New Jersey Small Business Health Insurance Options
The Complete New Jersey Small Business Health Insurance Guide (2024 Edition)
HAS for America’s complete health insurance guide for small businesses in New Jersey. This guide is for New Jersey-based companies that employ 30 people or fewer. This document will help independent professionals and small business owners provide their staff with the healthiest, least expensive benefits. To remain competitive you must offer benefits that are attractive to the talent you want and the package of compensation necessary to retain them.
New Jersey Small Business Health Insurance Benefits Options
New Jersey’s small businesses have several options to choose from when it concerns providing health benefits to their employees.
Option 1, the most common and most expensive, is to implement traditional group health plans.
Prices vary according to age. According to information from the Kaiser Family Foundation however, in 2021 the average annual cost for group health coverage sponsored by employers that covered a worker’s family and a worker was $22,094, approximately $700 more than the national average.
New Jersey employees, on average, contribute to their health insurance costs more than $5,000.
New Hampshire firms also have an array of options to choose from that may help them reduce their costs. These options include:
- Health savings Accounts (HSAs)
- Health reimbursement agreements (HRAs)
- Direct primary care (DPC), memberships
- Health Sharing Programs
The best strategy to use for your small business depends on several factors. This includes the size and budget of your business as well as your employees and their dependents’ ages and medical requirements.
Read on the go, download our Complete Guide To Small Business Healthcare Plans.
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New Jersey Small Business Health Insurance geographic location
New Jersey is unique in its healthcare environment, with both urban areas such as Camden, Trenton and Jersey City and more rural ones like Frenchtown or Tinton Falls.
New Jersey business owners need to be careful about the distribution of their employees in the state. It does little to benefit executives in Jersey City from choosing an HMO that only allows workers to visit in-network doctors, when the majority of their staff and their families reside and work in Ringwood.
New Jersey Small Business Group Health Insurance
New Jersey companies tend to opt for traditional group health plans.
It is also one of the most pricey.
The following is how the system works:
In this case, the employee’s family is also covered if requested by the employer.
According to the Affordable Care act, employers with at least 50 workers must provide ACA health insurance coverage for their full-time employees.
Under the Affordable Care Act, the insurance plan must have the following ten coverages. These include:
- Ambulatory care (outpatient health services that are provided without the need to enter a hospital)
- Emergency Services
- Hospitalization, such as surgery or overnight stays
- Maternity, newborn and pregnancy care
- Mental health services and treatment for addictions to substances, such as behavioral health (such as psychotherapy and counseling)
- Prescription drugs
- Rehabilitative devices and services (devices that help people who have disabilities, chronic conditions, or are injured to regain mental and/or physical abilities)
- Laboratory services
- Health and wellness services for chronic and preventive diseases
- The coverage of pediatric services includes oral and visual care. Adults, however, are not eligible for dental or vision benefits.
ACA mandates that insurance policies cover breastfeeding and birth control.
It is true that traditional health care insurance can be expensive but there are advantages.
When a worker enrolls for insurance during the first enrollment period they have qualified for, during special enrollment periods triggered due to a qualifying event in their life, or when the general open registration period begins each November, an insurer can not deny or increase the cost of coverage based on medical history.
Small Business in New Jersey Does Not Need Health Insurance
In accordance with the Affordable Care Act employers employing fewer that 50 people are not obliged to offer any form of health insurance.
New Jersey does not have a similar requirement. The state of New Jersey does not require employers with less than 50 workers to offer health care insurance.
The penalty is not applicable to you.
Despite this, offering competitive health benefits is a good idea.
New Jersey offers a particularly attractive environment for employers, with its low rate of unemployment and intense competition to attract talent.
New Jersey employers have the potential to save lots of money through a Medical Cost Sharing or Health Share Plan (more information below). You can pay for some or all expenses on behalf of your employees.
New Jersey Small Business Health Insurance HRA Alternative
If you prefer, your employees can pay their own health insurance through a QSEHRA. This arrangement is tax-free.
