The federal Consolidated Omnibus Budget Reconciliation Act (COBRA) generally requires group health plans sponsored by employers with 20 or more employees in the prior year to offer employees and their families the option to continue benefits for limited periods of time when coverage under the plan would otherwise end due to certain qualifying events. These events include voluntary or involuntary job loss, reduction in hours worked, death, divorce, and other life events.
COBRA sets rules for how and when continuation coverage must be offered, how employees and their families may elect COBRA, and what circumstances justify terminating coverage. The length of time for which continuation coverage must be made available depends on the type of qualifying event. For termination of employment or a reduction in hours, the maximum period of COBRA is generally 18 months. Up to 36 months of coverage may be available due to other qualifying events, or if a second qualifying event occurs during the initial period of COBRA coverage.
Please review our COBRA Steps to Success to understand the key areas involved in implementing COBRA for your company. Most states also have laws (commonly referred to as "mini-COBRA" laws) which require that group health plans provide COBRA-like continuation of benefits for certain employees and their families.
Maine provides employees of small businesses (those with fewer than 20 employees), whose group insurance coverage is terminated for specified reasons, the right to continue coverage for up to 12 months, provided that such individual has been an employee for at least 6 months. Continued group coverage also extends to the employee's dependents, provided that the dependents have been covered under the group policy for a period of at least 3 months (unless the dependents were not eligible for coverage until after the beginning of the 3-month period).
Continuation coverage must be provided for eligible employees and dependents when group insurance coverage terminates because:
Continuation coverage is not required where an otherwise eligible person:
Continuation of benefits may be terminated before the end of 12 months for the following reasons:
The payment amount for continued group coverage may not exceed 102% of the group rate. Employees must elect continuation and make the initial premium payment within 31 days of the termination of coverage.
Under the federal Patient Protection and Affordable Care Act (Health Care Reform), beginning with plan years starting on or after September 23, 2010, group health plans that offer dependent coverage must make the coverage available until a child reaches the age of 26. There is a temporary exception for grandfathered group health plans, which may exclude adult children who are eligible to enroll in an employer-sponsored health plan other than the group health plan of the parent. This exception will no longer be available for plan years beginning on or after January 1, 2014.
Individual states may have requirements that are more favorable to plan participants. For information about your state, please click here and contact your state insurance department for guidance.
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