NJBIA member companies responding to the survey reported paying an average of $6,692 per covered employee for their policies in 2003, up $781 or 13% from the year before. This was among the major findings of the survey, which was conducted in January. The findings are based on the first 1,468 responses.

Over the last four years, survey participants have seen their health insurance costs soar by 53% overall. This has hiked their costs by a compound annual rate of 13%, well above the equivalent rate of general inflation, which has been less than 3%.

"Exploding health insurance costs are putting a tremendous financial burden on employers and employees alike," Kirschner said in a news conference at the NJBIA headquarters in Trenton. "The average cost of a policy is fast approaching $7,000 per covered employee."

Prevented by competition from raising prices for their own products and services, employers have responded by working aggressively to lower their health plan costs. They have shopped around for better deals, changed plans or carriers, cut back on medical services covered, and required their employees to share more of the cost.

Seventy-two percent of employers who took steps to control costs last year did so by requiring covered employees to pay higher deductibles, co-payments and premium costs, the survey found.

Even after taking aggressive cost-control actions, however, most employers saw their own costs rise by double-digit rates of increase in 2002 and 2003. A majority of survey participants, 65%, saw costs rise by 10% or more in 2003. This compares with 69% who saw double-digit increases the year before.

Health plan costs are also rising as a percentage of employee wages and salaries. The average cost per employee at $6,692 in 2003 represented 15% of reported average wages of $43,940, up from 14% of wages in 2002 and 11% in 1998.

In spite of sharply rising costs, coverage has remained stable among the group of employers responding to this survey. Ninety-four percent provided coverage for full-time workers and 75% for full-time workers and their dependents. As measured by the NJBIA survey, these coverage levels have remained virtually unchanged for five years.

The average per-employee cost of $6,692 includes coverage of both full-time employees with no dependents and full-time employees with covered dependents. This is the amount paid by the employer. It does not include any share of premium costs paid by covered employees.

Many survey participants paid significantly more than the average, however. Eleven percent of survey participants paid $7,000-$8,000 per employee, 18% paid $8,000 to $10,000, and 12% paid $10,000 or more.

The smallest companies continue to pay the highest costs. Companies with 2-19 employees saw their average cost rise by $816 to $6,797 last year, an increase of 14%.

Among the plan types, health maintenance organizations (HMOs) remained the low-cost leaders. The average cost of an HMO plan rose by $638 to $6,249 per employee. The next-lowest-cost plan, point of service (POS), rose by $733 to $6,713, followed by preferred provider, which rose by $910 to $7,197.

Looking ahead, survey participants expect their costs to rise by an average of 11% this year. If these expectations are realized, 2004 will be the third consecutive year in which the cost of providing health benefits will have risen at a double-digit pace.

Looking at the details of inflation expectations, about half (52%) of respondents expect their health plan costs to rise by 10% or more this year, down from a high of 64% having this expectation in the 2003 survey.

Also present at the news conference were Christine Stearns, NJBIA vice president for health affairs, who presented details of the survey findings, and NJBIA Senior Vice President Melanie Willoughby, the Association's chief lobbyist.

Employers participating in our survey paid an average of $6,692 per covered employee for health insurance in 2003. That's $781 more than they paid the year before, an increase of 13 percent.

This comes on top of a 15 percent increase in 2002. Compare this to the rate of general inflation of 2 to 3 percent.

And a majority of our survey respondents expect their costs to rise at a double-digit pace again in 2004.

At this rate, the average cost of a policy soon will exceed $7,000.

This is by far the fastest growing labor cost for all employers, and it is a huge problem.

In spite of fast-rising costs, most employers responding to our survey continued to provide this benefit to their employees. An impressive 94 percent reported provided coverage for full-time workers and 75 percent for dependents.

Employers are working hard to control costs. They are shopping around, changing plans, changing insurance carriers, and even cutting back on the types of medical services covered. Employers are also asking their employees to share in more of the cost of their coverage.

In this year's survey, three out of every four employers reported asking their employees to pay more through higher deductibles and co-payments or by sharing in more of the cost of premiums.

Therefore, costs are rising rapidly not only for employers, but also for their employees.

