Don’t Get Bit by Mini-COBRA. Understanding Your Obligations as a Health Insurance Plan Sponsor.

The Consolidated Omnibus Budget Reconciliation Act, known as COBRA, is a federal law that requires certain employers to allow former employees to continue health insurance coverage for a specified length of time. While the coverage is at the former employee’s expense (plus up to an additional 2% admin fee), employers have certain obligations to remain in compliance.

COBRA applies to private employers that offer group health insurance plans and employ 20+ employees, but this definition gets tricky in states that have mini-COBRA laws such as Georgia.

If you don’t offer a group health insurance plan at all, you’re not subject to COBRA. But if you do provide a plan and, even if you only have a few employees, read on please.

After an employee walks out the door, the clock starts ticking on your COBRA obligations.

First, you have 30 days from an employee’s last day on the job (or upon qualifying for Medicare) to notify your health insurance plan administrator of the employee’s COBRA eligibility.

Second, the plan administrator then has just 14 days to notify the employee of the right to elect COBRA coverage.

Failure to comply could cause your company to be fined $110 for every day that a COBRA notice is late by the Department of Labor. The IRS can also assess penalties.

Additionally, you must offer the same coverage the employee elected while employed, and any dependents must be offered an opportunity to elect coverage even if the former employee opts out. Sixty days is the election period for both ex-employees and covered dependents, and coverage can be maintained for 18 months (in some cases for three years by spouses and dependents) so long as premiums are paid in full.

What is mini-COBRA?

Georgia, like some other states, has passed mini-COBRA laws to cover businesses that offer group health insurance but employ fewer than 20 employees. As such, in Georgia, if you employ at least two employees, you’re obligated to offer COBRA to former employees. However, the former employee must have had at least six months of continuous coverage immediately prior to termination. And, the employee can only extend coverage to the end of the term plus three additional months. If the employee was terminated for gross misconduct, you needn’t offer COBRA at all.

Several states have mini-COBRA laws, and they vary from state to state. Find your state here.

Keeping up with COBRA can be an administrative burden. Contact your PBG representative for guidance.