American Rescue Plan Act of 2021’s COBRA Subsidy Ends September 31. What’s next?

The Federal COBRA Insurance ACT allows covered employees and their families to stay on the same group health care benefits after a separation of employment or change in the immediate family (divorce, death or a dependent turns 26 years old). This is required of all employers with 20 or more employees.

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Health Insurance Continuation Law or Mini-COBRA

There are two important differences between federal COBRA and the Connecticut Continuing Insurance Law (also known as Mini-COBRA). The first is that it also applies to small businesses with 2 – 19 employees. The other difference is that the covered employee may continue on the employer-sponsored plan for up to 30 months.

COBRA Notices

The law requires plan administrators (typically employers) to give employees and qualified beneficiaries notice of COBRA rights and enrollment information at a specific time.

The “notice of early termination of continuation coverage” requirement is triggered when a plan cancels a beneficiary’s coverage before benefits are exhausted as otherwise allowed under COBRA, such as for nonpayment or when the employer ceases to offer any health care coverage to its active employees. The notice must include the reason the coverage is ending early, the coverage termination date, and any conversion rights (e.g., to an individual policy) the beneficiary has under the plan. The regulations specify that the notice must be provided “as soon as practicable” following the administrator’s determination that coverage is terminating.

Details of Connecticut’s Continuation of Coverage Law

Connecticut law requires each group health insurance policy, regardless of the number of insureds, to provide continuation and conversion benefits (CGS §§ 38a-538, 38a-546, and 38a-554(b) & (d)).

Continuation of Coverage

State law requires each group health insurance policy to give individuals the option to continue coverage under certain circumstances until they are eligible for other group insurance (CGS § 38a-554(b)). Continuation of coverage is available to an employee and his or her covered dependents if the employee is laid-off, is given reduced work hours, takes a leave of absence, or terminates employment, for other than gross misconduct. The employee’s spouse and dependent children can continue coverage under a group health plan if the employee dies; there is a divorce, court ordered annulment, or legal separation; or the child loses dependent status.

Except as otherwise specified in state law, continuation coverage extends for the periods of coverage set forth in COBRA. This means that coverage will continue for 18 or 36 months, depending on the qualifying event, or longer if the person has a disability. However, under PA 10-13, coverage will continue for 30 months (instead of 18 months) after a layoff, reduction of hours, leave of absence, or employment termination. And an employee and his or her covered dependents also are entitled to continue coverage until midnight of the day preceding the employee’s eligibility for Medicare if the employee’s reduced hours, leave of absence, or employment termination results from his or her eligibility for Social Security income.

An individual may be required to pay the premium, up to 102% of the group rate, for the continued coverage.

Continuation after Health Plan Termination

State law provides limited continuation coverage for people with disabilities after a group health plan terminates (CGS § 38a-554(b)(4)). Regardless of a person’s eligibility for other group insurance, when a group health plan terminates, coverage for covered individuals who were totally disabled on the date the plan terminated continues for 12 calendar months without payment of premium, provided a claim for coverage is submitted within one year of the termination. Coverage continues only for claims related to the disability.

If a person is not totally disabled on the date the plan terminates, state law does not require coverage continuation.

Conversion to Individual Coverage

State law requires each group health insurance policy to give Connecticut residents the right to convert to an individual policy immediately upon termination of coverage under the group plan (CGS § 38a-554(d)). The terms and benefits offered under the conversion plan must be at least equal to those in an individual comprehensive health care plan, as described in CGS §§ 38a-553 and 38a-555.

Plan documents for a group health insurance policy explain how a person can convert to an individual policy. The law does not require employers or insurers to contact people losing coverage to offer the individual conversion plan. Thus, it is up to the individual to request conversion.

RELATED OLR REPORTS

For related information, see the following OLR Reports:

2004-R-0004, Continuation of Coverage for Individuals Age 62 and Older

2004-R-0020, Coverage Continuation Following Liquidation

2004-R-0646, COBRA Coverage after Sale of Company

2007-R-0528, Notification of Group Health Care Plan Change

 

Affordable Temporary Health Insurance

If you are fairly healthy and still want to remain insured, alternatives to COBRA insurance may be available based on where you live. Short-term health insurance is a popular option and available in most States. This can protect you from high medical costs of new injuries or new illnesses that unexpectedly occur while allowing you to use any licensed doctor. Coverage is available up to $1 million per person. For more information and pricing, you can call us at 1-877-262-7241 or complete a free quote online.

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Short-Term Health Insurance is popular and available in most states to cover gaps between major medical plans.

These plans also cover COVID-19 hospitalization. After deductibles and coinsurance, many plans will have $1 million in coverage.


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