Employers generally are reluctant to ask their employees to share in these rising costs, but many simply have little choice if they are going to continue to provide health coverage as a benefit at current levels. The costs are simply too high, and they are growing too quickly.

This has enormous policy implications.

The government must not make things worse by ordering new mandates that drive up costs and make everyone pay even more -employers and employees alike.

A subject on everyone's mind is jobs, and one impediment to job creation is the exploding cost of health insurance.

This has got to stop. Government has got to take steps to control health insurance costs.

According to OLS estimates, New Jersey will collect $307 million more in taxes than Governor James E. McGreevey has estimated in his proposed budget. Business taxes are leading the way, second only to gross income taxes, in the amount of additional revenue they are expected to generate.

Given this infusion of additional revenues, legislators should reject proposals to raise business taxes in the FY 2005 budget, which begins on July 1.

NJBIA has called on legislators to reinstate net operating loss deductions (NOLs) and other costly measures.

The Governor's proposed budget would suspend NOLs for another two years, reneging on a promise to the business community made in 2002 that the deduction would be restored in 2004. NOLs are essential to helping manufacturers and other businesses recover after a long recession.

Similarly, the proposed budget would prevent New Jersey employers from using on their State tax returns federal tax deductions intended to encourage investments in new equipment. Most other states allow these deductions. Specifically, the budget would prevent small businesses from deducting up to $100,000 of the cost of new equipment on their State tax returns. It would also decouple from the federal bonus depreciation, preventing New Jersey businesses from taking the 50 percent depreciation bonus for capital investment on their 2004 State tax returns.

Finally, energy taxes were scheduled to drop from 10 percent to 7.5 percent in fiscal year 2005. The Governor's budget would keep them at 10 percent, costing businesses an additional $54 million in energy costs.

For more information, contact Art Maurice at amaurice@njbia.org, or ext. 247.

The measure now goes to Governor James E. McGreevey for consideration.

The bill, A-437 (Impreveduto), would create a Biotechnology Permit Acceleration Task Force within the NJ Department of Environmental Protection. The Task Force would consult with the NJ Commission on Science and Technology and the NJ Commerce and Economic Growth Commission to develop new rules and regulations.

For more information, contact Art Maurice at ext. 247 or amaurice@njbia.org.

The bill, A-50 (McKeon, Cohen, Weinberg, Roberts)/S-50 (Vitale, Lesniak), returns to the Assembly, which approved it in February and now must vote to concur with Senate amendments. The measure would create the Medical Malpractice Liability Insurance Premium Assistance Fund to help healthcare providers who experience unusually high increases in malpractice insurance costs. For more information, contact Christine Stearns at ext. 260 or cstearns@njbia.org.

JoAnn Trezza
Vice President of Human Resources
Arrow Group Industries

In just the first three months of the new legislative session, more than 100 bills have been introduced that would impact the way businesses manage their work-forces. Most of these bills would be costly to employers and add to the already high cost of doing business in New Jersey.

Thanks to people like JoAnn Trezza, most of these bills will never make it to the Governor's desk.

Trezza is vice president of human resources for Arrow Group Industries in Wayne. For the past six years, she has also served as chair of NJBIA's Human Resources Policy Committee, reviewing hundreds of bills every year to assess their impact in the real world of business and arming NJBIA's government affairs staff with the facts and arguments they need to get the business com-munity's point across to lawmakers.

"Our HR Policy Committee wrestles with the highest volume and some of most difficult issues of any of NJBIA's 11 policy committees," NJBIA Senior Vice President Melanie Willoughby said. "But JoAnn is able to decipher hundreds of labor bills, identify the pitfalls for employers and offer alternatives that NJBIA can fight for. Without dedicated people like her, running a business in New Jersey would be much more expensive and difficult."

As vice president for Arrow, Trezza manages and administers all corporate human resources functions for 450 union and nonunion employees at several manufacturing facilities in the United States and Canada. Trezza is responsible for the policies and procedures for the company's benefit and employee programs, including salary administration, recruitment, employee handbook, training, employee relations, labor contract negotiations, and labor relations.

"NJBIA is truly a partner for New Jersey businesses," Trezza says. "Being active in NJBIA is both professionally and personally rewarding. It places companies in the forefront of legislative issues and makes us aware of the impact these political decisions have on our organization."

