N.J. Admin. Code § 11:4-42.7

Current through Register Vol. 56, No. 24, December 18, 2024

Section 11:4-42.7 - Provisions for offsets in group policies and certificates providing disability income insurance

(a) Group policies and certificates providing disability income insurance may provide that benefits shall be offset by other income received by the covered person under the following conditions:

1. Offsets to group disability benefits may not result in a monthly benefit of less than $ 100.00.

2. When other income benefits are paid to the covered person for a specified period of time in a lump sum amount, the other income amount shall be determined by dividing the lump sum amount by the number of months in the specified time period for which the lump sum is applicable, and offsetting such amount on a monthly basis.

3. When other income benefits are paid to the covered person for an unspecified time period in a lump sum amount, the other income shall be offset by dividing the lump sum amount by the number of months of the covered person's expected lifetime and offsetting such amount on a monthly basis.

4. The insurer may require the covered person to sign an agreement promising to reimburse benefit overpayments as a condition of receiving full benefits prior to the date benefits under a Federal plan are received, but the insurer shall not require the covered person to sign any agreement promising to reimburse benefit payments as a condition of receiving full benefits prior to the date other benefits which qualify as other income are received.

i. Any such agreement shall be submitted on an information basis to the Department prior to use in New Jersey.

(b) Group disability income benefits may be offset by one or more other income items to which the covered person is entitled, but which the covered person has not yet received, subject to the conditions of (a) above, and the following:

1. With respect to retirement benefits and disability benefits provided by a retirement plan, the covered person shall be eligible for full retirement benefits from the policyholder's or sponsoring employer's plan.

i. The amount offset shall be no greater than the amount attributable to the policyholder's or sponsoring employer's contributions to the retirement plan.

2. With respect to reductions for expected estimated benefits under a Federal plan, the insurer may make the reduction:

i. If the covered person requests that the insurer reduce his or her benefits by the amount of the estimated Federal plan benefit; or

ii. The covered person fails to apply for Federal plan benefits to which he or she is entitled within a reasonable period of time, including filing a request for reconsideration of a denied disability claim, or requesting a hearing on the denial before an Administrative Law Judge (when the insurer has agreed to pay for legal expenses and other costs incurred by the covered person in proceeding with the hearing).

3. If an offset is made at the request of the covered person pursuant to (b)2i above, and the covered person's application for Federal plan benefits is ultimately denied, or an offset is made pursuant to (b)2ii above, and the covered person subsequently takes the action that was the basis for the offset, the insurer shall:

i. Immediately reimburse the covered person by lump sum for the amount offset; and

ii. Include interest on the amount offset at the rate of interest, if any, the Federal plan pays on amounts it owes.

(c) In the event that a reduction in group disability income benefits as permitted pursuant to (b)2i and ii above does not occur, the insurer may require the covered person to return disability income benefits received when Federal plan benefits finally are granted.

1. The insurer may require interest to be added to amounts to be returned, but only to the extent that the Federal plan pays interest on amounts it owes to the covered person.

2. If the insurer elects to reduce disability income benefits when Federal plan benefits finally are granted, it may do so only until and to the extent that such disability income benefits are recovered.

N.J. Admin. Code § 11:4-42.7