QSEHRAs provide employers with the following benefits:
1.) No contribution minimum
QSEHRAs do not require you to pay a certain minimum every year. This is unlike a traditional pension plan. As an employee, you can choose your own budget to cover HRA expenses and make changes as necessary each year.
With a QSEHRA you can manage your budget for medical benefits.
2.) Flexibility
You can offer your employees a different benefit based on whether they are married or have children. You can discriminate and offer a greater benefit for employees with families compared to employees without dependents.
3.) Tax-free treatment both for employers and employees
Your employer’s contributions are fully deductible by the IRS as a compensation cost. Contrary to cash compensation your employees are not taxed on the QSEHRA benefit, provided that they maintain health insurance plans that include the 10 minimum essential benefits specified by the Affordable Care Act.
In this case, a QSEHRA would be a better option than merely offering a health stipend for employees to use towards health insurance and other expenses.
4.) QSEHRAs Promote Employee Choice
A large number of traditional group health insurance policies limit employees from a wide range of backgrounds to just one or a few health insurance options.
Many of these are overpriced or unsuitable because they were chosen by the HR department or company management and not by workers.
QSEHRAs give workers and families more options, and they can choose the plan that best suits them.
New Jersey Taxed Employer Health Coverage
As an employer, you can deduct the full amount of health insurance premiums paid as a part of your business costs under federal and New Jersey laws. Also, they are not taxed to employees.
Overall, health sharing plans have lower costs. The employee can also deduct their monthly cost. Employees are taxed on employer-paid health costs.
New Jersey Employer-Group Health Insurance: The Disadvantages
The traditional group employer health insurance is not without its disadvantages, both for the employers and their employees.
- The Cost
It can be staggering high and this can be especially true for industries with high labor costs.
The government regulators of Washington and Trenton have overloaded health insurance policies with coverages and requirements which make no sense to many employees.
For instance, the traditional insurance industry requires insurers to include mental health benefits, drug and liquor addictions, as well as maternity coverage that most workers are not interested in.
The result is that they are much less effective and more expensive than they should be.
- Inflexibility
The majority of group health plans are one-size fit all strategies that do not always meet employee needs or budgets. The nature of employer-sponsored health insurance group plans is to only offer a few solutions, which may not suit the needs and budgets of specific employees.
It may make sense for workers to buy their own plans on the market. They could take advantage of the Affordable Care Act’s subsidy.
The Affordable Care Act may offer subsidies to workers who purchase individual plans.
These workers may benefit from a cheaper health sharing plan. Affordable and innovative alternatives to insurance may be the best solution for people in good physical health who do not have pre-existing health conditions.
More information on health sharing plans is discussed below.
- Administrative burden
The administrative burden of managing an entire health insurance plan is substantial. This involves managing paperwork and compliance. Auditing plans to prevent employees from enrolling people who aren’t qualified, as well as responding to staff questions.
The health insurance program within an organization must run efficiently and smoothly.
However, they are an enormous burden on very small businesses who lack the manpower to hire a HR department to administer the plan.
Health Sharing Plans vs. Health Insurance
Health insurance is not the same as health sharing plans.
Healthsharing groups are associations of people who share medical costs. Health sharing ministries, unlike health insurance companies that are typically for-profit corporations are non-profit.
Mandatory Coverages
Health insurance plans do not have such requirements. Federal and state laws require that traditional health insurance policies include coverage for many items, which many people don’t need or want. Health sharing organizations are not subject to the Ten Minimum Essential Coverage requirements.
For example, medical cost-sharing plans do not have to cover the costs of addiction treatment for those who don’t use drugs. They don’t have to pay for injuries caused by drunken driving.
Pre Existing Conditions
Healthsharing plans can impose waiting times before they share costs for treating pre-existing medical conditions.
They also often impose waiting times for surgeries, except in the case of accidents and injuries that were not foreseen before the member enrolled.
These waiting periods help eliminate a lot of adverse selection and allow health sharing organizations to provide a fantastic set of benefits for a fraction the cost of a non-subsidized ACA qualified group health insurance plan or one purchased through GetCoveredNJ.