Trezza also is generous in sharing her expertise with others. She has been a frequent speaker at NJBIA seminars, offering practical advice to other HR professionals on such topics as hiring and firing employees and preventing harassment in the workplace.

"It's members like JoAnn Trezza who make NJBIA such a dynamic association and we deeply appreciate her involvement in so many of our activities," Willoughby said.

Health insurance, environmental regulations, taxes and paid family leave highlighted the hour-long presentations. This year, the annual Legislative Briefing Breakfast series was held in conjunction with NJBIA's grassroots affiliate, the Employer Legislative Committees (ELCs).

During the program, NJBIA laid out the public policy principles that will guide the Association's legislative affairs activities for the coming year.

Melanie Willoughby, NJBIA's senior vice president for government affairs, said: "These are the ideals that we share as business people. When looking at the legislative landscape, we see numerous opportunities to put these principles to use in developing public policies that will help to create the jobs we need."

Those principles include affordable health insurance, tax policies that encourage economic growth, labor laws that are reasonable, environmental regulations that emphasize cooperation instead of fines, and a legal system that discourages frivolous lawsuits.

Willoughby pointed out that NJBIA members were somewhat optimistic about increased sales and profits in a recent Association survey, but were not so sure about hiring more workers. And while the economy seemed to be recovering slowly, Association members were giving New Jersey's business climate its worst rating in ten years.

"Even though our members think the economy is getting better, they are not ready to commit to hiring new workers," Willoughby said. "We need to ask ourselves why."

A key reason is the exceptionally high cost of doing business in New Jersey. When compared to other states, New Jersey has:

• The third highest business costs overall (source: economy.com);
• The most unfair and unpredictable tax environment (source: CFO Magazine);
• Third highest state and local tax increase over the last three years (source: Ernst&Young); and
• The highest air and water permitting fees in the nation (source: NJ Department of Environmental Protection).

To improve the business climate, New Jersey should take several actions, Willoughby said.

In the State budget, legislators should reject proposals to suspend or eliminate State tax deductions on net operating losses (NOLs), the federal 50 percent bonus depreciation, and equipment expensing.

NJBIA also believes a scheduled $54 million reduction in energy taxes should move forward.

NJBIA is also pushing for clarification of the Business Retention Act, which exempts business equipment from property taxes (a State tax court has ruled this only applies to equipment that is moved). Eliminating the alternative minimum tax on gross business income would be a boon to New Jersey's business climate. Enacted in 2002, this unfair tax even forces companies that lost money to pay more in taxes.

"This tax was a bad idea in 2002. It was a worse idea in 2003. And it should be eliminated in 2004," she said.

The cost of health insurance is the number one issue for NJBIA members, Vice President Christine Stearns said during her portion of the presentation. Member companies responding to NJBIA's 2004 Health Benefits Survey paid an average of $6,692 per employee in 2003 and were expecting another 11 percent increase in 2004.

Stearns said the State's small group and individual insurance markets should be reformed to encourage more participation. Specifically, employers should have more choices in the types of plans offered. Additionally, the Legislature must address the cost of healthcare mandates and the impact they have on health insurance costs.

Employment benefits like health insurance, paid vacation and retirement plans now account for almost a third of employee compensation, according to the US Department of Labor. In today's competitive world, businesses need to know how their benefits packages rate.

That's why NJBIA compiled its first ever Benefits Report. Based on responses from 688 New Jersey companies, this publication provides answers to 173 different benefit questions in five separate categories. Results are broken down between small and large companies as well as hourly production and maintenance, office nonexempt, and salaried exempt employees.

Make your business more competitive. Order your copy of the NJBIA Benefits Report today! The publication is available at a cost of $95 each for NJBIA members and $200 each for nonmembers (plus 6% NJ sales tax). To order your copy, contact Christine Lopez at NJBIA at 609-393-7707, ext. 224, or clopez@njbia.org.

That's why NJBIA hosted Making Sense of Disability and Family Leave, a half-day seminar conducted in March to help employers navigate the maze of federal and State family leave laws and disability laws without getting fined or sued.

