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Self-employed in New Jersey

January 1, 2010

Q: I am self-employed in New Jersey. Can I get group insurance by counting my wife as an employee?

A: The following response is from Aetna insurance but would generally be applicable to other NJ small group major medical insurance policies as well. Remember that in New Jersey the issue is different and opposite than other states:
- All individual medical insurance covers pre-existing medical conditions.
- group insurance is less expensive than individual insurance in this state, so more self-employed people are trying to get onto a group policy.

In short, the insurance companies defer to state law on this issue that is quoted in Aetna's memo below.

Underwriting guidelines for small groups in New Jersey - Clarification

In January we communicated that all new 2-life groups that intended to add a new employee on or shortly before the policy effective date would be subject to specific underwriting criteria. By "new 2-life group" we meant sole proprietors or self-employed individuals who are adding an employee, thereby becoming a 2-life group.

Please note that this criteria does not apply to cases in New Jersey as the state has specific regulations concerning eligibility. An employer who did not previously qualify as a small employer in the prior calendar year may not be issued coverage under the Small Employer Health Benefits Program. Such employers would need to seek coverage under the Individual Health Coverage Program.

As reference, New Jersey regulation 11:21-7.3, states:

4. At the time of application, the determination of whether an employer is a small employer shall be based upon the small employer's completed New Jersey Small Employer Certification form.

i. If an employer qualifies as a small employer in the immediately preceding calendar year, the employer shall be considered a small employer regardless of the status of the employer on the date of application or the effective date of coverage so long as it employs at least two employees on the first day of the plan year.

ii. If an employer did not qualify as a small employer in the immediately preceding calendar year, the employer shall not be considered a small employer, regardless of the status of the employer on the date of application or the proposed effective date of coverage, if any.

iii. In the case of an employer that was not in existence during the preceding calendar year, the determination of whether the employer is a small or large employer shall be based on the average number of eligible employees that it is reasonably expected that the employer will employ on business days in the current calendar year. An employer that was not in existence during the preceding calendar year must have at least two eligible employees when completing the employer certification and on the first day of the plan year to be considered a small employer.

Because of these laws, it is difficult for a self-employed person to graduate into a group health insurance policy by adding an employee. The moved must usually be contemplated in advance, with preparatory changes made in the business' wage tax filings for the prior calendar year in order to enable eligibility for group health insurance. Of course, the benefits must be weighed against the costs of this additional filing, wage taxes and, in some cases, workers compensation costs.

The only exception at MedSave.com in New Jersey is the Value Benefits 24 Hour Accident Coverage supplemental insurance plan that provides emergency accident coverage and the "CallMD" feature. While this is technically group insurance, it is available to any individual or small business. If individual insurance is inadequate, this may provide a small amount of relief.



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