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Questions on Rates and Plans
NJ Small Employer Health Benefits Program Buyer's Guide
1. How does a carrier determine the premium for my group?

Carriers determine a group’s rates based on the plan of benefits selected and the characteristics of the group.  Carriers can only consider the ages of the people to be covered and the location of the business in New Jersey in determining the premium. Carriers may not consider the health status, nature of business, or past claims experience of a group in determining premium.

2. Are rates guaranteed for a specific period of time?

The SEH Program Act does not require that carriers guarantee their rates for any period of time.  However, most carriers do.  Ask the carrier or your broker or agent if rates are guaranteed and for how long.
3. How long should I expect to wait for a price quote?

In practice, price quotes are run immediately, so you should not have to wait.  (Technically, a carrier has up to 10 business days to provide you with a price quote after you have given the carrier all the information the carrier needs to develop the quote.)
4. If one or more of my employees incurs significant claims, can a carrier cancel the coverage or refuse to renew it?

No, a carrier may not terminate a small group’s coverage based upon the claims experience of the group or specific members of the group.  Small employer coverage is guaranteed renewable at the option of the employer, except when:  the employer fails to pay the premium, the employer fails to provide the completed Employer Certification; the employer has acted fraudulently with respect to the coverage; the carrier has elected to withdraw from the small employer market entirely; the employer no longer meets the definition of a small employer; or, the group no longer meets participation or contribution requirements.
5. If one of my employees incurs significant claims, can a carrier refuse to continue covering that employee?

No.  Carriers cannot refuse to renew coverage for any member of a small employer group because of claims experience or health status-related factors.
6. If one or more of my employees incurs significant claims, should I expect to see a significant increase in rates because of it?

Not necessarily.  Because of how rates are developed, your group’s specific premium is not directly related to your group’s specific claims.  The law requires carriers to community rate health benefits plans, which means that the carriers blend the experience of all groups that purchase a health benefits plan to develop a community rate.  The rate is then modified by group to take into consideration specific group characteristics as permitted by the law.  Although the experience of your group will have an impact on the rate for the health benefits plan for your carrier, it will be blended with the experience of all other groups purchasing the same health benefits plan, and will not be tied directly to your premium.   
7. What can I do if I am unhappy with the rates being charged by my currrent carrier?

You have several options.  You are not required to stay with a specific health benefits plan indefinitely.  You may have an option to change some of the cost-sharing requirements of your current health benefits plan, or add or remove coverage riders.  You also may be able to switch to a lower cost plan offered by your current carrier.  In addition, you may be able to switch to another carrier offering the same health benefits plan at lower rates. But note:  changes in health benefits plans are not entirely unrestricted.  Carriers are not required to honor any requests for plan changes unless the existing plan has been in effect for at least 12 months.
8. How do deductibles work?

Deductibles are the amount of allowed charges for which the covered person is responsible before the carrier agrees to pay anything towards covered charges.  Preventive care services are an exception.  No deductible applies to preventive care services.  So, for instance, if a person has a policy with a $2000 deductible, until the covered person pays $2000 in allowed charges for covered services, other than preventive care, the covered person is not entitled to have any of the charges reimbursed by the carrier.
9. How does coinsurance work, and what are the coinsurance requirements for the standard health benefits plans?

“Coinsurance” is a term used to express the promise by the carrier to share, on a percentage basis, payment for allowed charges for covered health care services with the covered person.  The standard small employer Plans B through E have specified coinsurance requirements, but the actual coinsurance amount may vary depending on whether the plan is offered with or without a network feature.  When the standard plans are offered with a network feature then the coinsurance percentages in-network and out-of-network may differ for in-network and out-of-network benefits, each ranging from 50% to 100%.  For the HMO Plan, when coinsurance applies (and it only applies when copayments do not apply to a covered service), the carrier may offer the plan with a coinsurance specified within a range of 50% to 100%. 
10. What is the Maximum Out-of-Pocket (MOOP) amount and how does it work?

The MOOP is the maximum amount of allowed charges for covered services that a covered person/family is obligated to pay before the carrier agrees to pay for all of the allowed charges for covered health care services for the rest of the calendar year.  For the standard health benefits plans, allowed charges the covered person pays towards the deductible, coinsurance and copayments accumulate to satisfy the MOOP. 
11. Are there any charges that do not count towards satisfaction of the MOOP amount?

Yes, some charges may not count towards satisfaction of the MOOP.

Charges for health care services that are not covered under the health benefits plan do not count towards the MOOP amount.  In addition, charges for covered health care services that exceed the allowed amount – as determined by the carrier – are not counted toward the MOOP amount.
12. What does "allowed charges" refer to?

“Allowed charges” refers to either the charges billed by the health care provider or the amount of billed charges that a carrier considers eligible and covered under the health benefits plan, whichever amount is less.  “Allowed charges” may also refer to the negotiated rate of payment.  The amount of charges that a health care provider bills for his or her services, and the carrier’s allowed charges may not be the same – sometimes the provider bills more than allowed charge, and sometimes the provider bills less.  When determining amounts due to the provider subject to a coinsurance percentage, the carrier bases what it pays on either the allowed charges or the provider’s billed charges, whichever amount is less.  When there is a negotiated rate of payment, the provider’s bill may reflect the negotiated rate, or it may be in excess of the negotiated rate, but the carrier will only pay the negotiated rate. 


