Updated NJ Health Insurance Mandate Information
January 23, 2019
Beginning Jan. 1, 2019, NJ requires its residents to maintain health insurance throughout 2019 and beyond (unless an exemption applies). NJ recently updated its website to detail the requirement of employers to verify the information provided by individual taxpayers.
As background, Gov. Murphy signed the Health Insurance Market Preservation Act on May 30, 2018, requiring every NJ resident to have health coverage or pay a penalty (shared responsibility payment). This state mandate mirrors the former federal individual mandate imposed by the ACA and intends to require NJ residents to purchase health care so that the NJ health insurance market will remain stable and provide more affordable rates of coverage. We initially discussed the individual mandate shortly after it became law in Compliance Corner.
Beginning in 2020, the NJ legislature will require employers with at least 50 employees to provide Form 1094-C, “Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns,” and Form 1095-C, “Employer-Provided Health Insurance Offer and Coverage,” that they currently provide to taxpayers and the IRS to the NJ Div. of Taxation. Copies of the forms must be submitted on or before Feb. 15 following the close of each calendar year. This NJ reporting requirement mirrors the current ACA reporting requirements, but if the federal government discontinues the use of Forms 1094-C or Forms 1095-B and 1095-C at some point in the future, then NJ will deploy similar forms for the ongoing filing requirement.
Similar to the federal requirement, NJ does not require dependent information, including adult children who are covered by their parents’ plans. However, it is recommended that employers advise employees to provide a copy of any Form 1095-B or 1095-C containing coverage information to their children residing in NJ.
NJ employers should review the NJ website for the reporting requirements and make note of the Feb. 15 deadline to provide the Forms 1094-C and 1095-C starting in 2020. Please also note that this reporting requirement also applies to out-of-state employers that withhold and remit NJ gross income tax for NJ residents.
For more information, employers can visit the NJ Health Insurance Mandate website.
The NJ Health Insurance Market Preservation Act »
New Jersey Outlines New Out-Of-Network Consumer Protection, Transparency, Cost Containment and Accountability Act
November 28, 2018
On Nov. 20, 2018, Commissioner Caride released Bulletin No. 18-14 to provide guidance for the additional obligations under the Out-Of-Network Consumer Protection, Transparency, Cost Containment and Accountability Act (the Act). As background, the Act became effective Aug. 30, 2018, with the purpose to enhance consumer protections from surprise bills for out-of-network health care services, including transparency, new consumer disclosures, and cost-containment for out-of-network services. This Act creates and modifies processes for carriers regarding out-of-network policy disputes for inadvertent and/or involuntary out-of-network services provided in New Jersey or to NJ residents.
In addition, it addresses out-of-network billing and adds new disclosure and transparency requirements. While most of the notice relates to insurance carriers that cover NJ residents, portions of the notice apply to self-funded health benefit plans that elect to be subject to the claims processing and binding arbitration provisions of the Act.
Claims Processing and Arbitration. The Act creates an arbitration process to resolve out-of-network billing disputes for inadvertent and/or involuntary out-of-network services. Specifically, when carriers (including self-funded plans that elect to participate) and out-of-network providers cannot agree upon reimbursement for such services, an arbitrator will decide and will be binding upon both parties. The intended result is that the out-of-network health providers will bill the covered person for the cost-sharing liability for inadvertent and/or involuntary out-of-network services only once upon acceptance of the allowed charge/amount, whether it is initially agreed upon, determined through negotiations or decided through the arbitration process. NJ providers and self-funded health benefit plans that opt-in must apply the new arbitration process applies for claims with a date of service on or after Aug. 30, 2019.
Out of Network Billing. The Act prohibits providers from balance-billing for inadvertent and/or involuntary out-of-network services for any amount above the financial responsibility that they would have incurred if the same service(s) had been provided by an in-network health care provider. The Act also prohibits most opportunities for an out-of-network provider to, either directly or indirectly, knowingly waive, rebate, give, pay or offer any thereof as an inducement to seek services from such out-of-network provider.
Disclosure and Transparency. Carriers must provide clear and understandable descriptions of the benefits for services rendered by out-of-network health care providers that are covered under the plan, including emergency or urgent services, for inadvertent out-of-network services and, where applicable, voluntary out-of-network treatment. The bulletin provides a template summary of the transparency disclosures required by the Act.
For self-funded plans that choose to opt-in to the claims processing and arbitration provisions, they are not bound to the transparency disclosures and other sections of the Act.
