Pennsylvania Mini-COBRA
Anthony T. Bowser
On June 10, 2009, Governor Rendell signed House Bill 1089, PN 1573, Pennsylvania’s Mini-COBRA law. The law takes effect on July 10, 2009. Pennsylvania now joins the majority of other states in requiring small employers to offer health care continuation coverage similar to that required of larger employers under federal law. The Mini-COBRA law applies to companies with between two (2) and nineteen (19) employees on a typical business day during the preceding year. The law requires that employers that sponsor group medical insurance to offer employees and their dependents the opportunity to purchase up to nine months of medical continuation coverage upon a qualifying loss of medical coverage.
In many ways, the Mini-COBRA law is similar to the federal act. Employees and their dependents become eligible for continuation coverage upon a qualifying event. Qualifying events include:
- The death of a covered employee
- The termination, other than by reason of the employee’s gross misconduct, or reduction of the covered employee’s employment;
- The divorce or legal separation of the covered employee from an eligible dependent;
- The covered employee becoming entitled to benefits under Social Security;
- A dependent child ceasing to be a dependent child; and
- A proceeding in a case related to bankruptcy.
As with the changes to COBRA under the American Recovery and Reinvestment Act of 2009 (ARRA), employees covered by the Mini-COBRA law are eligible for premium assistance in the amount of sixty-five (65%) of their total premiums. The covered employee or eligible dependent must first contribute thirty-five (35%) of the premium costs.
The Mini-COBRA law differs from its federal counterpart in certain ways. First, the Mini-COBRA law applies to small employers, while only employers of twenty (20) or more are subject to the federal act. Second, the benefit period under Mini-COBRA is limited to nine (9) months, whereas individuals covered by the federal act are entitled to at least eighteen (18) months’ coverage. Third, Mini-COBRA applies only to group major medical, hospital and surgical policies, while the federal COBRA law applies to all ERISA group health plans, including dental, vision and prescription drug plans. Fourth, the Mini-COBRA law allows employers to charge up to 105% of the group insurance rate being continued, while the federal law allows a charge of up to 102%.
As with the federal COBRA law, the Mini-COBRA law requires a series of notices. The following notices must be provided within the prescribed time limits:
- An employer having a group policy must provide notice to each covered employee of the rights provided by the law within 45 days of its effective date.
- The employer of a covered employee under a group policy must notify the administrator or its designee, the covered employee and the insurer of a qualifying event within 30 days of the date of the qualifying event.
- Each covered employee or eligible dependent must notify the administrator or its designee of the covered employee’s or eligible dependent’s election of continuation coverage within 30 days after the date of the qualifying event.
- The insurer must be notified within fourteen days of the covered employee's or eligible dependent's election.
Given the effective date of July 10th, employers should act now to ensure compliance with the Mini-COBRA law. Companies that provide healthcare benefits and employ less than twenty-employees should contact their counsel and third-party administrators or insurers to ensure preparation and distribution of all required notices.
