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SEH Program Features for Health Benefits Plans
NJ Small Employer Health Benefits Program Buyer's Guide

All small group health benefits plans must meet certain minimum requirements that are “SEH Program features.”  Small group health benefits plans must:

  • Be guaranteed issue;
  • Be guaranteed renewable;
  • Comply with restrictions on rating criteria and standards;
  • Include rights of coverage continuation for members of groups not governed by COBRA; and
  • Be standard plans (at the option of the employer, such plans may include one or more riders offered by the carrier in the SEH market).
Guaranteed Issue

A carrier may not refuse to issue a small group health benefits plan to any small employer or any member of the group for which the small employer is purchasing coverage because of anyone’s health, prior claims experience, age, gender, occupation, nature of the business, or the location of the business in New Jersey. (See Eligibility)
Guaranteed Renewal

In general, a small employer may continue to renew a small group health benefits plan at the discretion of the small employer.

A carrier may nonrenew a small employer health benefits plan ONLY if:
  • The employer fails to provide the completed Employer Certification as required (Note: the Employer Certification is required annually.);
  • The employer ceases to be eligible because it no longer has at least one eligible employee;
  • The small employer is no longer eligible because it fails to meet contribution requirements or fails to meet participation requirements; or
  • Following the approval of the Commissioner of the New Jersey Department of Banking and Insurance, the carrier withdraws the health benefits plan from the small employer market.

In addition, if the small employer has obtained coverage through membership of the business entity in an association, the carrier may nonrenew the health benefits plan if the business is no longer eligible for the association membership, or the small employer chooses to discontinue membership.  Nonrenewal occurs only upon the anniversary date of the coverage and only after appropriate notice is provided to employers.

When a small employer grows to more than 50 eligible employees, the carrier will renew the small employer policy at the employer’s request, but the premiums may no longer be the carrier’s SEH market rates.  If the employer changes the policy in any way, the employer loses the protections (and restrictions) arising from small employer status entirely.  The carrier may offer the employer the opportunity to buy a large group policy that would use different rating methodologies and might apply different participation and different contribution requirements to the employer.   

Of course, regardless of the employer’s status, a carrier may terminate the coverage if the employer fails to pay premiums timely or has acted fraudulently or intentionally made material misrepresentations of information relevant to the issuance of the health benefits pan.  In such cases, termination can occur immediately.  

Carriers use modified community rates for small employer plans. Rates are not based upon the actual or expected claims history of any particular person or persons in the small employer group. In addition, carriers do not rate based on gender and there is no special rate for smokers versus non-smokers.

Carriers use age and geography as a rating factor for small employer plans. Starting in 2014, carriers are required to use a child rate for ages 0 through 20 years old, and then incrementally increases rates every year from age 21 through 64. Each carrier must set its rates so that its highest rate is not more than 2 times its lowest adult rate for a specific individual plan. (This is referred to as a 2:1 rate band.)

Each eligible employee covered under a small employer plan is rated individually, except that a family is not charged for more than three children under the age of 21, even if they cover more than three children under the age of 21. If a family has two adults (one being 45 years old and the other being 42 years old) and four children under the age of 21, to determine the monthly cost of a plan to cover the entire family, the family would add the monthly premium for each adult and add the child premium for three children to get the total for the family’s monthly premium, as follows:

45 year old premium + 42 year old premium + child premium + child premium + child premium = family premium

The rate for the small employer group is the sum of the rates for each eligible employee and any dependents. 

Find Monthly Rates

The New Jersey Small Employer Health Benefits Program publishes information to enable small employers to calculate the monthly rates for a small employer group.  There is also a calculator available to help small employers calculate the monthly premium for any small employer plan. 
Rating Errors

If a carrier discovers that it has undercharged a small employer, the carrier must provide the small employer with notice of the error at least 60 days prior to charging the small employer group the corrected premium amount.  The carrier is not permitted to try to collect or offset for the undercharges.

If a carrier discovers that it has overcharged a small employer, the carrier must stop doing so immediately, provide notice to the small employer about the overcharges as soon as possible, and refund or credit the full amount of the overcharges to the small employer within no more than 30 days after discovering the error.  (See N.J.A.C. 11:21-9.6).  
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New Jersey Department of Banking and Insurance