What is NJ State Continuation?
- NJ Continuation is in effect “mini COBRA” and is a State Law whereby employees who have 1-terminated for other than cause or 2- whose hours have fallen to below 25 hours per week and thereby lose their group medical coverage are eligible to continue on the group medical plan at their own expense.
What are the notification requirements?
- The employer is obligated to provide a notice to the employee at the time of the qualifying event. This must include a due date and amount of premium that is due.
- There is no obligation to provide a notice to covered dependents (different from Federal COBRA Law).
- The employee, spouse or dependent child shall make a written election for continued coverage within 30 days of a qualifying event.
- No premium paymentshall be due before the 30th day after the day on which the covered employee made the initial election for continued coverage. Payment must be retroactive to the loss of coverage date.
What is the election period?
- The employee, spouse or dependent child shall make a written election for continued coverage within 30 days of a qualifying event.
- No premium paymentshall be due before the 30th day after the day on which the covered employee made the initial election for continued coverage. Payment must be retroactive to the loss of coverage date.
- Please keep in mind that under the Rescission Provision under PPACA, coverage may not be retroactively terminated if the member has paid any contribution toward the premium.
Note: under Federal COBRA the election period is 60 days from the qualifying event or date of notice, whichever is later. Note this differs from NJ Continuation.
How long may an employee/dependent continue
- Employees who terminated for other than cause or whose hours are reduced to below 25 hours may continue for up to 18 months if they continue to pay the full premium.
- The employee’s death or divorce allows dependents to continue for 36 months. Dependent children who “age out” may continue for up to 36 months.
- Adult Children (DU31) covered under the parent/ employee plan pursuant to Chapter 375 do not have continuation rights unless the parent / employee has a qualifying event and elects continuation, The Adult Child may remain covered for 18 months as long as the parent remains insured.
- Members who become eligible for Medicare disability may extend continuation from 18 to 29 months if the Medicare disability was in place within 60 days of first electing continuation.
- Reservists may continue for 24 months.
Must continuation be offered to persons eligible or enrolled in Medicare at the time of a qualifying event?
- Continuation must be offered. Conversely, NJ Continuation ceases if the individual becomes eligible or enrolled into Medicare while covered under continuation.
Keep in mind that regardless of the TEFRA status of the group, Medicare is always primary once the individual is on COBRA or state continuation for any reason.
Who pays the premium and how much?
- Continuees pay 100% (the total employer and employee contribution) of the premium plus the employer may charge an additional 2% surcharge (same as Federal COBRA).
- Employers may charge 150% of the total premium rate for month 19-29 for those who extend coverage to 29 months due to Medicare disability
What coverage must be allowed to be continued?
- Medical coverage in force at the time of the qualifying event must be allowed to be continued. The continuee may not change to another plan offered by the employer outside of open enrollment unless s/he moves out of the plan service area.
- Continuation is NOT extended to the continuation of Dental.
- There may be carriers that permit the continuation of dental that is coupled with the medical plan but this is not mandated
What are the Qualifying Events for NJ State Continuation?
- Termination of employment for other than cause OR a reduction of hours* to below 25 (differs from Federal COBRA).
- Keep in mind that reduction of hours includes any scenario where the employee is not working at least 25 hours every week including leave of absence or maternity leave.
- Covered spouses and dependents DO HAVE INDEPENDENT continuation rights under any Qualifying Event scenario.
An employee who terminates off the employer plan to fully enroll onto Medicare does NOT create an event for spouse/children.
- The employee’s death or divorce allows dependents to continue for 36 months.
- Dependent children who “age out” at 26 may continue for up to 36 months.
- Adult Children (DU31) covered under the parent/ employee plan pursuant to Chapter 375 do not have continuation rights unless the parent / employee has a qualifying event and elects continuation, The Adult Child may remain covered for 18 months as long as the parent remains insured.
- Members who become eligible for Medicare disability may extend continuation from 18 to 29 months if the Medicare disability was in place within 60 days of first electing continuation.
- Reservistsmay continue for 24 months
What employees are eligible?
- Any employee or dependent covered by a NJ fully insured contract regardless of where they live or work and regardless of how long they were on the health plan (even one day).
Keep in mind that the plan may no longer accommodate the member who moves out of the service area as in an HMO. The employer is not obligated to create another plan for the continuee.