Unlike COBRA, Chapter 375 only applies to group health insurance policies issued in the State of New Jersey, and to the State Health Benefits Plan (SHBP). The law does not apply to group health insurance policies issued in other states, or self-funded group health plans (other than the SHBP). The information below is limited to group health insurance policies issued in the State of New Jersey. Individuals covered by the SHBP should contact the Division of Pensions and Benefits in the New Jersey Department of Treasury.

The information below is provided to assist young adults and their parents in understanding the law and determining whether the young adult may be eligible to make a Chapter 375 election.

A young adult MUST:

Have already aged-out of a parent’s group health benefits plan, or be about to age-out of a parent’s group health benefits plan issued in New Jersey or under the SHBP;Be younger than 30 years old;Not have any children of his or her own;Be a resident of New Jersey OR be a full-time student at an accredited public or private institution of higher education (regardless of location);Not be covered under an individual health benefits plan, a group health plan, or church plan (note: a young adult can be covered immediately prior to the Chapter 375 election, so it is not necessary to have a break in coverage, only that the young adult not be covered under two policies); Not be entitled to coverage under Medicare.

The adult child’s parent MUST be covered under a group health benefits plan issued in New Jersey or under the SHBP.

The group health benefits plan MUST cover dependents.

The following are NOT conditions of eligibility:

A demonstration of the young adult’s economic dependence on the parent (through tax returns or anything else).New Jersey residency of the adult child’s parent or of the adult child if the child is a full-time student in an accredited public or private institution of higher education.The adult child’s ineligibility for coverage under other group coverage (but the young adult must not actually be covered under other group coverage).A demonstration that the young adult exhausted coverage continued through COBRA.A demonstration that the young adult chose to become covered during all periods of Chapter 375 eligibility.A demonstration of insurability.
Enrollment in the same policy from which the young adult aged-out.

An adult child who continues coverage as a Chapter 375 dependent will lose coverage if:

The adult child marries;The adult child becomes a parent;The adult child is no longer a full-time student and is not residing in New Jersey;The adult child becomes covered under an individual or group health benefits plan, group health plan or church plan; The adult child turns 30 years old;Required premiums are not paid;The adult child’s parent is no longer covered under the group health benefits plan; OR The group health benefits plan no longer covers dependents.

If a young adult loses coverage obtained through a Chapter 375 election, but later meets the eligibility requirements again, the young adult may make another Chapter 375 election, up until reaching age 30.

The cost of coverage for a Chapter 375 dependent will depend on the cost of the adult child’s parent’s group coverage. The cost of coverage for a Chapter 375 dependent will be less than the cost of coverage for a single employee under the parent’s group coverage, probably between 20 to 40% less. Employers are NOT required to contribute to the cost of covering a Chapter 375 dependent and the parent or continuing dependent may be required to pay the full cost of the coverage.

If an adult child meets the eligibility requirements for Chapter 375, AND aged-out prior to May 12, 2006, the adult child may enroll any time from May 12, 2006 through May 11, 2007. After that, an adult child may enroll either during an open enrollment period, or within 30 days after becoming eligible for reasons other than age.

Special Phase-in Period: Age-Out After May 12, 2006.

If a young adult loses coverage on or after May 12, 2006, a carrier is required to offer a Chapter 375 election to continue coverage to that young adult at the annual renewal date of the group plan under which the young adult’s parent is covered. FOR EXAMPLE – if you age out as of July 1, 2006 but the group plan that covers your parent renews on January 1, 2007, you will not be able to make the Chapter 375 election to continue coverage until January 1, 2007, resulting in a loss of health coverage unless you make a COBRA or NJSGCR election, or purchase individual health coverage. You can elect COBRA or NJSGCR continuation to provide coverage from the date you age out of your parent's group plan until the date you can obtain Chapter 375 coverage.

General Requirements

Once a policy renews (and all policies will have renewed on or before May 12, 2007), adult children who meet the Chapter 375 eligibility standards may make Chapter 375 elections as follows:

Within 30 days PRIOR to the date a dependent is scheduled to age-out of the policy;
Within 30 days AFTER an adult child meets the Chapter 375 eligibility standards for reasons other than age (for example, an adult child who had been working in California decides to return to live in New Jersey); OR
Either during the group’s annual open enrollment period, or annually during the 30-day period following the anniversary of the adult child's loss of coverage if the adult child is seeking coverage under a Small Employer Health Benefits Plan.

A carrier may require an adult child to certify that he or she lost eligible coverage as a dependent due to age at some time in the past.

Even if an adult child if eligible to make a Chapter 375 continuation election, he or she should evaluate the COBRA (or NJSGCR) election option to determine which election option is best for his or her situation.

Health coverage is also available in the Individual Health Coverage (IHC) market. Most of the standard individual health benefits plans (including HMO coverage) provide comprehensive coverage, and are priced on a community rates basis; that is, the rates do not vary by age or gender. The “Basic and Essential” health benefits plans provide more limited benefits, but are also less expensive than the standard individual health benefits plans; their rates vary by age and gender.

More information about individual health benefits plans is available at http://www.state.nj.us/dobi/reform.htm

An adult child must make the COBRA or NJSGCR election when he or she first ages-out. Chapter 375 allows the adult child to make a Chapter 375 election when: (1) he or she first ages-out, (2) when he or she meets the other Chapter 375 eligibility standards, or (3) during an established open enrollment period. An adult child who exhausts the COBRA or NJSGCR election (for instance, the 36-month period ends), may make a Chapter 375 election later if he or she meets all of the Chapter 375 eligibility standards.The premium rate for an adult child making a COBRA or NJSGCR election may be up to 102% of the group’s single person rate. The premium rate for an adult child making a Chapter 375 election may be 102% of the rate applicable to the group’s child dependents. Generally, the Chapter 375 charge may be a little lower than the charge for the same coverage under a COBRA or NJSGCR election.The adult child’s continuing coverage following a Chapter 375 election is contingent upon whether: (1) the parent continues to have coverage with the group, (2) the parent elects to continue dependent coverage, and (3) the group continues to offer dependent coverage. An adult child’s continuing coverage with a group following a COBRA or NJSGCR election is not contingent upon his or her parent’s actions, or a decision by the group policyholder to eliminate the option to cover dependents. Also a person continuing coverage under Chapter 375 loses the right to such coverage if he marries, becomes a parent, moves out of state and is not a full-time student, or completes studies and does not live in New Jersey. None of these events disqualifies a person from continuing coverage under COBRA or NJSGCR.The adult child’s COBRA and NJSGCR election is restricted to the group from whose coverage the adult child aged-out. The adult child’s Chapter 375 election right is not restricted to the group from which the adult child aged-out.