Small business health insurance in New Jersey
As a small business owner in New Jersey, have you ever felt overwhelmed by the array of health insurance options available for you and your employees? From small group plans to alternative solutions, the variety of options can be a double-edged sword.
This guide will help you understand your health benefits options so you can make informed decisions that support your team and your company. It will also explain how PeopleKeep can help you provide affordable, flexible health benefits through a health reimbursement arrangement (HRA).
New Jersey small business health insurance information
Small businesses play a vital role in New Jersey's economy. The Garden State ranks 11th in the nation for the number of small businesses. Nearly 1 million small enterprises operate in the state, making up over 99% of the business population. This is particularly impressive given that New Jersey ranks 47th in terms of land size.
Though larger companies have the resources to consider numerous health insurance options, small businesses with limited budgets frequently face challenges in securing affordable health plans. However, forgoing health coverage can lead to even greater costs. Employers in New Jersey must provide health insurance if they want to attract and retain skilled employees.
This guide provides an overview of health insurance options for small businesses in New Jersey, along with alternatives that can save you time and money.
Topics covered in this guide include:
- Overview of small business health insurance in New Jersey
- Importance of small business health insurance
- Small business health insurance in New Jersey
- Average cost of health insurance in New Jersey
- What plans are available on the individual market in New Jersey?
- COBRA in New Jersey
- How PeopleKeep can help
Overview of small business health insurance in New Jersey
New Jersey small business owners have a variety of choices for providing health insurance coverage to their employees. Many of them go for traditional group health insurance plans. These options vary significantly in terms of flexibility and cost-sharing arrangements, both of which are important factors to consider.
Even though group health plans are often the go-to, they may not be the best choice for your small business. You may not have the budget for group policies. You might also struggle to meet their minimum participation requirements. In such cases, you could end up having to self-insure or forgo benefits altogether.
If you're facing this issue, there’s a more effective solution. Rather than choosing a traditional defined health benefit, you can offer a defined contribution health plan like an HRA.
Employers can streamline their budget and benefits administration by using an HRA. They simply reimburse employees for their individual health insurance premiums rather than purchasing group health insurance for them.
Importance of small business health insurance
Selecting the right health insurance plan isn't just about compliance—it's about fostering employee loyalty and promoting well-being in your workforce.
Here are some key reasons to offer health benefits to your employees in New Jersey.
The employer mandate
Federal regulations impact health benefits in New Jersey. The Affordable Care Act (ACA) mandates that organizations with 50 or more full-time equivalent employees (FTEs) offer affordable health insurance that meets minimum essential coverage (MEC) and minimum value requirements. This requirement is referred to as the employer mandate.
Employers with 50 or more FTEs, known as applicable large employers (ALEs), may face tax penalties if both conditions are met:
- They don't provide health insurance coverage to at least 95% of their full-time employees and their dependents.
- Any of those employees get subsidies on the individual health insurance market.
ALEs may also face a penalty for not offering minimum value.
The New Jersey individual mandate
New Jersey’s Health Insurance Market Preservation Act requires residents to have health insurance coverage. Otherwise, individuals must pay a tax penalty. By offering health benefits to your employees you can help them meet the mandate and avoid costly penalties.
Perks of providing health insurance to employees
Offering health insurance isn't required if you have fewer than 50 FTEs, but it can benefit your business.
Here are some of the advantages of offering health benefits to your employees:
- Attract and retain qualified employees
- Tax benefits
- Better health outcomes
- Increased productivity
According to our 2024 Employee Benefits Survey, 81% of employees said an employer’s benefits package is an important factor in whether they accept a job with the organization. Additionally, 92% of employees rated health benefits as important.
Small business health insurance options in New Jersey
Running a small business comes with its own set of health insurance hurdles, especially when you stack it up against running a larger organization. The big guys have bigger budgets and teams. But for small employers, every dollar counts, so you need to consider your options carefully.
Here are some ways small businesses can offer health coverage to their employees:
- Traditional group health insurance
- Health reimbursement arrangements (HRAs)
- Health stipends
- Ancillary benefits, like vision and dental plans, health savings accounts (HSAs), and flexible spending accounts (FSAs)
Group health insurance plans in New Jersey
Traditional group health insurance plans have been a popular option for employers since the end of World War II. In a group plan, both the employer and employee typically share the cost of premiums, with the employer covering a larger portion of the monthly expenses. Employers also have the flexibility to extend coverage to employees' spouses and dependents.
In New Jersey, group plans can come in one of the following forms:
- Preferred provider organization plans (PPOs): This is the most common type of health plan. PPOs give members access to a network of providers, with the option to seek care outside the network for an additional cost.
- Health maintenance organization plans (HMOs): An HMO provides various healthcare services through specific provider networks. Members of an HMO need to choose a primary care physician (PCP). Their PCP will manage their healthcare needs and give referrals to specialists when needed.
- Exclusive provider organization plans (EPOs): An EPO combines HMO and PPO features. Members access services from a specific network provider and can see specialists without referrals, but an EPO doesn't cover out-of-network care.