Note that healthsharing plans do not qualify for subsidies as part of the Affordable Care act. The price savings are so large that even if you qualify for a subsidy depending on your circumstances, many people will still benefit by switching to a healthsharing plan.
Switching to health sharing is often more beneficial for New Jersey employers, since small group health plans do not qualify for a subsidy on premiums under the ACA.
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Health Sharing and Network Restriction in New Jersey
Health sharing plans offer greater choice in healthcare providers than traditional managed care plans like HMOs or PPOs. These are the most popular group health insurance plans sponsored by employers.
Healthsharing organizations in New Jersey don’t restrict their patients to providers in the network in most cases. Health sharing plan members can choose any doctor or provider they want. Choosing the doctor of your choice is a right that people should have.
Does your business need to offer health sharing?
Each business is unique. It takes careful analysis to choose the best plan for your business, whether you’re looking at a healthsharing plan or a more traditional group health plan.
It’s simple for New Jersey business owners to receive a complete case analysis with recommendations specific to their organization and employees.
Click here and make an appointment to meet with one of our Personal Benefits Managers in New Jersey.
You can help yourself by preparing a staff census.
Most of the time, switching from health insurance to a group plan will save you thousands per employee. Health sharing is not recommended if your employees have pre-existing medical conditions.
Consultation and analysis are always free.
New Jersey Small Businesses can now take advantage of Health Reimbursement Plans
Employees can receive reimbursements for medical expenses, tax free, through HRAs.
New Jersey’s small businesses often do not offer group health insurance. In New Jersey, many small business owners opt to create an HRA instead, which they use to give their workers cash for them to purchase health insurance in the individual market using pre-tax dollars.
Workers can then take advantage of the subsidies available, which further reduces the cost net for the business and employee.
The HRA can also be used for out-of pocket costs like prescriptions, copays, durable medical devices, and deductibles. HRAs are also tax-free.
When you offer an HRA as a replacement for formal group health coverage, employees have the option to pick and choose health insurance that meets their individual needs.
Learn more about Human Resource Assessments (HRAs) for Small Business by clicking here .
HRAs for New Jersey Small Business Health Insurance
QSEHRA is an HRA for small business that allows them to use the health insurance reimbursement plan.
It is available to companies that have fewer than fifty full-time workers or an equivalent number, but do not provide a group health insurance program.
The QSEHRA allows businesses to choose their maximum QSEHRA contribution, subject to certain restrictions. New Jersey employers may contribute $5,850 to individual employees up to 487.50 dollars per month and up to $12,800 to employees who have a family up to 983.33 dollars per month as of 2023.
This money is used by employees to purchase insurance on their own via an online exchange or Personal benefits Manager. It preserves eligibility for subsidies, something they could not receive under a group insurance plan paid by their employers.
Employers can reimburse their employees either for the premiums alone or for both premiums and additional medical costs.
QSEHRAs, Special Enrollment periods and the Qualified Self-Employed Health Reimbursement Account
Health Reimbursement Arrangements, or HRAs, have many benefits.
Tax-deductible for you as well as your employees, the benefits of HRAs are tax free.
HRA money is not released to your employees until after it has been paid. As operating capital, it remains yours. This money doesn’t need to be placed with anyone else.
HRA benefits can be tailored to suit the needs of employers, with many options available. This includes deciding what expenses are covered.
When workers change status from employee to contractor, their coverage of health insurance isn’t affected. The QSEHRA gives the worker control over his/her insurance plan. Not the employer.
HRA Advantages
Health Reimbursement Arrangements offer many advantages
Your employees are not taxed on the amount you spent for HRA benefits.
HRAs are not paid to the workers until you give them control. The money is available as operating capital. The money does not have to be held by a third-party.
The HRA benefit can be designed by employers in a way that suits their needs, and includes what costs you’re willing to cover.
When workers change status from employee to contractor, their coverage of health insurance isn’t affected. With QSEHRA’s approach, each worker is the owner of his or her own insurance policy and can control it. Not the employer.
HRA Disadvantages
Many workers do not wish to take on the task of researching and selecting their own healthcare plan. It’s possible that some workers need assistance in navigating this transition.
