If you have under 20 employees, you may not think offering continuation coverage to your employees is something to consider.

However, many states currently require all small employers to offer continuation insurance to their participants.

In the following article, we review the 19 states to which PrimePay currently administers COBRA continuation.

Starting with the Basics: What is COBRA?

The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) allows group health plan participants to continue coverage if they experience certain qualifying events (QEs), resulting in a loss of coverage under the plan. These individuals are referred to as qualified beneficiaries (QBs).

COBRA applies to a wide range of group health plans, including major medical, dental, vision, health flexible spending accounts (health FSAs), and health reimbursement arrangements (HRAs). It may also apply to employee assistance programs (EAPs), telemedicine, and wellness plans if they provide medical care.

COBRA applies to employers with 20 or more employees on a typical business day during the previous calendar year. Church plans and governmental entities are exempt. QEs that may require an offer of COBRA include termination of employment, reduction of hours, death of the covered employee, divorce or legal separation from the covered employee, employee enrollment in Medicare, and a dependent losing eligibility under the plan. These events may result in a maximum coverage period of 18 or 36 months and extensions due to disability or for a second QE may apply.

If a QB elects COBRA, the plan may charge the entire premium plus an administrative fee (ex., 102% of the applicable premium). Generally, the applicable premium for insured plans will be the full cost of the insurance premium paid to the insurance carrier.

What is state continuation (aka mini-COBRA)?

Just because an employer is not subject to COBRA doesn’t mean that they’re off the hook completely. Many states now require small employers to offer continuation coverage for their insured group health plans. PrimePay administers ‘state continuation’ for several states.

The information below details several requirements under state continuation laws currently administered by PrimePay. However, the information is intended to provide general information only and is not an exhaustive list of state continuation requirements. If you have any additional questions, you should contact PrimePay or an employment attorney.

1. Arizona

WHO IS SUBJECT?

Arizona state continuation laws apply to all Arizona small employers (at least one, and not more than 20, eligible employees during the previous calendar year).

WHO IS ELIGIBLE FOR CONTINUATION COVERAGE?

Employees, spouses, and dependents who are covered under the employer’s group health plan for at least three consecutive months before the QE.

WHAT BENEFITS ARE SUBJECT TO CONTINUATION?

Arizona’s state continuation applies to fully insured group health plans.

At this time, specific guidance has not yet been issued regarding which group health plans apply but may include fully insured medical, dental, and vision plans. Self-insured plans (including health FSAs and HRAs) are not subject.

WHAT IS THE MAXIMUM COVERAGE PERIOD?

Arizona’s state continuation provides 18 months of continuation coverage for all QEs. This timeframe may be extended if the QB experiences a second QE or receives a disability determination.

WHAT IS THE MAXIMUM PREMIUM THAT CAN BE CHARGED?

105% of the applicable premium. 150% may be charged during a disability extension.

2. California

WHO IS SUBJECT?

California state continuation applies to all employers with insurance policies in the state, regardless of size.

WHO IS ELIGIBLE FOR CONTINUATION COVERAGE?

Covered employees, their spouse, and dependents who were covered on the day before the QE.

WHAT BENEFITS ARE SUBJECT TO CONTINUATION?

California state continuation applies to fully insured group medical, surgical, and hospitalization plans. Standalone dental and vision policies are not covered.

WHAT IS THE MAXIMUM COVERAGE PERIOD?

The law provides a general maximum coverage period of 36 months for all QEs listed under federal COBRA. For employers that are subject to federal COBRA, California state continuation provides an additional 18 months for QBs experiencing termination of employment or reduction of hours after federal COBRA is exhausted, for a total of 36 months.

WHAT IS THE MAXIMUM PREMIUM THAT CAN BE CHARGED?

110% of the applicable premium. 150% may be charged during a disability extension.

3. Colorado

WHO IS SUBJECT?

Colorado state continuation applies to all employers exempt from federal COBRA.

WHO IS ELIGIBLE FOR CONTINUATION COVERAGE?

Employees, their spouse, and dependents who are covered continuously under the employer’s group health plan for at least six months prior to the loss of coverage.

WHAT BENEFITS ARE SUBJECT TO CONTINUATION?

Colorado state continuation laws only apply to fully insured medical group health plans. Standalone dental and vision policies are not covered.

