Home Home Page

Governor Signs Bill Setting Mini-COBRA Election Period

Economic recovery legislation signed into law by Governor Deval Patrick on Thursday amends the Massachusetts mini-COBRA law to require the same special election period as that mandated by the American Recovery and Reinvestment Act’s (ARRA) amendment to the federal COBRA law.  As a result, individuals who worked for Massachusetts employers with between two and 19 employees and who lost health insurance coverage due to an involuntary termination of employment occurring between September 1, 2008 and February 16, 2009, will have a second opportunity to enroll in continuation coverage and to have the federal government pay 65 percent of the premium cost for up to nine months.

The federal subsidy is provided under the ARRA’s COBRA Premium Assistance Program to “assistance eligible individuals” (AEIs), defined as employees and dependents who lose health insurance coverage due to an involuntary termination occurring between September 1, 2008 and December 31, 2009. The subsidy is available to qualified beneficiaries eligible for continuation coverage under both federal COBRA and state “mini-COBRA” laws.

The ARRA, signed by President Obama on February 17, required employers covered by federal COBRA to offer a special election period for AEIs who experienced an involuntary termination and lost coverage between September 1, 2008 and the ARRA enactment date – even if they had previously waived coverage or had enrolled and their coverage had subsequently lapsed. There was no such requirement for plans covered by state mini-COBRA laws since Congress lacks authority on such state-specific issues.    AEIs covered by Massachusetts mini-COBRA will now have the same opportunity as those covered under the federal continuation law.

AIM has produced extensive information on the COBRA Premium Assistance Program, which can be accessed on our Web site:   AIM COBRA Resource Page . For employers with plans covered by Massachusetts mini-COBRA, following are key points related to this new development:

• While the obligation to provide continuation notices technically lies with the insurance carriers, many have shifted responsibility to employers through their insurance contracts.  It is critical that employers understand what they must do versus what their carrier will do in light of the special election requirement.  The federal Department of Labor issued a model Special Election Notice that may be helpful. Individual carriers may also issue their own model notices.
• A notice of special election rights must be sent within 60 days of the enactment of the state law – or by September 2, 2009 - to qualified beneficiaries who would qualify as AEIs based on their loss of coverage due to an involuntary termination that occurred between September 1, 2008 and February 16, 2009 and who either waived continuation coverage or who enrolled and whose coverage subsequently lapsed.
• Qualified beneficiaries will have 60 days from the date notice is provided to make their election.
• If elected, coverage will be effective with the first period of coverage that begins after the enactment date of the state law. For plans with calendar month coverage periods this will be August 1, 2009. Absent federal guidance to the contrary, this means that the nine-month federal subsidy can apply through April 2010 or until an individual ceases to meet the definition of an AEI, whichever occurs first. At that point, coverage may continue but the subsidy would end.
• The 18-month continuation period is not extended – it continues to be counted from the original qualifying event date.

Important information to remember:

• Massachusetts mini-COBRA is an insurance law that applies to all group health insurance plans written in the state for employers of between two and 19 employees, i.e., those not covered by the federal COBRA law. Self-insured plans are generally not covered by any mini-COBRA law. Insured plans written in other states are not covered by Massachusetts mini-COBRA, but may be covered by a mini-COBRA law in the state where the policies are written.
• Massachusetts mini-COBRA requires continuation of medical insurance only – not dental or vision. Employers who wish to include dental and/or vision coverage in the special election opportunity must make sure their carriers are supportive of this action.
• For plans covered by state mini-COBRA laws, the insurance carriers are required by the ARRA to pay 65 percent of the premium cost and then recoup those funds by claiming a credit on their federal payroll taxes. Employers are, in fact, prohibited from claiming such a credit, so this responsibility is not something that can be shifted to employers through an insurance contract.
• The importance of proactively seeking specific information and clarification from individual carriers cannot be stressed enough. 

For more information, AIM members are encouraged to contact our toll-free HR Hotline at 800-470-6277.