Pennsylvania Enacts Mini-COBRA Law

Pennsylvania has enacted a Mini-COBRA law (“Mini-COBRA”) that requires employers with fewer than 20 employees to provide COBRA-like benefits. Such employers are exempt from Federal COBRA. Mini-COBRA laws apply in most states. Pennsylvania’s Mini-COBRA law comes into effect on July 10, 2009 and applies to group health insurance policies that are issued to employers with more than two but fewer than 20 employees. Under the new law, eligible employees (and their dependents) may elect to continue group health upon experiencing a “qualifying event,” including termination from employment, divorce, death, or loss of dependent status. Eligible employees include those employees who had coverage under their employer’s group health plan for the three months prior to termination, are not eligible for Medicare, and are not eligible for or covered by other private group health insurance. Eligible employees are given 30 days to elect Mini-COBRA coverage following their qualifying event.

Eligible employees who elected continuation coverage under Mini-COBRA may be required to pay up to 105% of the group rate (unlike 102% under Federal COBRA). Employees who are involuntarily terminated between July 10, 2009 and December 31, 2009, must be offered a Mini-COBRA subsidy equal to 65% of the premium under the American Recovery and Reinvestment Act of 2009. In addition, an eligible employee may convert coverage to an individual ­policy at the expiration of Mini-COBRA.

While Pennsylvania’s Mini-COBRA law mirrors the Federal COBRA statute in many ways, there are significant differences, including:

• Mini-COBRA is available for nine months, as opposed to 18 or 36 months under Federal COBRA;
• Mini-COBRA applies only to hospital, surgical, and major medical policies, and does not apply to vision and dental plans;
• Mini-COBRA requires three months of coverage before employees become eligible as opposed to one day of coverage under Federal COBRA;
• Mini-COBRA ends upon eligibility for Medicare or group hospital, surgical or major medical coverage; whereas Federal COBRA eligibility ends upon actual enrollment or coverage;
• Mini-COBRA requires employee verification of non-eligibility for employer-based health insurance as a dependant through, for example, a spouse’s group health plan; and
• Insurers, and not employers, bear responsibility for notifying eligible employees about their rights under Mini-COBRA. The plan administrator, or the employer if there is no designated plan administrator, is responsible for notifying the insurer of an employee’s Mini-COBRA election within 14 days of receipt.

In order to prepare for the July 10, 2009 enactment of Mini-COBRA, small Pennsylvania employers should work with their group health plan insurers to ensure that the requirements of Mini-COBRA are satisfied. Additional regulatory guidance is expected from the Pennsylvania Department of Insurance.