KBenefits Insurance Services
Employers Guide

Employers Guide To Small Group Health Insurance

This Employers Guide To Small Group Health Insurance is a helpful resource for employers and office managers. This Guide reviews the key concepts, requirements and guidelines an employer has to follow when offering a small group health plan to their employees and new hires.

I. New Jersey Small Employer Health Benefits Program defines an eligible small group employer as an employer with at least 1 to 50 eligible employees enrolling into coverage. Small employers must satisfy “participation” and “contribution” requirements in order to be eligible to enroll into a small group health plan.

II. An "eligible employee" is defined as working 25 or more hours per week and receiving at least minimum wage. Carriers may ask for proof of compensation for purposes of determining which employees are eligible for coverage and whether the employer meets the participation requirements.

Who is not considered an eligible employee:

• Owners, Partners, including spouses and children

• Sole proprietors
• 2% shareholders in S-corp
• Independent contractors - 1099’s
• Leased employees

III. Participation Requirements
At least 75% of the full-time employees must be covered under the health plan or covered elsewhere:
    1. Coverage with another employer’s health plan
    2. Coverage with a spouse’s employer health plan
    3. Coverage with Medicare, Medicaid, Familycare, Tricare or GetCoveredNJ/Obamacare

    Note: Individual off-market health plans do not count toward the 75% participation requirement.

IV. Contribution Requirement

A small employer is required to contribute at least 10% of the total cost of the health plan’s premium.  Employers can choose to contribute a percentage amount or a flat dollar amount per employee.

Exception to the 10% Contribution & 75% Participation Requirement

Does not apply during the Employer Open Enrollment Period which takes place from Nov 15 through Dec 15.

V. Enrollment Requirements for a Small Group Health Plan

Employers can enroll their employees into a small group health plan on the 1st or 15th of any month.  To enroll, the employer selects a carrier and health plan then they must provide the enrollment documents and meet enrollment eligibility criteria and requirements.


Small Group Health Enrollment Requirements:

* Group Enrollment Application
* Employer NJ Certification form
* Employee Enrollment Applications
* Waiver Forms
* Final Rates - signed
* Binder Check:  Company check - 1st month premium
* AutoPay Form- recommended

* Business Tax forms: either K-1, Schedule C or 1120s showing 100% ownership



NJ Employer Certification
Carriers require an annual redetermination of small group eligibility by requesting you complete an NJ Employer Certification from and submit supporting documentation. WR-30, waivers, either K-1, Schedule C or 1120.

VI. Waiting Periods

The waiting period is a period of time that must pass before coverage will become effective. The waiting period cannot exceed 90 days. Waiting periods may be applied by class of employee based upon conditions pertaining to employment (examples include number of hours the employees work, salaried v. hourly, union v. non-union).  0, 30, 60, 90 days

If an employer wishes to apply a period during which the performance of a new employee is evaluated, the employer may require that new employees satisfy an orientation period, as explained below. If an employer applies an orientation period, the waiting period begins on the first day after the orientation period ends.

Orientation Period

The orientation period is a period of no longer than 1 month during which the employer and employee determine whether the employment situation is satisfactory for each party and any necessary orientation and training processes commence.

VII. COBRA/Continuation of Coverage

Continuation of coverage may be exercised when an employee loses coverage. Benefits can be continued for up to 18 months, sometimes 36 months. NJSGC -New Jersey State Group Continuation is for groups with under 20 employees, and COBRA is for groups with over 20 employees. The laws are similar, but there are some differences.

VIII. Annual ACA Reporting Requirements for Small Employers

Fully-Insured Health Plans - Use Form C
* Form 1094-C:  Transmittal sheet to the IRS includes summary information for each employer.
* Form 1095-C:  Used to report information about each employee & months covered. Sent to IRS & employee.

Self-Insured Health Plans - Use Form B
Any employers enrolled in a self-insured health plan must report the Minimum Essential Coverage for all covered individuals using forms: Form 1094-B & Form 1095-B - Parts 1,3,4.
* Form 1094-B:  Transmittal sheet to IRS includes the name of the company, address, EIN and contact name.
* Form 1095-B:   Used to report information about each employee & months covered. Sent to IRS & employee.

IX. Employer Compliance Checklist
These ACA/ERISA notices and documents are to be reviewed by the employer and their employees upon initial enrollment and renewal. -
See Below

XI. Potential Penalties & Fines for Non-Compliance

Many federal compliance laws apply to all group health plans, regardless of the size of the sponsoring employer. Here's a brief list of potential penalties that may apply if employers do not comply with key ACA/ERISA provisions.  This is a brief list. For more information on the ACA, including model notices, visit Department of Labor (DOL).


- Failure to provide an SPD within 30-days of an employee’s request.

  Subject to a maximum $110 per day penalty.


- Failure to provide an enrolled employee an SBC within 90-days of an employee request.

  Subject up to $1,176 fine/failure/dependent.
  Subject to $100 excise tax & ERISA penalties.


- Failure to distribute an SMM - summary of material modifications or for failure to provide to DOL.

  Penalties of up to $110 per day - up to $1,100.
  Potential criminal charges under ERISA section 501.


- If you don't furnish an employee with a correct 1095-C and you don't file the form with the IRS.

  Subject to a penalty $560 per employee.


- Failure tot comply with COBRA & NJ Continuation compliance and guidelines.

  $100 per day or $200/day/family plus medical expenses.
  Potential to trigger an IRA audit.


For more information on the ACA, including model notices, visit the Department of Labor ( DOL).

Download these helpful Employer Resources:

Employers Guide To Health Insurance-2023[...]
Adobe Acrobat document [351.2 KB]
Employer ACA Compliance checklist.pdf
Adobe Acrobat document [172.6 KB]

Contact us for advice, navigation, plan options & free enrollment assistance.

Christopher S. Kudryk

KBenefits Insurance Services
Employee Benefits

Individual Health Insurance
Medicare Plan Options


Christopher S. Kudryk
Insurance Specialist

KBenefits specializes in health, dental, vision, life and medicare insurance for employers and individuals in NJ & NY.

Thank you for your referrals!
Referrals are the cornerstone of our business.  Let us know if we can be of further assistance to you or someone you know.  Glad to be of service

Print | Sitemap
2011 KBenefits LLC