Must My Company In New Jersey Offer Or Provide Health Insurance To Its Employees?

Whether a business in New Jersey must offer or provide health insurance to its employees depends on the number of workers that the business employs.  In general:

• Employers in New Jersey with 50 or more employees must provide “minimum essential” health care coverage for employees who work 30 or more hours per week or must pay an annual penalty;
• Businesses in the Garden State with two to 50 employees are not required to offer health care coverage to their employees.  However, companies in New Jersey with two to 50 employees which elect to provide a health benefits plan must offer health benefits coverage under the plan to all employees who work 25 or more hours per week; and
• Employers in New Jersey with one employee are not required to offer health care coverage to their employees.

Employers in New Jersey with fifty (50) or more employees:

Effective January 1, 2014, employers in New Jersey (and, for that matter, in the other forty-nine states) which employed an average of 50 or more full-time employees or full-time equivalents on business days during the preceding calendar year are required to provide “minimum essential” health care coverage for their full-time employees or pay an annual penalty.  Patient Protection and Affordable Care Act tit. I, § 1513, 26 U.S.C. § 4980H(a), 4980H(c)(2)(A), 4980H(c)(2)(E).

The federal Patient Protection and Affordable Care Act (the “Affordable Care Act” or the “ACA”) defines a ” ‘full-time employee’ ” as an employee who, in any given month, works an average of at least 30 hours per week.  ACA, tit. I, § 1513, 26 U.S.C. § 4980H(c)(4)(A).

Employers in New Jersey with two (2) to fifty (50) employees:

Businesses in New Jersey which employed an average of one through 49 full-time employees or full-time equivalents on business days during the preceding calendar year are not required to offer health care coverage to their employees.  See Dep’t of Banking & Insurance, State of New Jersey, NJ Small Employer Health Benefits Program Buyers’ Guide, Questions and Answers – Eligibility, Participation and Contribution Issues, at question 8 & answer 8.

However, any employer which (i) employed an average of at least two but not more than 50 “eligible employees” on business days during the preceding calendar year, (ii) employs at least two eligible employees on the first day of the plan year, and (iii) has a majority of the eligible employees working within the State of New Jersey, and which chooses to provide a health benefits plan, must offer health benefits coverage under the plan to all eligible employees.  New Jersey Small Employer Health Benefits Act § 1(1), N.J.S.A. § 17B:27A-17(1) (defining ” ‘[s]mall employer’ “); N.J. Admin. Code § 11:21-1.2 (same); New Jersey Small Employer Health Benefits Act § 2, N.J.S.A. § 17B:27A-17; N.J. Admin. Code §§ 11:21-1.1(c), 11:21-1.4, 11:21-7.1, 11:21-7.3.

The New Jersey Small Employer Health Benefits Act (the “Small Employer Health Benefits Act” or the “NJSEHBA”), and the regulations implementing that statute, define an ” ‘[e]ligible employee’ ” as a full-time employee who works a normal work week of 25 or more hours.  NJSEHBA § 1(1), N.J.S.A. § 17B:27A-17(1); see N.J. Admin. Code § 11:21-1.2.

The New Jersey Department of Banking and Insurance, which is the state agency responsible for administering the Small Employer Health Benefits Act, takes the position that an employer in New Jersey with two to 50 employees may, in plan documents, establish a definition of full-time employees that is more stringent than the NJSEHBA’s definition, and may offer health benefits to employees based on the employer’s definition. Dep’t of Banking & Insurance, State of New Jersey, NJ Small Employer Health Benefits Program Buyers’ Guide, Questions and Answers – Eligibility, Participation and Contribution Issues, at question 5 & answer 5.

For example, a small employer in New Jersey may, in plan documents, define a full-time employee as one who works at least 40 hours per week, and may offer health benefits only to employees who work 40 or more hours per week.  Id.

However, a small employer in the Garden State which, in plan documents, defines full-time employees more stringently than the Small Employer Health Benefits Act does, and which offers health benefits to workers based on the employer’s definition, may run afoul of the NJSEHBA’s 75% participation requirement.  That statutory requirement provides that, in order for a small employer to provide a health benefits plan, seventy-five percent of employees who normally work 25 or more hours per week must participate in the plan.  See N.J. Admin. Code § 11:21-7.5(a);Dep’t of Banking & Insurance, State of New Jersey, NJ Small Employer Health Benefits Program Buyers’ Guide, Questions and Answers – Eligibility, Participation and Contribution Issues, at question 5 & answer 5.

Employers in New Jersey with one (1) employee:

Finally, as stated above, employers in New Jersey with one employee are not required to offer health care coverage to their employees.

If your company needs assistance or guidance on a labor or employment law issue and your company is located in the New Jersey area, call Attorney David S. Rich at (347) 941-0760.