Tuesday, February 24, 2009

COBRA/Spendulus Update

[Updated - scroll down]
FoIB Bill Montgomery, CIC, points us to another "deal killer" in this bill. According to a memo from United Healthcare, "the subsidy provisions apply to state continuation coverage that is comparable to federal COBRA. That would include so-called "mini-COBRA" state laws that cover groups below the 20 employee threshold for COBRA."
Here in Ohio, groups with 2 (!) or more employees must indeed offer such an option; the key threshold is whether the (former) employee is eligible for unemployment compensation. If so, he or she may elect to continue the group coverage, at his/her own expense, for up to 6 months. Of course, this now means "at a substantial discount" for up to 6 months.
This does not bode well for small employers, who may have believed that they'd "dodged a bullet" when it appeared that these new reg's applied only to larger, COBRA compliant groups.
Of course, since "mini-COBRA" admin requirements are much less onerous than COBRA's, it's up to the (now former) employee to seek out this coverage. Still, if the extra costs are a problem for COBRA compliant groups, they could be disasterous for mom-and-pop shops.
Over on the Left Coast, co-blogger Bill Halper reports that California has CalCobra. He says that it "covers all group health plans (except those regulated by ERISA) with 2-19 eligible employees. The eligibility requirements are the same as Federal Cobra: as long as you are on the employer’s plan, pretty much anything short of walking in carrying an Uzi means you’re eligible. Voluntarily quitting your job, which would make you ineligible for unemployment, doesn’t affect your CalCobra eligibility. You can stay on CalCobra for 36 months; normally premiums are 110% of the employer’s premiums [ed: well, they were 110%. Now, not so much].
It’ll be amusing to see how this is implemented. Under CalCobra, the carriers are responsible for all of the administrative work. The employer notifies the carrier of a qualifying event, the carrier sends out the notice and then bills the participant and collects the premium. The employer is completely out of the loop. The Federal Law complicates things a bit.
OY! UPDATE: Just got this from one of our dental carriers: "Dental benefits are included in the health plan definitions of COBRA."
Exit question: If I didn't have dental before, will I be able to elect it at termination?
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