New Jersey stop-loss floors, and what they mean for level-funded

Level-funded plans use stop-loss to cap a bad claims year. New Jersey regulates that stop-loss. For New Jersey small employers (about 1-50), the floors are $20,000 specific and 125% aggregate. Open-state marketing numbers do not survive that math. This page is educational, for New Jersey employers only.

What the floors actually say

Stop-loss is the policy that pays when a person, or the group as a whole, blows past a set claims number. In an unregulated market, a carrier can set that number so low that the product starts to look like a high-deductible health plan with a fancy name.

New Jersey does not allow that. For small employers, the specific floor is $20,000 per covered person per plan year. The aggregate floor is 125% of expected claims for the plan year. Cite it as N.J.S.A. 17B:27A-17, not as a broker talking point.

Higher floors mean the employer retains a little more risk than in states with a $20,000 / 110% model. That is why national marketing savings do not copy-paste into New Jersey.

NJ still permits small-group level-funded

Two neighboring stories get cited as if they were national law. They are not. New York prohibits stop-loss for community-rated groups of 100 or fewer employees. California's high attachment effectively kills small-group level-funded. New Jersey still permits small-group level-funded.

That is the honest pitch: you can still model the structure here. You just cannot use open-state percentages as if the statute did not exist.

This is not a carrier encyclopedia and it is not a rate table. How level-funded works is the product page. This page is the New Jersey floor under it.

What that means for a healthy NJ group

For the right healthy groups, moving from fully insured to level-funded is often modeled in a 10-25% range. That is a typical product range for groups that fit, not a quote and not a client average. If there is no opportunity, an honest analysis should say so.

An older or claims-heavy census may not save. Stop-loss caps the worst case. It does not invent a refund. Surplus comes back only when claims run under what was funded, and only on the terms in the plan document.

Questions owners actually ask

For New Jersey small employers (about 1-50), the statute sets a minimum specific attachment of $20,000 per covered person per plan year, and a minimum aggregate attachment of 125% of expected claims. Those floors are in N.J.S.A. 17B:27A-17. They exist so stop-loss cannot masquerade as a high-deductible health plan.

Yes. New York prohibits stop-loss for community-rated groups of 100 or fewer employees. California sets a high attachment that effectively kills small-group level-funded. New Jersey still permits it. That is a jurisdiction fact, not a quote.

Open-state marketing uses lower stop-loss floors and often 100% surplus. New Jersey's $20,000 / 125% floors keep more risk with the employer. For a healthy group, the typical product range we model is 10-25%. That is a typical range for groups that fit, not a quote and not a client average. If there is no opportunity, an honest analysis should say so.

Read the letter, then ask whether anyone modeled a level-funded illustration on your own census against New Jersey's stop-loss floors. Start with a no-obligation analysis.

Keep reading

See whether the floors still leave room for your group.

One analysis. Your census and current rates. No obligation. We will tell you if a different funding structure is worth a closer look - and if it is not.