- Point of service plans (POSs): A POS plan provides lower in-network doctor visit costs. It also covers out-of-network care. Similar to an HMO, members must get a referral from a PCP to see a specialist.
The plan type that's best for you and your employees will depend on your needs and budget.
Big companies tend to get lower group health insurance rates since the risk is spread out. From there, they share the cost of premiums. According to KFF, employers usually cover 83% of premiums for self-only plans and 72% for family insurance premiums. You also need around 70% of your employees to sign up to qualify for a group health plan.
If you find that the standard group health plan is too expensive for your organization, you can always look at a high deductible health plan (HDHP). HDHPs provide cost savings since they offer lower monthly expenses for employers and employees.
However, HDHPs have higher deductibles, so your employees will have to pay more before the health insurance company starts to cover their expenses. This can lead to increased costs for your workers.
In this case, you can offer a group coverage HRA (GCHRA), also known as an integrated HRA, alongside an HDHP. With a GCHRA, you can reimburse your employees tax-free for their out-of-pocket costs, such as deductibles.
In some states, the Small Business Health Options Program (SHOP) marketplaces offer small group health insurance plans that can also you save money. However, GetCoveredNJ, New Jersey's state-run exchange, doesn’t operate a SHOP program.
Employers in New Jersey with fewer than 50 FTEs can access small business health insurance plans through a broker or a health insurance carrier. If you have fewer than 25 employees who earn less than $50,000 annually, you may qualify for the Small Business Health Care Tax Credit.
The following companies will offer small group health plans in New Jersey in 2025, according to HealthCare.gov’s rate review website:
|
Health insurance company |
SHOP status |
|
AmeriHealth HMO |
Off-exchange |
|
AmeriHealth Insurance Company of New Jersey |
Off-exchange |
|
Horizon Healthcare Services |
On-exchange |
|
Oxford Health Insurance |
Off-exchange |
How to take advantage of individual health insurance with an HRA
Whether a group plan is too expensive or you don't have enough employees to enroll in it, there's a better option for your small business.
If you want to save money, you can skip a traditional group health plan altogether and use a stand-alone HRA instead. They allow you to reimburse employees for their medical expenses and individual health plan premiums.
You can reimburse more than 200 types of HRA-eligible expenses, including:
- Monthly premiums for health, vision, and dental plans
- Prescription drugs
- Over-the-counter medication
- Preventive care
- Emergency care
- Mental health counseling
Two HRAs allow you to reimburse employees for their plan premiums:
- The individual coverage HRA (ICHRA): This HRA offers the most flexibility for employers. There’s no annual cap on employer contributions, which means you can offer your workers as much as you'd like. You can also differ allowances and eligibility with 11 employee classes, such as full-time and part-time workers. The ICHRA is also a budget-friendly option for ALEs who need to meet the employer mandate. Eligible employees need their own individual health insurance plans to participate.
- The qualified small employer HRA (QSEHRA): The QSEHRA is only for small businesses with fewer than 50 FTEs. It's a great option for organizations that want to provide benefits for the first time or lower their premium costs. Like the ICHRA, the QSERHA allows you to offer tax-free reimbursement for eligible health expenses and insurance premiums. However, the QSEHRA has a maximum limit on employer contributions. It also doesn't have employee classes, but you can vary allowances based on an employee's age and family size. Eligible employees need health plans that provide MEC to participate.
By offering an HRA, you can save money by reimbursing employees for their individual health premiums instead of offering them a group plan.
Qualified small employer HRA
A powerful alternative to group health insurance made specifically for small employers.
Individual coverage HRA
A health benefit that enables employers to cover the individual insurance plans their employees choose.
Group coverage
HRA
A health benefit that employers can use to help employees with their out-of-pocket expenses.
Health stipends
There's also the option of a health stipend. A stipend is additional money you apply to your employees' paychecks for their medical expenses. They're a flexible way to help your workers pay for out-of-pocket costs. This includes premiums, copays, and healthcare services that an HRA or group plan doesn’t cover.
But there are some disadvantages to stipends:
- The IRS counts them as taxable income.
- Due to federal regulations, you can't ask for proof of insurance or receipts for items listed in IRS Publication 502.
- Stipends don't meet the employer mandate's requirements. ALEs who offer stipends instead of insurance or an ICHRA may face financial penalties.
With that said, stipends are still useful for small organizations that want to enhance their current health benefits. They may also benefit organizations with many employees who have premium tax credits.
Ancillary and supplemental plans
While health insurance coverage is an important employee benefit, it's only the first step toward supporting employees’ overall well-being. You can add extra perks, known as ancillary benefits, alongside health coverage.
Here are some examples of ancillary and supplemental health benefits:
- Critical illness insurance: Critical illness insurance offers coverage for serious medical conditions like cancer, stroke, and kidney failure that traditional health insurance plans may not fully cover. It offers a lump sum of money that can cover medical bills or lost wages.
- Vision insurance: Traditional health benefit plans rarely cover vision expenses. Adding vision coverage can help them with the costs of glasses and exams. You can also reimburse them for vision expenses and vision plan premiums using an HRA.