More than 220 employers attending the seminar heard from top employment law specialists from several of New Jersey's leading law firms. The speakers' unanimous message: consult your attorney. This is one area where legal counsel is a must.

John Petrella of Genova, Burns & Vernoia kicked off the program with a briefing on the two major unpaid leave laws-the New Jersey Family Leave Act (FLA) of 1989 and the federal Family & Medical Leave Act.

Employers with fewer than 50 employees are exempt, but larger companies have struggled for ten years with the State's failure to reconcile the two laws. As a result, New Jersey-based employees on leave can combine the FLA and FMLA to qualify for many extra weeks of job protection beyond the 12-week maximum common in most other states. Requests for intermittent leave are also on the rise.

Katherin Nukk-Freeman of Gibbons, Del Deo, Dolan, Griffinger & Vecchione reminded the audience that employee supervisors might be individually liable for violations of the FMLA. If a manager repeatedly mishandles employee leave requests, the employer could face a class action lawsuit. She also warned employers that the New Jersey Law Against Discrimination and the federal Americans with Disabilities Act (ADA) can complicate disability cases.

Ian Meklinsky of Fox Rothschild illustrated how the State's Temporary Disability Insurance program and Workers' Compensation could impact a leave request. He outlined workplace injury or pregnancy scenarios in which employees could exhaust their maximum weeks of job protection long before they exhaust their right to collect disability benefits.

Julie Warner of Lowenstein Sandler assured employers that common sense still has a role to play in leave policies.

All of the speakers emphasized that the rules for New Jersey employers are different than rules for employers anywhere else. Companies should be wary of sample policies, software and legal advice from sources unfamiliar with the special requirements in effect here.

That's why NJBIA put together its March 19 environmental compliance seminar, How to Comply with State Regulations-An Introduction. Speakers presented an easy-to-understand overview of the essential elements of environmental compliance for New Jersey employers. The program featured government regulators who implement the State's policies, and private-industry environmental professionals who came armed with practical, real-world advice.

More than 100 participants received valuable information on how to comply with regulations on chemicals, waste, water discharges, air emissions, site remediation and land use.

The seminar was aimed at small businesses and manufacturers who might not be fully aware of all environmental regulations concerning the environment. While large industrial plants generally have entire departments devoted to environmental compliance, smaller companies do not have the staff or the expertise.

Overlooking a regulation or failing to get a needed permit is easy to do, and it could cost a business thousands of dollars in fines and penalties, not to mention the cost of remediation. With the NJ Department of Environmental Protection's (DEP) emphasis on enforcement, small businesses must be aware of all the requirements.

For those entering the environmental regulatory arena for the first time, the complexity of New Jersey's environmental bureaucracy presents a daunting challenge.

The DEP and NJBIA are working cooperatively to help companies obtain their first environmental permits and guide new personnel with environmental compliance duties. Under the leadership of former NJBIA Environmental Quality Committee chairs Ken Kraly and Edd Hogan, a working group of NJBIA members wrote a short Environmental Compliance Digest. The Digest is an overview of the essential elements of compliance with environmental regulations for New Jersey businesses. NJBIA members can get copies of the Environmental Compliance Digest here.

NJBIA and DEP have been working to devise ways to help small businesses comply with the rules. NJBIA has supported "grace period" regulations that stop the clock on automatic penalties and give companies time to correct minor violations. The Association also supports the development of "general permits" for minor pollution control activities.

For more information, contact Jim Sinclair at ext. 236 or jsinclair@njbia.org.

NJBIA First Vice President Art Maurice testifying before the Assembly and Senate Budget Committees.

Employment benefits like health insurance, paid vacation and retirement plans now account for almost one third of employee compensation. In today's competitive world, businesses need to know how their benefits packages compare to the competitions'.

That's why NJBIA has compiled its first ever Benefits Report. Based on survey responses from 688 New Jersey companies, this report gives answers to 173 different benefit questions in five separate categories. Order your copy of the NJBIA Benefits Report today! The publication is available at a cost of $95 each for NJBIA members and $200 each for nonmembers (plus 6% NJ sales tax). To order your copy, contact Christine Lopez at NJBIA at 609-393-7707, ext. 224, or clopez@njbia.org.