We can help if you are in this situation. There is no one left behind.
Call 800-913-0172 or have your workers simply click on this link for an appointment to receive personalized and individual service.
Cliquez ici for information on alternatives to the employer-sponsored insurance that New Jersey’s small businesses can choose.
Direct Primary Care: The Advantage
Direct Primary Care plans, or DPCs for short, are an alternative health care model that has been gaining popularity both in New Jersey as well as across the nation.
This is a model based on membership: Your employees can receive as many consultations as they require, whether in-person or through telehealth, for an affordable flat monthly fee.
DPC’s monthly membership fees start at just $80 and are a viable option for people to take care of their health, without having to pay copays or insurance.
DPC plans offer members unlimited access for routine primary, chronic, and preventive care.
Some of the services that are commonly offered by primary direct care include:
The following are just a few of the common medical services provided by direct primary care doctors.
- Preventive care. DPC doctors are committed to preventive care and offer routine screenings, immunizations and checkups.
- DPC Doctors treat injuries and illnesses that are acute, including infections, colds and influenza, minor skin injuries, and other conditions.
- Chronic disease management. DPC doctors assist patients in managing chronic conditions such as hypertension, diabetes, arthritis and more. These doctors offer ongoing treatment, monitor patients, and adjust their plans of care as required.
- Comprehensive physical exams. DPC doctors provide comprehensive physical examinations that help assess health overall, identify possible risks, and offer personalized health recommendations.
- Urgent care. DPC is often able to offer same-day, or the next-day, urgent care.
- The appointment system allows patients to be seen quickly for medical problems that are not emergencies.
- Laboratory and diagnostics services. DPCs may perform or arrange a range of lab tests including imaging (Xrays, Ultrasounds), blood analysis, and electrocardiograms.
- Medication management. DPC Doctors can prescribe medication and track its effectiveness. Additionally, DPC doctors provide medication education and counselling.
- Mental health services DPC practices offer mental health as part of their total care. DPCs may also refer their patients to mental health professionals for therapy or counseling.
- Minor procedures. DPCs are equipped to carry out minor surgeries in their own offices.
- Care coordination and referrals. DPC’s doctors coordinate and advocate for their patients with hospitals, specialist physicians, and other healthcare professionals when referrals are required.
No insurance companies are involved so there aren’t any co-payments, coinsurance, or deductibles. A monthly subscription will cover all costs. So, workers with limited funds can receive immediate medical attention. Never again will workers have to avoid seeing their doctors because they cannot afford the co-pays or deductibles.
For services not covered by DPC, patients can purchase supplemental insurance plans. These include accident plans, high deductible plans and health sharing plans. DPC covers routine medical care. Therefore, members are free to opt for more cost-effective options such as healthsharing plans, rather than traditional insurance.
Health Savings Accounts (HSAs)
The HSA (Health Savings accounts) is a powerful tool that can assist workers in managing their health care costs and also help to keep the premiums of workplace health insurance lower.
New Jersey’s residents and business owners need any tax relief they can find. Good news! Employer contributions to Health Savings Accounts for employees are fully deductible from New Jersey corporate tax.
HSAs enable individuals to pre-tax funds for future medical needs. HSAs can be funded by employees as well as employers. However, the annual contribution limit is set annually by Congress in order to adjust it to inflation.
HSAs allow for tax-deferred investment growth and tax-free withdrawals.
HSA Eligibility
Employees who want to contribute to their HSA or receive employer-paid pretax contributions must sign up for an High Deductible Health Plan (HDHP) that meets the requirements.
According to the IRS, a high-deductible plan is one that has a deductible at least of $3,000 or $1500 for individuals.
Total annual HDHP out-of pocket costs (including deductibles copayments coinsurance and other expenses) cannot be higher than $7500 for individuals or $15,000. The limit is not applicable to outside-the-network care. ).
Do I have to choose between HSAs and Health Sharing?
There is only one major plan available to employees that preserves their eligibility to make pre-tax contributions into an HSA: HSA’s SECURE Plan.
HSA SECURE Plan allows you to take advantage of the health-related tax benefits and cost savings of sharing health care.