Bulletin No. 18-14 »
Template Summary of Transparency Disclosure Requirements »
New Jersey Issues FAQ for Sick and Safe Leave Law
November 13, 2018
On Oct. 29, 2018, the NJ Earned Sick Leave Law went into effect. On that same day, NJ’s Dept. of Labor and Workforce Development (DOL) released an FAQ and published a model employee notice in English and 12 other languages.
As we discussed in previous Compliance Corner articles (the Oct. 3 Paid Sick Leave proposal update and the May 1 Paid Sick Leave Law update), Gov. Murphy signed the NJ Paid Sick Leave Act into law on April 12, 2018, making NJ the 10th state to require employers to provide paid time off to full- and part-time workers. Under the law, employers must allow eligible employees to accrue up to 40 hours of paid sick leave.
The FAQ provides answers to more than 100 questions, including details regarding the employees that are covered by the law, the rights to earn sick leave, the proper use of sick leave, how an employee’s earned sick leave is paid, how an employee can file a complaint against an employer, and the required notice to employees.
The DOL also published a model employee notice to assist employers with the law’s requirement to give employees notice of their right to earned sick leave. Specifically, employers are to provide notice of employee rights within 30 days of the notice being published (Nov. 29, 2018), at the time of a new employee’s hiring (going forward), and upon first request by an employee. The model notice is available in English and 12 other languages: Arabic, Chinese (simplified and traditional), Guajarati, Haitian Creole, Hindi, Italian, Korean, Polish, Portuguese, Spanish and Tagalog. The employer must also provide notice of the law in a conspicuous place or places to all employees of each employer’s workplaces. This poster must be displayed in English, Spanish or any other language that a majority of employees consider their primary language as long as the agency has created a notice in that language.
Employers must keep or maintain records that the notice was provided to an employee and proof that it was received. The FAQ clarifies that an employer may satisfy this requirement by sending employees an email and can satisfy the posting obligation by displaying the notice on internet or intranet sites exclusively used by employees (if all employees have access). Saved signed copies or email receipts is a good way to document that individual notice occurred.
The NJ DOL is accepting written comments to the proposed rules through Dec. 14, 2018.
The employer should review its record retention policies to ensure compliance with the law.
NJ Earned Sick Leave Webpage »
NJ Press Release »
Frequently Asked Questions »
Model Notice »
New Jersey Reiterates State Law Regarding AHPs
November 13, 2018
On Oct. 29, 2018, Ins. Commissioner Caride issued bulletin No. 18-13 regarding association health plans.
As background, on June 21, 2018, the DOL issued final regulations regarding AHPs and expanded the definition of an “employer” for associations that could sponsor group health coverage. The regulations permit an association to form for the sole purpose of offering an AHP (or MEWA) to its members, provided the association maintains a commonality of interest. Essentially, the DOL made it easier for association-sponsored plans to offer group health coverage and be treated as a single “employer” for ERISA purposes to allow treatment similar to large-group coverage.
This bulletin points out that the DOL’s final regulations explicitly state that traditional oversight and regulatory authority over AHPs/MEWAs remains with the states and does not modify or limit existing state authority under ERISA. Any state law regulating insurance may apply to the AHP, to the extent that it isn’t inconsistent with ERISA. NJ law also extends to policies issued outside of NJ.
The intended purpose of the bulletin is to advise carriers, brokers and other interested parties that the recent federal rulemaking related to association health plans (AHPs) does not modify or preempt NJ’s existing regulatory authority and oversight regarding MEWAs, and any AHP operating, expanding or otherwise marketed in NJ. Ultimately, a MEWA or AHP, whether insured, partially-insured or self-funded whether organized in NJ or another jurisdiction may not market (that is, sell, solicit or negotiate) its plan in NJ unless it complies with all applicable NJ laws and regulations.
Bulletin 18-13 »
New Jersey Issues Proposed Rules for Paid Sick Leave
October 03, 2018
On Sept. 26, 2018, the New Jersey Department of Labor and Workforce Development (NJDLWD) issued proposed rules to assist employers in compliance of the NJ Paid Sick Leave Act (Act), which goes into effect on Oct. 29, 2018. The proposed rules provide additional clarity with respect to the Act’s requirements, including the calculating and recording of earned sick time, employer notice requirements, and potential penalties for noncompliance.
