A “small employer” is an employer with 1-50 full-time employees on business days in the preceding calendar year and with at least 1 full-time employee on the first day of the plan year. A “full-time employee,” for purposes of determining whether an employer is a “small employer,” is one who works at least 30 hours per week.
Small employers do not have to offer their employees health insurance. However, if a small employer chooses to offer health insurance they have to meet certain requirements.
The first requirement of the New Jersey Small Employer Health Benefits Law (“SEH”), is called the “Participation Requirement.” Participation in the plan requires:
"[a]t least 75 percent of the full-time employees (25 hours per week or more for this element) must be covered under the small employer health benefits plan the employer is offering OR covered under one of the following: (1) any fully insured health benefits plan offered by the small employer; (2) Medicare; (3) Medicaid or NJ Family Care; (4) another group health benefits plan; (5) a spouse’s group health benefits plan; or (6) Tricare."
Fortunately, the SEH Buyer’s Guide provides a good example of complying with the SEH Law where the small employer wants to allow only employees working 35 hours per week to get health benefits under the plan:
"For example, if an employer with 30 employees – 15 of whom work 35 hours per week and 15 of whom work 30 hours per week – wants to offer coverage only to employees working 35 hours per week, the employer may do so, but the group must meet the participation requirement (75%) based on 30 employees. Thus, at least 23 employees must be covered under the employer’s group health plan(s) OR another group health plan, Medicare, Medicaid or NJ Family Care or Tricare for the employer to meet the participation requirement."
As a result, no law mandates that a small employer provide coverage to employees working at least 25 hours per week. Rather, the SEH Law requires that an employer must count as full-time employees, for purposes of the Participation Requirement, the individuals that work at least 25 hours per week. That does not mean that an employer must set coverage eligibility threshold to 25 hours per week. An employer just needs to make sure that 75% of its full-time employees (those working 25+ hours per week) are covered by the plan that the employer is offering or (1) any fully insured health benefits plan offered by the small employer; (2) Medicare; (3) Medicaid or NJ Family Care; (4) another group health benefits plan; (5) a spouse’s group health benefits plan; or (6) Tricare.
The second requirement is called the “Contribution Requirement.” A small employer is required to pay 10% of the total cost of a health benefits plan issued to the employer’s group. A small employer may elect to pay a greater percentage – up to 100% - but a carrier may not require the employer to pay more than 10% as a condition of issuing the small employer a small group health benefits plan.
Lastly, small business employers that offer health insurance, must offer, under certain circumstances, health insurance continuation.
Takeaway: Small business employers that choose to offer health insurance must comply with the New Jersey Small Employer Health Benefits Law. If an employer has questions regarding same, please reach out to Tracy Armstrong or any other member of the Employment Law Team.
The postings on this blog were created for general informational purposes only and do not constitute legal advice or a solicitation to provide legal services. Although we attempt to ensure that the postings are complete, accurate, and current as of the time of publication, we assume no responsibility for their completeness, accuracy, or timeliness. The information in this blog is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. Readers should not act upon this information without seeking professional legal counsel.
This blog may contain links to independent third party websites and services, including social media. We provide these links for your convenience, and you access them at your own risk. We have no control over and do not monitor the content or policies (including privacy policies) of these third-party websites and have no responsibility for, and no liability with respect to, their content, accuracy, or reliability. Unless expressly stated, we do not endorse any of the linked websites or any product, service, or publication referenced herein or therein. We will remove a link to any site from this blog upon request of the linked entity.
We grant permission to readers to link to this blog so long as this blog is not misrepresented. This site is not sponsored or associated with any other site unless so identified.
If you wish for Wilentz, Goldman & Spitzer, P.A., to consider representing you, please obtain contact information from the Contact Us area of this blog or go to the firm’s website at www.wilentz.com. One of our lawyers will be happy to discuss the possibility of representation with you. However, the authors of Wilentz blogs are licensed only in New Jersey and/or New York and do not wish to represent anyone who viewed this site in a state where the site fails to comply with all laws and ethical rules of that state.