To enroll in the plan, however, you must be a small-business owner or have earned some sort of income as a self-employed person.
HSA SECURE cannot be used by employees with a straight W-2. HSA SECURE could work well for your employee or spouse if they have their own small business, side gig, freelance or other type of employment, are healthy, and do not suffer from any pre-existing medical conditions.
As a small business, you may want to consider the HSA-SECURE Plan as an option that can save both your and partners money.
HSA SECURE is only available to employees who enroll on their own. If they already have an HSA established, then you can still make pretax contributions on their behalf up to the limit Congress sets each year.
HSA SECURE is available by clicking on the link below.
Click here to learn more about HSA SECURE.
New Jersey Small Business Health Insurance Benefits Applied Taxes
After you’ve learned a little bit more about all the other options that are available for small business owners in addition to health insurance as it is known today, we have a short table to explain how they will be taxed.
Plan Type Employer Workers
Traditional health insurance premiums Tax deductible. May qualify for a tax credit (see below) Non-taxable
HSA contributions Tax deductible
Pre-tax, up to certain limits. No income limitations.
Health sharing costs Tax deductible as a compensation expense Taxable as ordinary W-2 income
Health reimbursement arrangements Tax deductible Benefits are non-taxable to the employee
HSA withdrawals N/A
Withdrawals for qualified medical expenses are tax-free. Otherwise taxable as ordinary income.
A 20% penalty for non-qualified withdrawals applies up until age 65.
Direct primary care costs
Tax deductible as a compensation expense Taxable to the employee
New Jersey Small Business Health Insurance Care Pyramid
Employee Health Benefits should be designed to cover the entire Employee Healthcare Pyramid. From routine prevention, to accessing primary care and early detection for health problems through to catastrophic accidents.
On the left we have listed the common solutions that are based on traditional insurance and address the Care Pyramid at each level.
To the right we provide a range of affordable and alternative ways of providing protection to employees of each pyramid level.
Plan design that is good will offer employees affordable options at each level. The plan should ensure that none of the employees are forced to postpone or skip care simply because they don’t want to pay a higher premium or coinsurance.
You can work with your Personal Benefits Manager to create a customized plan for each employee that addresses the Care Pyramid at all levels. This is often done at a fractional cost compared to a group plan.
New Jersey Small Business Health Insurance Tax Credit
Small Business Health Care Tax Credit, passed with ACA, permits some small business to claim a tax credit up to 50 percent of the employee health insurance cost.
This program is designed for small business owners who have 25 or less employees and tend to hire workers at lower wages.
Businesses that are for-profit or non-profit can claim the tax credit.
* Has fewer then 25 employees. Average salaries are around $53,000. It is not common to include owners when determining the number and average salary of the employees in a company. Number of employees is also calculated based upon “full-time equivalencies” (FTEs). The two part-time employees will equal the full-time equivalent.
Employees must be paid at least half as much in premiums.
GetCoveredNJ offers the Affordable Care act coverage on New Jersey’s state exchange.
Tax credits are eliminated when employers reach 25 employees and/or the average wage is at least $53,00
If you are a small business that is tax exempt, then the IRS Forms 990-T must be filed to receive this credit.
Taxes on your contributions to employee health care aren’t applicable.
It’s not true that I owe tax for my company this year. Can I still claim a tax credit?
Yes. It is possible to carry this tax credit back to offset tax liability from the previous tax year.
This credit is refundable for businesses that are exempted from paying taxes.
To learn all about the Small Business Health Care Tax Credit consult your tax professional.
Combine New Jersey Small Business Health Insurance Strategies
When it comes to maximizing your coverage, combining different programs is a wise move.
Combining a variety of health care packages allows employers to reduce healthcare costs and provide complete coverage for their employees.
Combining a Direct Primary Care Plan (DPC), which covers normal primary care, with a low cost health sharing program that includes catastrophic occurrences is one way to achieve a cost effective solution.
Compared with conventional group health coverage, this approach can make it more affordable, either for the company or for employees.
It is possible to offer employees more flexibility by giving them an option between joining a Health Savings Account or buying an individual health plan.
What Should You Do NOW?
Please contact us if you would like a complementary, complimentary business health plan and analysis.
Your HSA for America Personal Benefits Manager will review your family and work situation with you. They’ll also discuss your budget, needs and employees’ contribution ability.
Many of our PBMs are successful entrepreneurs and business owners in their own right. Many of our PBMs have owned successful businesses and are entrepreneurs themselves. They understand what you need as a business leader and how to attract and retain top talent.
Can I provide both Health Insurance and Health Share at the Same Time?
If you offer both, employees can choose the one that suits them best.
Please note, if you lose too many workers from a Group Health Insurance Plan (GHIP), your group may be forced to drop below the Minimum Participation Rate required for a GHIP. HRAs are a great way to reimburse employees who purchase individual health plans, since they will have a similar cost.
New Jersey Small Business Health Insurance: Questions and Answers
What is the Difference Between Health Insurance and Healthsharing for Small Businesses?
A health sharing plan involves members pooling their funds together to cover medical expenses
Can you tell me about the waiting period for health plans that cover pre-existing conditions?
Certain health-sharing plans require a certain waiting period to begin coverage. Review the plan’s guidelines for specific information or talk to your Personal Benefits Manager.
Health Savings Accounts can be used to help New Jersey employers manage the medical costs of their employees.
HSAs provide individuals with the opportunity to invest pre-tax dollars to help pay for future healthcare expenses. The contributions of both employees and employers could provide tax incentives and possible savings for healthcare expenses.
Is it possible to deduct employer contributions for HSAs from New Jersey state income taxes?
Yes. New Jersey allows employers to deduct their contributions for employee HSAs as compensation expenses from the state income tax.
Do these programs have any restrictions regarding the size of small companies eligible in New Jersey to participate?
QSEHRAs (Qualified Small-Employer Health Reimbursement Arrangement) are available exclusively to employers with fewer that 50 employees. Other HRAs are available if you or your company have over 50 employees.
The ACA also requires that you provide a qualified insurance plan to your employees. Otherwise, there will be a fee. Consult your Personal Benefits Specialist if, within the next year, you will be hiring more than 50 full-time employees or their equivalent. The plan that you design could change.
How do I know which health insurance plan and cost-sharing option is right for me?
It’s not a solo trip. Call a Benefits Coordinator today! You can get a free consultation and analysis based on any specific requirements, such as budgets, employee numbers, or pre-existing problems. It is possible to create a customized plan which maximizes value for employees and helps you control costs.
What are the benefits of offering Direct Primary Care Plans (DPCs) alongside other plans for New Jersey’s small businesses?
Combining DPC coverage with other low-cost plans, such as Health Sharing Plans, can offer comprehensive and cost effective healthcare solutions to small businesses.
How do I apply for the Small Business Health Care Tax Credit?
Small businesses with taxable income can claim this tax credit by filing IRS Form 8941 on their tax return.
HSA for America provides no tax advice. Employers are encouraged to speak with their accountants for more details about claiming this credit.
Is it possible for a New Jersey-based business to still receive the Small Business Health Care Tax Credit even if there are no taxes due?
You can carry the Small Business Health Care Tax Credit backwards to offset your income tax liabilities from previous years or forward for 20 years.
New Jersey offers a wide range of health insurance and healthsharing plans, many of which include coverage for prenatal, labor, and afternatal care. Some healthsharing plans, however, may limit the benefits available to children born outside of marriage.
New Jersey allows employers to contribute towards their employee’s HSA?
The annual contribution limits set forth by Congress apply to employers who wish to contribute to HSAs for their employees.
What is an HRA and how does this work?
HRAs allow employers to reimburse their employees for certain medical costs that were not covered in the employee’s insurance policy. Employers contribute to the account based on what expenses they determine are covered.
HRAs work with individual and health insurance plans as well as other health coverage plans.
HRAs do work in conjunction with other types of insurance. HRAs have been used by many small businesses to reimburse the employees for their individual policy premiums. HRA money is not able to be reimbursed directly by employees for costs associated with health sharing plans.
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