- Dental coverage: Like vision coverage, group and individual medical plans exclude adult dental care. By offering dental insurance as an additional perk, you can help your employees with the costs of exams, fillings, and other services. You can also use an HRA to reimburse employees for their dental expenses and dental plan premiums.
- Health savings account (HSA): An HSA is an employee-owned account that both you and your employees can contribute pre-tax dollars to. Employees can then use the funds in their HSAs to pay for future healthcare expenses.
- Flexible spending account (FSA): Similar to an HSA, a healthcare FSA helps cover an employee's out-of-pocket expenses for medical care. It includes most of the same reimbursable items as an HRA, except for premium expenses for health insurance coverage.
Average cost of health insurance coverage in New Jersey
Various factors affect health insurance prices in New Jersey:
- The employee’s, spouse’s, or dependent’s age
- ZIP code
- The value of the plan
Pricing also varies between traditional group health insurance plans and individual plans.
KFF’s 2024 Employer Health Benefits Survey found that the average yearly premium rate in the U.S. was $8,951 for individual coverage and $25,572 for family coverage. Prices vary considerably based on the type of plan you choose to offer.
The table below shows the lowest-cost premiums for each metal plan tier on average on the GetCoveredNJ exchange, according to KFF.
|
Average lowest-cost bronze premium |
Average lowest-cost silver premium |
Average benchmark premium (second-lowest-cost silver plan) |
Average lowest-cost gold premium |
|
$398/month |
$482/month |
$492/month |
$680/month |
The price of individual plans varies based on age, location, insurance provider, and level of coverage. For example, bronze plans tend to cost less monthly but have higher deductibles than silver or gold plans.
What plans are available on the individual market in New Jersey?
New Jersey has a state-operated marketplace called GetCoveredNJ. There are six health insurance companies offering plans for 2025. Availability for these plans differs across the state.
In New Jersey, the Open Enrollment Period runs from November 1 to January 31 each year. People with marketplace plans may be eligible for federal premium tax credits, often referred to as premium subsidies or health insurance subsidies.
During the 2024 Open Enrollment, more than 346,000 people in New Jersey received premium subsidies for marketplace health plans. The IRS uses federal poverty guidelines to determine eligibility for premium tax credits.
The Inflation Reduction Act removed the upper-income limit through the end of 2025. Now, anyone can use these credits if their premiums cost more than 8.5% of their household income.
If a person misses the Open Enrollment Period, they can only enroll in a health plan if they experience a qualifying life event that triggers a special enrollment period (SEP). If not, they'll have to wait until the next Open Enrollment Period to enroll.
The table below shows the health insurance carriers that are offering plans on the individual market in 2025.
|
Health insurance company |
On- or off-exchange |
|
Aetna Life Insurance Company |
On-exchange |
|
AmeriHealth HMO |
Off-exchange |
|
AmeriHealth Insurance Company of New Jersey |
On-exchange |
|
Horizon Healthcare Services |
On-exchange |
|
UnitedHealthcare |
On-exchange |
|
WellCare Health Insurance Company of New Jersey |
On-exchange |
COBRA in New Jersey
The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) allows employees to keep their employer-sponsored health insurance for a limited time after they leave their jobs. Under federal law, employers with 20 or more full-time employees who offer health coverage must offer COBRA. New Jersey also has a mini-COBRA law that applies to organizations with two to 50 employees.
How PeopleKeep can help New Jersey employers
If you want to offer flexible, personalized health benefits to your employees in New Jersey, PeopleKeep can help. Our HRA administration software helps employers save valuable time and resources so they can focus on other areas of their business.
Here's how it works:
- You set a monthly allowance for your employees to use on medical expenses.
- Your employees purchase health coverage and other essentials using their own money.
- They submit their expenses for reimbursement through their PeopleKeep account.
- You approve eligible expenses and reimburse them up to their allowance amounts.
With an HRA, your employees have the freedom to choose the healthcare options that work best for them. They're a cost-effective way to ensure employees receive the coverage they need.
Plus, we take care of the following time-consuming tasks for you:
- Our team reviews reimbursement requests from your employees. We ensure they follow ACA, ERISA, and IRS regulations. This also keeps protected health information (PHI) safe to prevent your organization from any HIPAA violations.
- We generate legal plan documents and summary plan descriptions on your behalf.
- Our award-winning customer support team is available to help answer any questions you may have.
Plus, we make it easier for your employees to find a health insurance plan. Once employees are enrolled in their QSEHRA or ICHRA, they can browse health coverage options directly from their PeopleKeep dashboard. Our in-house enrollment support team is available to help them navigate the complexities of enrolling in a policy so they can make the most of their new benefit.
If you work with a broker, you can continue to do so. Your broker can sell individual health insurance policies to your employees directly and assist you in managing your benefits. Have your broker contact us to learn more and set up an HRA for your team.
Ready to enhance your employee benefits?
Get in touch with a PeopleKeep HRA specialist who can answer your questions and provide expert guidance, or start building your benefits online.
