

(2) Continued coverage shall be offered 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.

(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 the date that the continuation of coverage period ends for any person who is a qualified beneficiary for the purposes of federal continuation of coverage as provided in accordance with chapter 6A of the "Public Health Service Act," (42 U.S.C. 300bb-1 et seq.).

(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. Continued coverage shall be provided from the date of the qualifying event, for up to 36 months after the date the federal continuation of coverage began as provided in accordance with chapter 6A of the "Public Health Service Act," (42 U.S.C. 300bb-1 et seq.). 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;

(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, (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.

4. (New section) a. (1) The School Employees' 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 or whose hours of employment were reduced to less than 25 hours per week subsequent to the effective date of coverage of that employee.

(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 the date that the continuation of coverage period ends for any person who is a qualified beneficiary for the purposes of federal continuation of coverage as provided in accordance with chapter 6A of the "Public Health Service Act," (42 U.S.C. 300bb-1 et seq.).

b. Continued coverage shall be provided from the date of the qualifying event, for up to 36 months after the date the federal continuation of coverage began as provided in accordance with chapter 6A of the "Public Health Service Act," (42 U.S.C. 300bb-1 et seq.). 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 School Employees' 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 School Employees' 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:

(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, (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 School Employees' 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.

5. This act shall take effect on the 30^th day following enactment.

STATEMENT

This bill provides for the continuation of health insurance coverage for 36 months for persons who are covered as qualified beneficiaries under certain employer health benefits plans and programs, and who experience qualifying events - reduction to less than 25 hours of employment per week, or termination for a reason other than for cause. The bill applies additional continuation requirements to existing continuation requirements that apply, under State or federal law, to the Small Employer Health Benefits Program, commercial group health insurance, the State Health Benefits Program, and the School Employees' Health Benefits Program.

Current law, commonly known as New Jersey's mini-COBRA law, governs continuation requirements for health benefits plans offered by small employers with less than 20 employees pursuant to the Small Employer Health Benefits Program, P.L.1992, c.162 (C.17B:27A-17 et seq.). The mini-COBRA law provides that these health benefits plans must offer continuation coverage to qualified beneficiaries after certain qualifying events for periods that range from 18 months to 36 months, depending on the circumstances of the beneficiary. The bill provides uniformity as to the extent to which continuation coverage must be offered to all qualified beneficiaries by providing 36 months of continuation coverage for all employees covered by small employer plans that are subject to mini-COBRA.

Federal COBRA currently governs continuation requirements for: small employers with 20 to 50 employees who offer health benefits plans pursuant to the Small Employer Health Benefits Program; employers with more than 50 employees who provide commercial group health insurance pursuant to N.J.S.17B:27-26 et seq.; the State Health Benefits Program (P.L.1961, c.49 (C.52.14-17.25 et seq.)); and the School Employees' Health Benefits Program (P.L.2007, c.103 (C.52:14-17.46.1 et seq.)).

Federal COBRA provides that these employers must offer continuation coverage to qualified beneficiaries after certain qualifying events for periods that range from 18 months to 36 months, depending on the circumstances of the beneficiary. This bill provides that as to policies and contracts provided by these employers, when continuation of coverage ends under federal COBRA, coverage shall be continued under the terms established by the bill, from the date that federal continuation of coverage ends, for up to 36 months after the date that federal continuation of coverage began. Thus, when federal COBRA continuation coverage is exhausted, the bill's requirements for continuation coverage in health benefits plans and contracts governed under State law, will ensure that the employee, spouse, or dependent will be eligible for a total of 36 months of continuation of coverage.

Although employees, spouses, and dependent children who choose continuation coverage can be required to pay coverage premiums, continuation coverage may be a more preferable option than becoming uninsured or purchasing a policy in the individual health insurance market, which tends to be more expensive than group coverage.

The bill's provisions take effect on the 30^th day following enactment and apply to policies and contracts delivered, issued, renewed, or continued on or after the effective date. The bill also makes certain technical changes.