A physician bills a covered health care service at $1,000.  The carrier determines the allowed charges to be $800.  If the carrier is paying 80% of the allowed charges, then the carrier will pay $640 ($800 x .80 = $640).  The covered person would pay 20% of the allowed charge, or $160.  If the health care provider is an out-of-network physician, the covered person is also responsible for the remaining $200 “excess” charge between what the provider billed and the allowed charges.
13. What's an in-network benefit versus an out-of-network benefit?

The in-network benefits are the benefits (reimbursement or monetary value) a covered person is entitled to when he or she receives covered services through an in-network health care provider.  The out-of-network benefits are the benefits a covered person is entitled to when he or she receives covered services through an out-of-network health care provider.  Because health care providers in a carrier’s network have agreed with the carrier to a negotiated rate of payment, and have agreed not to collect charges in excess of the negotiated rate of payment from the carrier’s covered persons, in-network benefits are almost always greater than out-of-network benefits for the covered person.  When a covered person chooses to receive covered services outside of the carrier’s network, the covered person is responsible for any charges that the health care provider may bill that exceed what the carrier considers to be reasonable and customary, and these excess charges do not count toward satisfying any deductible or maximum out-of-pocket (MOOP) requirements in the standard health benefits plan.
14. Is there a grace period for paying premiums?

Yes.  If premiums are paid within 31 days following the premium due date, the policy will remain in effect.  If an employer does not pay premiums by the end of the grace period, the coverage will lapse.  To avoid potential problems and misunderstandings, it is always advisable to submit premiums by the due date.

Premiums continue to be owed while coverage is in effect.  If a policy lapses at the end of a grace period, the employer remains liable for the premium for the period coverage was in effect.


After I have purchased a small employer health benefits plan, may a carrier continue to require me to complete forms?

Yes. The carrier will require you to fill out an Employer Certification form once per year in order to determine the number of employees and your participation rate. Failure to provide this information will result in non-renewal of coverage.
16. What is "self-insurance" and "stop loss" or "excess risk" insurance?

Some employers, especially large employers, opt to provide health coverage to their employees through a self-funded arrangement. Under such an arrangement, the employer is liable for expenses for the health coverage offered to the employees. Most employers that self-fund elect to purchase "stop-loss" or "excess risk" insurance for some portion of their potential liability from claims under the contract for health coverage.  Stop loss and excess risk insurance is designed to reimburse the self-funded arrangement for catastrophic, excess or unexpected claims expenses. Carriers may not legally offer stop loss or excess risk policies to small employers with "attachment points" of less than $20,000 per person per plan year and 125% of expected claims per plan year.  The attachment point is the line of demarcation between the employer’s liability and the carrier’s liability.  That is, a stop loss policy with an attachment point of $20,000 per person and 125% of expected claims per plan year means that the employer is responsible for at least $20,000 per person and 125% of expected claims for the group per plan year before the carrier pays any of the health care expenses incurred by group members.  Please note that employees covered under an employer’s self-funded plan do not count when determining whether an employer has met participation requirements for SEH plans.

What is the impact on a small employer group when a full-time employee turns age 65 and becomes eligible for Medicare?

Eligibility for Medicare does not preclude eligibility for coverage under the employer plan. Thus, the employee may be covered under both Medicare and the group plan. On the other hand, if the employee prefers to be covered only under Medicare, that decision will not have a negative impact on the group participation requirements. Carriers are required to count eligible employees covered under Medicare towards the participation requirement.

If the employee is covered under both Medicare and the group plan, there will be coordination of benefits between the plans.  There are federal rules to determine which plan pays first and which plan pays second.  The purpose of coordination of benefits is to allow a person to claim benefits from both Medicare and the employer plan, with the primary carrier paying benefits as if there were no other coverage, and the secondary carrier paying up to the difference between what the primary carrier paid and the amount of the allowable charge.


How do I go about terminating a policy?

If you wish to terminate a policy, whether you are canceling it sometime during the plan year, or electing not to renew the policy upon its anniversary, you should give affirmative notice of your intentions to the carrier or the carrier’s agent.  Remember, small employer health benefits plans are issued for a term of one year (12 consecutive months), and are guaranteed renewable by the employer.  Upon submission of the Employer Certification, the carrier will renew the policy of an eligible small employer for another term unless you advise that you do not want to renew it.

You may cancel a policy before the end of the 12-month period.  Although a carrier cannot require that an employer provide advance notice of an intention to terminate a policy, a carrier is only required to honor prospective termination requests, not retroactive termination requests.   If you make a prospective request to terminate the policy, the carrier will terminate the policy as of the date you specify.  You are liable for payment of premiums for the period of time during which the contract remains in force, but the carrier will refund any premiums you have already paid for time periods exceeding the date of termination. 

With respect to requests for retroactive termination, the carrier will terminate your policy on the date the carrier receives the notice, and refund premium for any remaining days.  So, if you pay a month of premium on April 1st, and then on April 25th send notice to the carrier to terminate the policy as of April 15th, the carrier is only obligated to terminate the policy as of April 25th, not April 15th.  The carrier would be required to refund 5 days worth of premium, not 15 days of premium.
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