WHAT IS THE MAXIMUM COVERAGE PERIOD?

The law provides a maximum coverage period of 18 months following termination of employment, the death of a covered employee, or divorce or legal separation from the covered employee.

WHAT IS THE MAXIMUM PREMIUM THAT CAN BE CHARGED?

100% of the applicable premium. An administration fee is not added.

4. Connecticut

WHO IS SUBJECT?

All Connecticut employers are subject, including private employers, public employers, non-profit employers, church plans, and governmental entities. The law applies to small employers (guaranteeing continuation coverage) and employers subject to federal COBRA (extending the maximum coverage period for certain QEs).

WHO IS ELIGIBLE FOR CONTINUATION COVERAGE?

Employees who are covered under the employer’s group health plan immediately before the QE as well as their covered spouses and dependent children.

WHAT BENEFITS ARE SUBJECT TO CONTINUATION?

Only fully insured group medical and hospitalization plans are subject. It does not apply to standalone dental, vision, or prescription policies.

WHAT IS THE MAXIMUM COVERAGE PERIOD?

The law provides up to 30 months of coverage in the event of termination of employment, reduction of hours, or leave of absence. For employers subject to federal COBRA, Connecticut continuation would begin after the 18 months on federal COBRA are exhausted, up to a maximum coverage period of 30 months.

36 months of continuation coverage applies if the loss of coverage results from the death of the covered employee, divorce, or legal separation from the covered employee, if the employee enrolls in Medicare, or a dependent loses eligibility. The maximum time frame for a termination of employment or reduction in hours may be extended from 30 to 36 months if a QB experiences a second QE.

WHAT IS THE MAXIMUM PREMIUM THAT CAN BE CHARGED?

102% of the applicable premium.

5. District of Columbia

WHO IS SUBJECT?

District of Columbia state continuation laws apply to all District of Columbia small employers (at least one, and not more than 20, eligible employees during the previous calendar year).

WHO IS ELIGIBLE FOR CONTINUATION COVERAGE?

Employees who are covered under the employer’s group health plan at the time of the QE as well as their covered spouse and dependent children.

WHAT BENEFITS ARE SUBJECT TO CONTINUATION?

District of Columbia state continuation laws only apply to medical group health plans. It does not apply to standalone dental, vision, accident-only, hospital indemnity, or specified disease policy.

WHAT IS THE MAXIMUM COVERAGE PERIOD?

District of Columbia’s state continuation provides three months of continuation coverage for all QEs.

WHAT IS THE MAXIMUM PREMIUM THAT CAN BE CHARGED?

102% of the applicable premium.

6. Florida

WHO IS SUBJECT?

Florida state continuation applies to employers with insurance policies in the state who are not subject to federal COBRA.

WHO IS ELIGIBLE FOR CONTINUATION COVERAGE?

Employees, their covered spouse, and dependents who are covered under the employer’s group health plan immediately before the QE.

WHAT BENEFITS ARE SUBJECT TO CONTINUATION?

Florida state continuation applies to the following:

  • Hospital, medical policy or certificate;
  • hospital or medical service plan contract;
  • health maintenance organization subscriber contract.

It does not apply to accident-only, specified disease, individual hospital indemnity, credit, dental-only, vision-only, Medicare supplement, long-term care, or disability income insurance.

WHAT IS THE MAXIMUM COVERAGE PERIOD?

The law provides a maximum coverage period of 18 months for all QEs listed under federal COBRA.

QBs can receive a disability extension of up to 29 months (11 additional months).

WHAT IS THE MAXIMUM PREMIUM THAT CAN BE CHARGED?

115% of the applicable premium. 150% may be charged during a disability extension.

7. Illinois

WHO IS SUBJECT?

Illinois state continuation applies to all employers with insurance policies in the state.

WHO IS ELIGIBLE FOR CONTINUATION COVERAGE?

Covered employees, their spouse, and dependents who were covered for three months prior to the termination of employment or reduction in hours. Spouses and dependents covered immediately before the qualifying event are also eligible following the death of a covered employee, divorce from the covered employee, retirement of the covered employee, or dependent aging off of coverage.

WHAT BENEFITS ARE SUBJECT TO CONTINUATION?

Illinois state continuation laws apply to fully insured hospital, surgical, major medical, