NJBIA Survey: Health Insurance Costs Soar 80% for NJ Employers Since 2002 Read
High Costs, Uncompetitive Policies Hurt State Economy and Lead to Weak Job Growth Read
NJ Business Hall of Fame Inducts First Three Business Leaders Read
Getting the Full Benefit: Save 20-60% on Shipping Costs Read
Ask the Experts: Obligations Under NJ's Temporary Disability Insurance Law Read
Legislators Speak Their Minds on Paid Family Leave and Other Issues at NJBIA Event Read

Health insurance costs for New Jersey employers soared by an average of 11.3 percent to $7,561 per covered employee last year, NJBIA President Philip Kirschner said recently in releasing the findings of the Association’s 2007 Health Benefits Survey. 

This marked the fifth consecutive year in which actual or anticipated costs increased by more than 10 percent.  Given the effects of compounding, the average cost has grown by 80 percent during the last five years.*

The survey found that fast-rising costs have taken a toll on the State’s smallest employers, those with 2-19 employees.  Growing numbers of small businesses are dropping coverage altogether because they can no longer afford it.

Eighty-two percent of businesses with 2-19 employees provided coverage in 2006, the survey found. This was down from 87 percent in 2004, and a high of 92 percent in 2003.  When those employers who no longer provide coverage were asked why, most said it was simply too costly.

“Health insurance costs are rising at more than three times the rate of inflation,” Kirschner said. “It’s clear that the pain of rising costs is hitting the smallest businesses the hardest, and this has forced some to drop coverage altogether.”

Even in the face of skyrocketing cost increases, however, coverage has remained stable among larger employers.  Ninety-seven percent of businesses with 20 or more employees reported providing coverage in the 2007 survey, little changed from earlier surveys.

“We are encouraged to find that coverage remains stable among businesses with 20 or more employees.  Even as their costs soar, they are making every effort to continue to provide health insurance as a benefit to their employees,” Kirschner added.

Kirschner presented the survey findings along with Christine Stearns, NJIBA vice president for health affairs, at a news conference in April.

The average cost of $7,561 per employee included coverage of both full-time employees with no covered dependents and full-time employees with covered spouses and/or dependents.  This was the amount paid by the employer.  It did not include any share of premium costs paid by covered employees.

Among other survey findings:

• Costs rose faster for the smallest employers, a pattern consistent with earlier surveys.  In 2006, the average cost rose by 12 percent to $7,577 per employee for businesses with 2-19 employees.  Companies with 20 or more employees saw their costs rise by an average of slightly less than 10 percent.

• The 11.3 percent increase in 2006 followed an estimated increase of 12 percent in 2005 and an increase of 11 percent in 2004.  Factoring in increases of 13 percent and 15 percent in 2003 and 2002, respectively, the total average cost has grown by 80 percent over the last five years, given the effects of compounding.

• Looking ahead, respondents anticipate that costs will moderate slightly in 2007.  Survey participants anticipate that the cost of health insurance will increase by an average of about 10 percent this year, less than the 2006 increase of 11.3 percent, but a double-digit rate of increase nonetheless.

• The average cost of $7,561 per employee in 2006 represented 13.4 percent of reported average wages of $56,318 per employee.

A majority of respondents reported taking one or more of the following actions to control their healthcare costs in 2006:

• Thirty-four percent of employers changed plans and 21 percent changed carriers.

• Thirty-two percent raised employee medical co-payments; 32 percent raised employees’ out-of-pocket deductibles, and 19 percent raised employees’ premium contributions.

• Finally, 18 percent limited wage and salary increases, 10 percent eliminated some types of medical coverage and 8 percent scaled back their hiring plans.

The full report on the survey findings concludes:  “Over the last five years, the cost of health insurance has risen at a relentless double-digit pace for New Jersey employers, the NJBIA survey has found. This has forced increasing numbers of small companies to drop coverage because they can no longer afford it……

It could not be any clearer that the rising cost of healthcare coverage in New Jersey has the biggest impact on the State’s smallest employers.  Many do not have the financial resources to afford skyrocketing insurance costs.

The state cannot solve this problem by imposing coverage mandates on employers that do not have the resources to provide costly health benefits in the first place.  Clearly, any reforms of the State’s regulated health-insurance markets should be aimed at making insurance more affordable.”

The survey was mailed in January 2007 to a random sample of the Association’s member companies employing two or more people.  The results are based on the first 1,148 valid responses from the target group of 9,837 businesses. 

Read the full report.

New Jersey employers face much higher costs of doing business than their counterparts in other states, accounting for weak private-sector job growth in this State, the New Jersey Policy Research Organization (NJPRO), NJBIA’s research affiliate, has found in a new report: New Jersey’s Business Climate, How Policy and Perception Are Affecting New Jersey’s High-Tech and Manufacturing Sectors.

New Jersey’s economy is growing slowly despite its well-educated workforce and prime location.  The Small Business & Entrepreneurship Council, in its 2006 Small Business Survival Index, ranked New Jersey as the worst state in the nation in which to operate a small business. Studies such as these indicate that New Jersey’s government policies towards business are having a profound affect on its ability to attract and retain businesses.  In other national studies, the State ranks:

• As the 7th most costly state in which to do business (Milken Institute).

• First in the cost of property taxes per capita (Tax Foundation).

• 43rd in business competitiveness (Beacon Hill Institute).

• 48th in the competitiveness of its business tax climate (Tax Foundation).

New Jersey’s poor business climate is also greatly impacting companies’ decisions about job creation, retention, and plant location.  New Jersey added just 27,000 new private-sector jobs in 2006, which is only about two-thirds of the State’s post-World War II average of about 40,000 new jobs a year and only 39 percent of the 70,000 private-sector jobs added annually in the expansions of the 1980s and 1990s.

If State policymakers want to boost New Jersey’s employment growth, they must reduce the high cost of health insurance, energy, employer mandates, taxes and regulatory hurdles.  New Jersey can no longer afford to be consistently outranked by most other states in terms of tax competitiveness and pro-growth policies.  Far too much is at stake.

A vibrant, expanding economy creates good, high-paying private-sector jobs that help expand the State’s tax base without raising taxes.  A healthy business climate is not a mere luxury.  It is critical to the quality of life for all State residents.

Read the full report.

S-2249 (Sweeney, Buono)/
A-3812 (Albano, Panter, Oliver, Van Drew)
Mandates 12 weeks of paid family leave funding through an increase in workers’ temporary disability insurance contributions for workers at businesses with as few as two employees.
Status:  Pending action in Senate Budget & Appropriations and Assembly Labor Committees.
NJBIA Position:  Oppose

A-2512 (Gordon, Johnson,  Manzo, Burzichelli, Greenstein)/
S-807 (Vitale, Buono)
Mandates that health insurance plans sold in New Jersey’s regulated market provide unlimited coverage for the treatment of hundreds of behavioral disorders and substance abuse, driving up the State’s already high health insurance costs even more.
Status:  Pending action in full Assembly.
NJBIA Position:  Oppose

A-1283 (Manzo, Chivukula)
Promotes manufacturing modernization by allowing for a tax credit equal to 20 percent of  the costs of new equipment, renovations or expansion of a manufacturing facility in this State.
Status:  Pending Assembly Vote.
NJBIA Position:  Support

A-1919 (Burzichelli, Greenwald, Vas, Quigley, Conaway)/
S-1020 (Sweeney, Rice)
Gives a limited preference to goods and products manufactured by qualified manufacturers in New Jersey for awarding government contracts using State funds.  
Status:  Pending action in Assembly Commerce and Economic Development and Senate Budget and Appropriations Committees.
NJBIA Position:  Support

Governor Jon Corzine recently signed five new laws enacting property tax reforms.  These laws provide property tax credits, cap property tax increases, and make it easier for local governments to share services:

• A-1 (Roberts, McKeon)/S-20 (Codey, Kenny) will provide property tax credits of 20 percent to homeowners with annual household incomes under $100,000; 15 percent for those with incomes between $100,000 and $150,000; and 10 percent for those with incomes between $150,000 and $250,000.  The measure also imposes a 4 percent cap on local property tax increases.  However, the cap includes many exemptions including reductions in State aid, certain debt and interest payments, and health insurance increases above 4 percent.

An important provision of the law will allow local governments to negotiate health insurance premium cost-sharing arrangements with employees enrolled in the State Health Benefits Plan.

• A-2 (Watson Coleman, Burzichelli)/S-15 (Kenny) establishes the Office of the State Comptroller to audit State spending and contracts and review local independent audits.

• A-4 (Roberts, Wisniewski)/S-10 (Smith) makes it easier for municipalities and school districts to voluntarily share services.  The measure provides for greater local government budget transparency, simpler rules to facilitate local government regionalization and cooperation, and a greater oversight role for county school superintendents to push local school districts towards more cost-cutting, efficiency and cooperation.

• A-15 (Wisniewski, Gordon)/S-12 (Smith, Sweeney) creates the Local Unit Alignment, Reorganization, and Consolidation Commission, which provides for voter referendums on consolidation and sharing of local government services.

•  A-20 (Panter, Pou)/S-14 (Adler, Karcher) mandates that public officials and employees convicted of bribery or corruption automatically forfeit their pensions.

For more information, contact at 609-393-7707, ext. 201 or visit our Property Tax Facts Web page.

New Jersey should balance economic and environmental concerns by providing more assistance to businesses for the clean-energy projects they undertake, NJBIA Assistant Vice President Sara Bluhm testified recently at a Senate Environment Committee hearing on climate change.

Bluhm said the State could do that by supporting more clean- energy projects, such as installing solar panels at commercial and industrial facilities.

Commercial and industrial users are among the State’s largest financial contributors to the State’s Clean Energy Fund, which finances renewable energy projects.  Yet, the Clean Energy Program has budgeted twice as much money ($79 million) for residential efficiency programs as it has for commercial and industrial projects ($39 million).

“Energy efficiency is no different than any other economy of scale—you achieve a bigger bang for your buck when you make a commercial space more efficient than you do with a residence,” she said.  For more information, contact at 609-393-7707, ext. 204.

