When business owners hear the term “COBRA,” most (hopefully) skip past the images of fangs and hissing and think of employee health care benefits, which, come to think of it, have their own type of fangs and hissing. Larger employers usually lean on human resources personnel who handle COBRA notifications and claims. Smaller business owners who wear most (or all!) of the hats in their company may not have that luxury but can do a quick search on the Internet and see that they’re exempt from COBRA’s requirements. Problem solved!
Well, not really. That Internet search hopefully brought up some references to “mini-COBRAs,” which are laws many individual states have adopted that mandate some or all of the continuation benefits available under COBRA be made to available to employees not otherwise covered under the federal COBRA. Illinois and Missouri are two of those states.
The Consolidated Omnibus Budget Reconciliation Act of 1985 is commonly called COBRA, which rolls off the tongue a little better. COBRA is a federal statute that requires employers with 20 or more employees to provide health care continuation benefits. The employer must have an existing group health plan, and there must be a qualifying event. The “qualifying event” is typically voluntary or involuntary termination of employment (for reasons other than gross misconduct) or reduction in hours. Spouses and dependents of covered employees are eligible for continuation in those cases, as well as in cases where the employee becomes entitled to Medicare, death of the employee, or divorce or legal separation. The employer can charge up to 102 percent of the group rate, and benefits continue for up to 18 months (or longer, depending on the particular qualifying event).
The mini-COBRAs are clearly patterned after COBRA, and due to recent changes in the law, Missouri in particular has essentially adopted COBRA for otherwise exempt employers.
Prior to 2009, Missouri had adopted a more limited version of COBRA. It limited benefits to nine months and required employees to have been covered for at least three months prior to the qualifying event. In 2009, however, the Missouri legislature, perhaps in connection with the rise in unemployment at that time, adopted Missouri House Bill 231, which provided for wholesale adoption of COBRA benefits for all employers with group health plans otherwise excluded from COBRA (i.e., those employers with under 20 employees). As under COBRA, a qualifying event is the voluntary or involuntary termination of employment (except termination for cause), or in the case of a spouse or dependent, divorce or the employee’s qualification for Medicare. Coverage can continue up to 18 months (or until the employee qualifies for other group health insurance) with up to 102 percent of the group rate being charged to the beneficiary.
Illinois has three separate laws that are analogous to COBRA: the Illinois Continuation Law, the Illinois Spousal Continuation Law and the Illinois Dependent Child Continuation Law. Each law differs slightly, but in short, Illinois law requires that all employers, regardless of size, offer continuation coverage to employees and their spouses and dependents. The employee must have been covered for three months prior to the qualifying event (though spouses and dependents need only be covered the day before). Coverage is limited to nine months for the employee and their spouses and beneficiaries, but spouses of widowed or divorced beneficiaries can receive coverage for up to two years. Unlike COBRA, the premiums cannot exceed the group rate.
Employers and employees both need to know their rights with respect to employee benefits (of which COBRA is just a small fraction!)—it creates peace of mind for employees and helps employers plan for the future.