As we discussed in a previous Compliance Corner article, the Act was originally signed on May 2, 2018, and requires employers, regardless of size, to provide earned sick leave to each employee working in NJ and outlines the way that sick leave is to be accrued, advanced, used, paid, paid out and carried over. In NJ, the earned sick leave may be used to cover:
- An employee’s own medical needs or the medical needs of a covered family member
- Certain needs resulting from the employee, or a family member of the employee, being a victim of domestic or sexual violence
- An employee’s inability to work because of a closure of the employee’s workplace, or the school or place of care of a child of the employee, due to a public health emergency
- Time needed by an employee to attend a child’s school-related conference, meeting or event as requested or required by the school
Eligible employees must accrue paid leave at a rate of at least one benefit hour per 30 hours worked.
Some notable provisions within the proposed rules include the following:
- The definition of “benefit year” may be any period of twelve consecutive months as established by the employer. Though a subsequent change to the “benefit year” is permissible, the employer must provide written notice to the NJDLWD at least 30 calendar days prior to the proposed change. The notice must include the reason for the proposed change, and a list of current employees with corresponding contact information and a history of accrual, use, payment, payout, and carry-over of earned sick leave for each employee for the preceding two benefit years. If the proposed change is identified as preventing the accrual or use of earned sick leave by an employee, then the Commissioner can impose a benefit year on the employer and deny the proposed change, subject to an appeal process.
- The definition of “family member” is expansive and includes a child, grandchild, sibling, spouse, domestic partner, civil union partner, parent, or grandparent of an employee, or a spouse, domestic partner, or civil union partner of the employee, or any other individual related by blood to the employee or whose close association with the employee is the equivalent of a family relationship.
- A “close association” includes any person with whom the employee has a significant personal bond that is, or is like, a family relationship, regardless of biological or legal relationship.
Use and Documentation of Paid Sick Leave
- Current employees must begin accruing earned sick leave as of Oct. 29, 2018 and employees hired on and after Oct. 29, 2018 must begin accruing earned sick time immediately upon employment. Though the law goes into effect Oct. 29, 2018, an employer isn’t required to allow employees to use their earned sick leave until Feb. 26, 2019 (120 days after the Act’s effective date of Oct. 29, 2018).
- When an employee is terminated, laid off, furloughed or otherwise separated from employment, but is reinstated or rehired in NJ by the same employer (or successor employer) within six months of separation, any unused earned sick leave accrued by the employee before the separation must be returned to the employee upon rehire and reinstatement.
- For exempt employees, an employer isn’t required to maintain records documenting the hours, but instead has the option of either recording the actual hours worked by that employee for the purpose of calculating earned sick leave accrual or presuming, solely for the purpose of calculating earned sick leave accrual, that the employee works 40 hours per week.
- All requests by employees to use earned sick leave shall be treated by the employer as presumptively valid. If the employee’s need to use earned sick leave is foreseeable, then the employer may require advance notice, but such notice cannot exceed seven calendar days prior to the first date of leave. If the employee’s need to use earned sick leave is not foreseeable (that is, not reasonably anticipated), then the employer may require an employee to provide notice as soon as practicable, but in order to require such notice, the employer must have already notified the employee of this notice requirement.
- An employer may also prohibit an employee from using earned sick leave on certain dates as long as such dates are limited to verifiable high-volume periods or special events that would disrupt employer operations. The rules include examples of a high-volume period, such as holiday travel for the airline industry, or the day or week in which a new product first becomes available for the manufacturers of retail products.
- The proposed rules also provide guidance for an employee that has two or more different jobs with the same employer or where employees are paid overtime, on commission, with tips or on a piecework basis.
- Employers must post a notice regarding employee rights and responsibilities under the Act in places accessible to all employees. The notice requirement is satisfied if the employer posts the information on the employer’s internet or intranet site or sends the notice through email.
Violations and Administrative Penalties
- A violation of the Act is considered a violation of a “state wage, benefit and tax law” that empowers the NJDLWD Commissioner to direct a suspension or permanent revocation of one or more licenses held by an employer.
- An employer that knowingly and willfully violates the Act would be subject to a fine of not less than $100 and no more than $1,000 and/or not less than ten days and no more than 90 days of imprisonment for the first offense. Upon a second offense, the fine would be no less than $500. Separately, if the NJDLWD Commissioner finds that an employer has violated the Act, they would be able to assess and collect administrative penalties in the amount of $250 for the first violation and between $250 and $500 for a second violation. Each week during which an employee has not been provided the amount of sick leave required by the Act constitutes a separate offense.
