S956

An Act concerning continuation of health benefits coverage for certain employees and supplementing P.L.1992, c.161 (C.17B:27A-2 et seq.) and Title 17B of the New Jersey Statutes.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. a. Notwithstanding the provisions of any law to the contrary, whenever the employment of a covered employee under a small employer health benefits plan is terminated because the workplace ceases to exist, the benefits of the plan may be continued, as provided in this section, for a period of up to 18 months from the termination date of the covered employee until the employee, spouse, or dependent child who was covered under the small employer health benefits plan becomes eligible for coverage under another group health plan.

b. The extended coverage for the period provided in subsection a. of this section shall be available to the terminated employee who was covered under the small employer health benefits plan at the monthly premium rate not to exceed 102% of the premium in effect on the day prior to the workplace ceasing to exist or as changed on the anniversary date of the small employer health benefits plan. A carrier may increase rates on the plan anniversary of the discontinued plan using the filed small employer health benefits plan rates for the plan of benefits; however, the increase shall not exceed the lower of 15% or the medical trend assumption used in developing small employer health benefits plan rates.

c. An employee who was covered under the small employer health benefits plan that was terminated because the workplace ceased to exist, shall elect to continue the extended coverage provided in this section no later than 30 days after the employee receives notice from the carrier, as provided in subsection d. of this section, about the availability of extended coverage. The election shall apply to the covered employee and qualified dependents. For purposes of this section, “qualified dependent” means a spouse or child of a covered employee, subject to applicable terms of the health benefits plan covering the covered employee. The covered employee shall be responsible for the payment of monthly premiums directly to the carrier of the small employer health benefits plan that was terminated because of the workplace ceasing to exist. The eligible employee shall not be required to pay more than a monthly premium at one time.

d. (1) Whenever a small employer health benefits plan is delivered, issued, renewed, or continued to an employer and that employer ceases to exist on or after October 1, 2009, the small employer carrier shall make available to a covered employee, spouse, or dependent child, as provided in this section, the same benefits of the small employer health benefits plan in effect on the day immediately preceding the date the employer ceased to exist.

(2) Upon receipt of information that an employer has ceased to exist, the small employer carrier shall promptly notify all covered employees of that employer, in writing, about the availability of extended coverage pursuant to this section.

e. The provisions of this section shall be in effect for the duration of federal premium assistance for continuation coverage, as provided in the “American Recovery and Reinvestment Act of 2009,” Pub.L.111-5.

2. a. Notwithstanding the provisions of any law to the contrary, whenever the employment of a covered employee under a group health plan is terminated because the workplace ceases to exist, the benefits of the plan may be continued, as provided in this section, for a period of up to 18 months from the termination date of the covered employee until the employee, spouse, or dependent child who was covered under the group health plan becomes eligible for coverage under another group health plan.

b. The extended coverage for the period provided in subsection a. of this section shall be available to the terminated employee who was covered under the group health plan at the monthly premium rate not to exceed 102% of the premium in effect on the day prior to the workplace ceasing to exist or as changed on the anniversary date of the group health plan. A health insurer may increase rates on the plan anniversary of the discontinued plan; however, the increase shall not exceed the lower of 15% or the medical trend assumption used in developing group health plan rates for comparable plans issued by the insurer. A health insurer that increases rates shall promptly notify the Department of Banking and Insurance, in writing, concerning the medical trend assumption that it used in developing the rates.

c. An employee who was covered under the group health plan that was terminated because the workplace ceased to exist shall elect to continue the extended coverage provided in this section no later than 30 days after the employee receives notice from the health insurer, as provided in subsection d. of this section, about the availability of extended coverage. The election shall apply to the covered employee and qualified dependents. For purposes of this section, “qualified dependent” means a spouse or child of a covered employee, subject to applicable terms of the group health plan covering the covered employee. The covered employee shall be responsible for the payment of monthly premiums directly to the health insurer of the group health plan that was terminated because of the workplace ceasing to exist. The eligible employee shall not be required to pay more than a monthly premium at one time.

d. (1) Whenever a group health plan is delivered, issued, renewed, or continued to an employer and that employer ceases to exist on or after October 1, 2009, the health insurer shall make available to a covered employee, spouse, or dependent child, as provided in this section, the same benefits of the group health plan in effect on the day immediately preceding the date the employer ceased to exist.

(2) Upon receipt of information that an employer has ceased to exist, the health insurer shall promptly notify all covered employees of that employer, in writing, about the availability of extended coverage pursuant to this section.

e. As used in this section, “health insurer” shall have the same meaning as provided in section 14 of P.L.1997, c.146 (C.17B:27-54).

f. The provisions of this section shall be in effect for the duration of federal premium assistance for continuation coverage, as provided in the “American Recovery and Reinvestment Act of 2009,” Pub.L.111-5.

3. This act shall take effect immediately.

STATEMENT

This bill extends coverage for COBRA health insurance continuation benefits to employees covered under small employer and larger group health plans whose employment is terminated because the workplace ceases to exist. The provisions of this bill will enable employees of employers that cease to exist to benefit from federal COBRA subsidies that cover 65% of the cost of the continuation health benefits coverage. The federal subsidy was enacted as part of the “American Recovery and Reinvestment Act of 2009,” Pub.L.111-5.

Specifically, the bill provides as follows:

· The benefits of the health plan may be continued for a period of up to 18 months from the termination date of the covered employee until the employee, spouse, or dependent child who was covered under the small employer or larger group health plan becomes eligible for coverage under another group health plan.

· The extended coverage shall be available to the terminated employee who was covered under the small employer or larger group health plan at the monthly premium rate not to exceed 102% of the premium in effect on the day prior to the workplace ceasing to exist or as changed on the anniversary date of the group health plan. An insurer may increase rates on the plan anniversary of the discontinued plan; however, the increase shall not exceed the lower of 15% or the medical trend assumption used in developing group health plan rates for comparable plans issued by the insurer. In the case of small employer plans, the insurer shall use the filed small employer health plan rates for the plan of benefits, and the medical trend assumption used in developing rates for that plan.

· The covered employee shall elect to continue the extended coverage no later than 30 days after the employee receives notice from the health insurer about the availability of extended coverage. The election shall apply to the covered employee and qualified dependents. “Qualified dependent” is defined as a spouse or child of a covered employee, subject to applicable terms of the group health plan covering the covered employee.

· The covered employee shall be responsible for the payment of monthly premiums directly to the health insurer of the group health plan that was terminated. The eligible employee shall not be required to pay more than a monthly premium at one time.

· The health insurer shall make available to a covered employee, spouse, or dependent child the same benefits of the group health plan in effect on the day immediately preceding the date the employer ceased to exist.

· Upon receipt of information that an employer has ceased to exist, the health insurer shall promptly notify all covered employees of the employer, in writing, about the availability of extended coverage pursuant to this bill.

· The extended coverage is available to employees whose employer ceases to exist on or after October 1, 2009.

The provisions of this bill shall be in effect for the duration of federal premium assistance for continuation coverage, as provided in the “American Recovery and Reinvestment Act of 2009,” Pub.L.111-5.