Small Employers and COBRA and mini-COBRA
Larger employers have to provide their employees the opportunity to utilize continuation coverage through the COBRA program at the federal level. Albeit, small employers with “fewer than 20 employees on at least 50% of its business days in the prior calendar year” do not have to provide COBRA coverage to their employees (Klinger 2017). Though, once they gain at least 20 employees, they are subject to federal COBRA rules, but there are some conditions when providing them to their former employees. Furthermore, some states have mini-COBRA laws that require small employers to offer continuation coverage after their employee experiences certain qualifying events (“COBRA Eligible for business under 20”).
When employers have to comply with COBRA, they offer this coverage to employees at certain times. While part-time employees are included in the full-time employee amount for COBRA, small employers “do [not] count workers who are not common-law employees[.] For example, do not count self-employed individuals, independent contractors, and members of a corporate employer’s board of directors, unless these individuals are also common-law employees of the employer or of any member of the employer’s controlled group” (Klinger 2017). Once they gain at least 20 employees, they have to provide COBRA to them next year starting on January 1 (Klinger 2017). They do not have to provide it to employees who lose access to their benefits before January 1, when the insurance “plan becomes subject to COBRA…” (Klinger 2017). If a former employee can access COBRA, but the employer is exempt from providing it starting next year because they manage to get less than 20 employees again in the current year, the former employee can still utilize COBRA for next year (Klinger 2017).
Small employers with less than 20 employees have to follow their state’s mini-COBRA laws. While their laws have some resemblances with federal COBRA laws, “each state has their own requirements and rules” (“COBRA Eligible for business under 20”). Their laws may have different criteria for “employee eligibility, maximum length of coverage, and grounds for early termination” (“State Mini-Cobra Laws”). For instance, small employers in California must offer continuation coverage for 36 months to their employees, while small employers in Georgia must “offer COBRA for 3 months” (“State COBRA Laws”). In contrast, in Washington, while its law “does not mandate continuation coverage for group policies… insurers must give employers the option for a continuation provision” (Insure.com 2015). In North Dakota, people can utilize COBRA for 39 weeks, but they can also utilize it for 36 months if they experience divorce (Insure.com 2015). Additionally, unlike federal COBRA laws, mini-COBRA laws can “change more frequently,” so small businesses must regularly “check with their insurance department on current health plan requirements” (“State Mini-COBRA Laws”).
Small employers should be aware when they are subject to federal COBRA laws once they get at least 20 employees. However, despite the number of employees they have, they may also have to follow their state’s mini-COBRA laws.
“COBRA Eligible for business under 20.” COBRAinsurance.com. Accessed November 15, 2018.
Insure.com. “State-specific laws for COBRA.” Insure.com. Last modified March 3, 2015.
Klinger, Lisa. “COBRA and MSP Obligations of Small Employers.” LeavittGroup, September
28, 2017. https://news.leavitt.com/health-care-reform/small-employers/cobra-msp-obligations-small-employers/.
“State COBRA Laws.” InsuranceBudget.com. Accessed November 15, 2018.
“State Mini-COBRA Laws.” hr360. Accessed November 15, 2018.