Nearly 500 New Jersey business executives and educators came together on April 19 to support Junior Achievement of New Jersey (JA-NJ) and to recognize three of New Jersey’s top business leaders at the inaugural New Jersey Business Hall of Fame event.

The Newark event raised approximately $200,000 for the JA-NJ cause, making it the largest fund-raiser in its history.  NJBIA was proud to partner with JA-NJ and The Star-Ledger to help make this event a reality.

“This event is so strongly connected to the Junior Achievement mission,” said Catherine Milone-Richards, President of JA-NJ.  “JA brings the real world to the classroom and after-school settings with hands-on experiences that teach young people about the economics of life, helping to mold and produce our future workforce and leaders.” 

The Hall of Fame event creates role models for today’s youth.  The 2007 event was hosted by Michelle Caruso-Cabrera of CNBC.  The award recipients were Pamela Craig, CFO of Accenture; Kurt Landgraf, President and CEO of ETS; and Paul M. Pantozzi, Chairman and CEO of The Provident Bank.  Junior Achievement elementary and high school students from Newark participated in the evening’s program as ambassadors, presenters and entertainers.

Verizon was the title sponsor of the program.  Platinum sponsors were HSBC and Accenture.  The other lead supporters included ATC, Allstate, Bank of New York, CIT, Cogswell Realty Group, Deloitte, ETS, Goldman Sachs, The Provident Bank, Lockheed Martin, and PSEG.

JA-NJ creates business/education partnerships through its K-12 economic education and financial literacy programs, which touched 27,000 students this school year.

Visit Junior Achievement's Web site to learn more about the program and how you can get involved.  You can also contact NJBIA’s Director of  Education Policy, at 609-393-7707, ext. 201.

—Discount Shipping Program—
Save 20-60% of Your Company’s Shipping Costs with NJBIA’s Discount Shipping Program

NJBIA member companies can save 20 to 60 percent on their shipping costs by taking advantage of discount prices through the NJBIA Shipping Program.

You can lower your costs whether you are shipping overnight letters, single packages, truckloads or overseas.  Get discounted shipping services with DHL Express, USF Companies, New Penn, Roadway and Yellow Transportation.

To learn how much you can save on shipping as an NJBIA member, visit our Member Resources Center.  You can also call 1-800-Members (1-800-636-2377) to receive personal assistance in deciding which shipping services are best suited to your company.

Q. As an employer, what are my obligations under New Jersey’s Temporary Disability Insurance law?

A. New Jersey’s Temporary Disability Insurance (TDI) law provides qualified employees with up to 26 weeks of partial wage replacement.  For 2007, the law provides a maximum of $502 per week.  The program is funded by both employer and employee contributions and applies to most private-sector employment.

Employees are eligible for benefits if they earn at least $143 per week for the 20 weeks preceding the disability or have earned $7,200 over the previous 52 weeks.  Since temporary disability benefits are based on the amount of wages earned by employees, businesses should be mindful that new employees, including part-timers, are eligible for benefits.

The law permits employers to participate in either the State plan administered by the NJ Department of Labor and Workforce Development or a private plan.  Private plans must be certified by the Department as providing benefits that meet or exceed those in the State plan.  A private plan can be administered by a private insurer; an employer can also elect to self-insure the benefits.  For questions concerning the formation or administration of a private plan, employers should contact the Division of Temporary Disability Insurance, Private Plan Compliance Section, PO Box 957, Trenton, NJ 08625-0957.

Most employers participate in the State plan, which requires them to contribute 0.5 percent of the their total wages paid.  Since the TDI Fund is experienced-rated, employer contributions can change from year to year based on the benefits paid to employees.  If your employees utilize TDI Fund benefits, your contribution rate will increase.  Employees covered under the State plan are required to contribute 0.5 percent of their wages to the fund; however, this amount does not fluctuate based on usage.  For both employers and employees, TDI benefits are based on the first $26,600 of wages for 2007.

Employers are responsible for withholding employee contributions from the employee’s wages and remitting them to the State.  Disability benefits are taxable to both the employer and the employee under both Social Security (F.I.C.A.) and federal income tax.  The benefits are not subject to State income tax.  Employers in the State plan should utilize Form DIS-89T to calculate an employee’s tax liability for inclusion on the employee’s W-2 statement.

Employers that participate in the State plan are required to respond to employee claims that have been filed with the Division.  The most important filing is the initial claim for disability benefits, Form DS-1.  This three-part form includees an employee’s application for benefits, certification of disability by a licensed medical professional, and wage information provided by the employer.

Finally, employers should be aware that other laws work with the TDI law to provide additional job protections to employees.  These laws might require the employer to accommodate the employee’s disability once they return to work.  As this area of the law is very fact specific, employers should consider consulting with an attorney at the beginning of any period of disability to ensure proper compliance.

For more information, contact at 609-393-7707, ext. 209.

NJBIA’s Fast Facts, available only to NJBIA members, help your company make financially-sound decisions.  Featured among our current Fast Facts are briefing sheets to help you buy health insurance for your business, understand Health Savings Accounts (HSAs) and more.  Order your Fast Facts online now.