To assist small employers in shopping for health insurance coverage, and to provide general information about the Small Employer Health (“SEH”) market, the New Jersey Department of Banking and Insurance ("Department") publishes this summary of the annual premium comparison survey for 2008. 

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About this Premium Survey

The attached pages show the rates each carrier would charge a sample small employer for group coverage for one month for a range of standard SEH health benefit plans.  The premiums for each plan are effective January 1, 2008 and are listed for comparison purposes only.  Premiums for each plan are subject to change throughout the year and may vary among small employers, but only according to the age, gender, and family status of the employees in the group, and the location of the business in New Jersey.  According to the SEH rating rules, the highest rate for a small employer can be no more than twice the rate for any other small employer with the same carrier and plan.  The charts will not provide an employer with an exact premium for its group, but will demonstrate the relative pricing among carriers in the market for the sample group.  A carrier that provides the lowest rate for the sample group for a particular benefit will not necessarily provide the lowest rate for a group whose employees have different age, gender, or family status characteristics than the sample group.

Beginning with 2008, the report compares the premium shown to the premium shown in the 2007 survey, and calculates the percentage increase.   This percentage increase is only indicative for the plans of coverage shown, and for the particular sample group specified.  The percentage increase shown in this report may be different than the average percentage increase.  The percentage increase may also be different for groups with different age/gender or family structure compositions.

Rates are allowed to vary by employer location.  Therefore, the sample premiums have been compiled for businesses located in Bergen, Camden, and Middlesex counties.  Carriers’ relative pricing positions may shift, depending on the location of your business.  (The survey does not request premium information for businesses located in the other counties.)  The monthly premiums listed on the attached sheets are based on a small employer with six employees and their dependents, as described below:

• Single female employee age 27;
• Single male employee age 37;
• Female employee age 47, with two children;
• Male employee and spouse, both age 57;
• Male employee age 27, with spouse age 24, and two children; and
• Female employee age 47, with spouse age 50, and two children. 

All insurance carriers (other than HMOs) are required to offer five standardized contracts labeled A through E.  Plan A is the most basic plan, covering primarily hospitalization.  Plans B through E are comprehensive medical plans and cover the same medical and hospital charges, but differ in how much the covered person pays toward these charges.  Plan B has 40% coinsurance, Plan C has 30% coinsurance, Plan D has 20% coinsurance, and Plan E has 10% coinsurance.  HMOs are required to offer a standard HMO contract that has per service copayments (for example $20 per visit) but no coinsurance percentage.

All carriers are required to offer the above standard health benefits plans.  However, carriers are allowed to offer plans B, C, D, and E as PPO or POS plans with network and non-network benefits.  In addition, HMOs are allowed to offer POS plans in addition to the standard HMO plan. HMO, POS, and PPO plans may be offered with optional riders allowing for deductibles and coinsurance either in or out of network. 

The Department and the Small Employer Health Benefits Program ("SEH") Board do not set or approve rates.  Carriers are required to file rates with the Department prior to using them.  The law permits carriers to consider only three factors (other than plan of benefits, issue date, and family status) in determining the rates for a small employer group:

• the age of the employees
• the gender of the employees, and
• the location of the business in New Jersey

Carriers may not consider the health status or past claims experience of a group in determining premiums.  The law requires carriers to limit variation in cost to a two-to-one ratio.  Thus, the rate for the highest cost group (based on age, gender, and geography) may not be more than two times the rate for the lowest cost group of the same size.

Carriers may base rates on the age and gender characteristics of all the employees in the company or on only the employees that are actually enrolling in the plan.

Section 5 of P.L. 2003, c. 27 requires that a carrier must provide a renewing employer 60 days notice of any rate increase. (Section 1 of this law also imposes notification requirements on employers.)

Generally, at renewal, if an employer's rate changes, it is for one or more of the following reasons:

• a change in the age/gender composition of the group
• a change in the location of the business
• a change in the factors that the carrier uses to reflect age, gender, and location
• a change in the carrier’s rate for the plan of benefits
• a change in the plan of benefits offered by the employer

Carriers in the small employer market are required to issue coverage to eligible small employers who meet the participation and employer contribution requirements. An eligible small employer has from 2 to 50 eligible employees, where “eligible employee” means a full-time, bona fide employee who works a normal work week of 25 or more hours.

Small employers are required to meet a 75% minimum participation requirement, which means generally that 75% or more of the full-time employees must either participate in the employer's plan (or have other qualifying coverage) in order for the employer to be eligible to purchase SEH coverage.  Credit for participation is given for employees that do not take coverage but are covered under another group health plan (for example, as a dependent) or under Medicare, Medicaid, or New Jersey Family Care.

A small employer is required to pay at least 10% of the overall premium for the entire group.  However, the employer may elect to contribute more than 10%. 

To obtain a price quote from a carrier, contact the carrier or an authorized insurance producer (agent or broker).  Carriers and authorized producers are required to provide a price quote to a small employer within 10 working days of receiving a request for a quote which contains the information necessary to provide the quote.

Many carriers offer plans with riders that have fewer benefits and cost less than the standard plans illustrated in this survey.  In considering these lower cost rider options, employers should make sure they and their employees understand the implications.  The decreased benefits riders could exclude or limit certain services and supplies covered by the standard plans, or impose higher cost-sharing (deductibles, copayments, and coinsurance.)

In addition to cost, an employer may want to consider 1) the financial strength of the carrier; 2) its reputation for service; and 3) for HMO, POS, and PPO plans, the carrier's network of providers,  in making a decision about coverage.

Other information about small employer health coverage is available online at the Department’s web site at: www.nj.gov/dobi/reform.htm.  You may also contact an insurance producer (broker or agent) for information.

Bergen County

• HMO Plans
• Indemnity Plans

Camden County

• HMO Plans
• Indemnity Plans

Middlesex County

• HMO Plans
• Indemnity Plans

Examples of Single and Family Rates

The published premiums in the Premium Comparison Survey do not show the cost for a single employee or family in a group with these rates.  The table below provides the monthly rate for a single employee and a family for the specified group in Middlesex County, for the typical plans and larger carriers shown below.

$20 Copay HMO Plan

Services must be provided in network.  There is a copayment of $20 per office visit and $200 per hospital day. The standard prescription drug plan either covers 50% of the cost or has a $15 copay.  Most carriers also offer other drug plans through riders that provide 2 or 3 tier copays, for generic, brand, and preferred brand.

$20 Copay/$500 Deductible Plan C POS

A POS plan allows covered services to be obtained from health care providers in- or-out-of- network.  In-network services are provided with the same copayments as the HMO Plan above.  Out-of-Network services require a $500 deductible, and are then covered with the insured paying 30% of the allowed charge.  Standard POS plans cover prescription drugs subject to the out-of-network deductible and coinsurance.  Most carriers also offer other drug plans through riders that provide 2 or 3 tier copays, for generic, brand, and preferred brand.