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.
Under New Mexico's continuation of coverage law, which applies to employers with fewer than 20 employees, employees and covered family members who would otherwise lose group health insurance coverage due to certain specified events have the right to continue coverage for a period of up to 6 months.
Continuation of coverage must be provided for covered employees and their family members for up to 6 months when group coverage would otherwise be lost due to termination of membership or employment with the group insured.
The right to continuation of coverage does not apply if coverage terminates for nonpayment of premium, nonrenewal of the policy or the expiration of the term for which the policy is issued. Additionally, the right to continuation of coverage by an employee or covered family member who is eligible for Medicare is limited to coverage under a Medicare supplement insurance policy.
The insurer is required to notify an employee in writing of the availability of continuation coverage when a qualifying event occurs, or the employer may give this written notice.
The eligible employee or covered family member exercising the right to continue coverage must notify the employer or insurer and make payment of the applicable premium within 30 days following notice of the availability of continuation coverage by the insurer (or the employer).
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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