NJ employers should review their earned sick leave policy to make sure that they’re compliant before the Act becomes effective on Oct. 29, 2018. Employers that already offer paid time off (including personal days, vacation days and sick days) will be compliant under the law, provided the accrual rate is at least as generous as described under the law, all eligible employees are provided leave and employees can use their earned sick time for the same permissible purposes provided in the Act.
A public hearing regarding the proposed rules is scheduled on Nov. 13, 2018, and the NJDLWD is also accepting written comments until Dec. 14, 2018.
Proposed Rules »
New Jersey Passes Act to Increase Out-of-Network Cost Transparency
July 24, 2018
On June 1, Gov. Murphy signed S485, creating the Out-Of-Network Consumer Protection, Transparency, Cost Containment and Accountability Act. This Act imposes new disclosure obligations for “surprise” out-of-network services and caps the pricing for such health care services. The bill also creates an arbitration system to quickly resolve billing disputes — and imposes significant penalties for noncompliance. Though the act primarily affects health care facilities, health care professionals and health insurance carriers, it also impacts self-insured health benefit plans (those subject to ERISA).
The bill generally requires health care facilities to disclose to patients whether the facility is in-network or out-of-network in respect to the patient’s plan, advise patients that, if in-network, the patient won’t incur any out-of-pocket costs outside of typical costs (e.g. copayment, deductible, etc.) unless the patient knowingly, voluntarily and specifically selects an out-of-network provider to provide services. For “emergency or urgent” services administered out-of-network, the act generally limits the amount a provider can charge to the deductible, copayment or coinsurance amount applicable to in-network services.
The Act incudes an “opt-in” procedure for self-insured health benefit plans (those governed by ERISA). For those plans that want to be subject to the act, they can do so by filing an annual notice with the state and amending their plan document to reflect that the benefits of the statute apply to the plan’s members. If the plan opts in, the participants wouldn’t be balance billed for out-of-network charges for emergency care in excess of the deductible, copayment or coinsurance amount applicable to in-network services, and the plan can take advantage of the act’s binding arbitration agreements. Self-insured health plans that don’t want to opt in don’t need to do anything.
The act goes into effect on or near Aug. 30, 2018 (90 days after enactment). Self-insured plans in New Jersey must determine whether to opt in to be subject to the act by the end of August 2018. Additional regulatory guidance will be forthcoming.
New Jersey Enacts Individual Health Insurance Mandate
June 12, 2018
On May 30, 2018, Gov. Murphy signed into law A 3380, the Health Insurance Market Preservation Act, which requires all New Jersey residents to have health coverage or pay a penalty. New Jersey's mandate mirrors the former federal requirement under the ACA and refers back to the ACA for key terms, including definitions, minimum essential coverage (MEC) and penalty amounts based on individual or family income. The annual penalty is 2.5 percent of the household's income or a per-person charge, whichever is higher. Interestingly enough, the Act provides that should Congress repeal the federal premium tax credits under the ACA or stop funding to the program, then the state mandate will not be enforced.
The New Jersey law is scheduled to take effect Jan. 1, 2019, making New Jersey the second state to enact such a state-wide individual health insurance mandate. The proceeds from the annual penalty are slated to fund a reinsurance program to help insurers cover the cost of the most expensive patients.
Because this is an individual mandate, employers don't need to take any action, but they should be mindful of potential tax implications for employees residing in New Jersey.
New Jersey Extends Transition for Non-ACA Compliance Plans
June 12, 2018
On May 30, 2018, the New Jersey Department of Banking and Insurance published Bulletin No. 18-10, which relates to the extension of renewal for non-ACA-compliant plans (also known as “grandmothered plans”). As background, on April 9, 2018, CMS issued guidance allowing extension of grandmothered plans (i.e., non-ACA-compliant plans that have been continued since 2014), subject to state and carrier approval. Bulletin No. 18-10 is New Jersey's approval for such an extension for the full period outlined by the CMS.
Similar to the extension approval for 2018, the bulletin directs carriers to the CMS guidance, meaning New Jersey will accept approvals for extensions based on the CMS bulletin's requirements. The CMS guidance allows an extension of non-ACA-compliant policies to policy years beginning on or before Oct. 1, 2019, provided that all such policies end by Dec. 31, 2019.
New Jersey employers with non-ACA-compliant plans should work with their carriers in extending their policies, as carriers may have their own restrictions (or prohibitions) on extending such plans.
