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X-Ell Employee Benefits, LLC |
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1680 Route 23 North, Suite 310, Wayne, NJ 07470 |
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Eligible Companies |
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NJ Small Employer (2-50) Reform Law Summary |
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To be considered an eligible
small employer, a company must be domiciled in the state of New Jersey and
must maintain a physical location that is responsible for the payroll
functions and accounting functions of the business. Multiple locations are permitted, even if
one or more of those locations does not physically reside in New Jersey. Multiple locations, as well as affiliated
companies must be treated as one company when determining eligibility. Affiliated companies are basically those
commonly owned or controlled as per IRS definition (sections 414 B, C, M, or
O, and all of section 1563 except a4 and e3c). Employers should defer to their accountant
or attorney with questions regarding affiliated company status. A small employer must be a legal
corporation, S-corporation, partnership, limited liability company, or a
proprietorship. In July, 1997, the law
was amended to include municipalities, government entities, and Boards of
Education that meet all other eligibility criteria. Welfare funded unions are NOT eligible for Reform plans. At least 51% (the
"majority") of eligible employees must physically work at or be
salaried from the New Jersey location.
The employees do not necessarily have to reside in New Jersey, but
they have to work in
New Jersey. Traveling salespeople or
employees will be counted toward the 51% in-state requirement if they are
paid from the New Jersey office and periodically report to that location. They are not required to spend all of their
working hours at the New Jersey location.
However, employees working from their out-of-state home are not considered toward the 51% requirement. An eligible small employer will
have at least two, but no more than fifty, total eligible employees based on the average number of eligible
employees on the business days in the preceding calendar year. In determining
the upper limit, employees continuing coverage under COBRA or NJ State
Continuation are not counted. (Disabled employees are included under the
continuation category.) Pensioners and
retirees, and independent contractors (if the employer excludes them from
coverage) also do not count toward the upper limit. So, if a company has 45 active
employees and 7 employees on continuation of coverage, they are still deemed
a small employer regardless of the fact that 52 people are being covered. The
previous calendar year quarter will be the determinant for eligibility. Technically, if an employer had
62 full-time eligible employees during January, February, and March of a
given year, and by April has 48 full-time eligible employees, they would not
be eligible for a small employer health plan. For the next calendar year
quarter, they would have to remain at 50 or fewer eligible employees before
they would be eligible for coverage. A start-up company with 50 or
fewer eligible employees will be considered eligible immediately. |