Bulletin No. 18-10 »
CMS Guidance »
Local Paid Leave Laws Still in Effect
May 30, 2018
Building upon our previous Compliance Corner articles, we wanted to remind employers that New Jersey cities, towns and counties may continue to enforce paid sick leave requirements upon private employers until Oct. 29, 2018, when the New Jersey Paid Sick Leave law goes into effect. The following counties have their own paid leave laws:
- East Orange
- Jersey City
- New Brunswick
Employers should be mindful of the city requirements and continue to comply until the state’s paid sick and safe leave law becomes effective Oct. 29, 2018. Once in effect, the New Jersey Earned Sick Leave law preempts any such ordinance, resolution, law, rule or regulation adopted by a city, town or county.
New Jersey Earned Sick Leave »
Paid Sick Leave Law
May 01, 2018
On April 12, 2018, the New Jersey legislature passed S2171, known as the New Jersey Paid Sick Leave Act, which is a mandatory paid sick leave law applicable to all employers. Gov. Phil Murphy has announced his intention to sign the bill into law on May 2, 2018 to be effective 180 days after its execution.
Under the new law, employers, regardless of size, must establish a “benefit year” and allow eligible employees to accrue up to 40 hours of paid sick leave at a rate of one benefit hour per 30 hours worked. Eligible employees include those perform work within NJ, but doesn’t include certain employees performing service in the construction industry that is under contract pursuant to a collective bargaining agreement, any per diem health care employees or public employees who are provided with full paid sick leave pursuant to another state law.
Employers that already offer paid time off (including, but not limited to, personal days, vacation days and/or sick days) will be compliant under the law, provided the accrual rate is at least as generous as described under the law, all eligible employees are provided leave and employees can use their earned sick time for the same permissible purposes (described below).
Unless the employer has already accrued sick time prior to the effective date of the law, sick leave will begin to accrue on the date that the law takes effect for employees hired and working before such date. Newly hired employees begin to accrue sick leave immediately upon starting a new job and may use earned sick time on the 120th day after the employee begins working.
Employees may use earned sick time for any the following reasons:
- Diagnosis, care, treatment of, or recovery from a mental or physical illness, injury or other adverse health conditions, or for preventative medical care of the employee
- Caring for a family member during diagnosis, care, treatment of, or recovery from a mental or physical illness, injury or other adverse health conditions, or for preventative medical care of the employee’s family member
- Absence(s) necessary due to the employee or employee’s family member being a victim of domestic or sexual violence, if the sick leave is used for any of the following:
- Medical attention needed to recover from physical or psychological injury or disability caused by domestic or sexual violence
- Services from a designated domestic violence agency or other victim services organization
- Psychological or other counseling
- Other legal services, including obtaining a restraining order or preparing for, or participating in, any civil or criminal legal proceeding related to the domestic violence or sexual violence
- Time needed after the closure of the employee’s workplace or the school/place of care for the employee’s child by order of a public official or other public health emergency, or if a public health authority issues a determination that the presence of the employee or their family member would jeopardize the health of others
- Attending a school-related function of the employee’s child requested or required by the school responsible for the child’s education, or attending a meeting concerning the care provided to the child in connection with the child’s health conditions or disability
Employers may require an employee to provide advance notice to use sick leave (if foreseeable), but not more than seven calendar days. Notice should include the date the leave is set to begin and the expected duration. If unforeseeable, employees must give notice as soon as practicable. If the sick leave is of three or more consecutive days, an employer may require that employees provide reasonable documentation that their leave time is for a permitted purpose under the law. Any information concerning the health or domestic or sexual violence of an employee or their family member will be confidential and shall not be disclosed, except to the affected employee or with written permission of the employee.
The law includes recordkeeping and notification requirements. Specifically, employers must keep employee records of hours worked and sick leave taken for a period of five years, and those records must be made available for review upon request by the NJ Department of Labor. The department will develop a notice that the employer must post in the workplace. The employer must also give a copy of this notice to employees within 30 days of the notice being drafted and provided to new hires as well as upon any employee’s request.
With regard to penalties, the law provides for a private right of action by an aggrieved employee and includes (but is not limited to) liquidated damages equal to the actual damages sustained by an aggrieved employee (i.e., wages multiplied by two).
The law expressly prohibits towns and cities from enacting ordinances regarding earned sick leave and preempts the previous municipal ordinances in existence prior to the law. When the law is signed, New Jersey will become the tenth state to require some form of paid leave.
Because it’s anticipated that this law will be signed, New Jersey employers should review their sick leave and paid time off policies to ensure compliance with the new law. Employers with specific questions should work with outside counsel, particularly since the law relates to employer leave policies, which can involve issues outside the employee benefits realm.
New Jersey Paid Sick Leave Act »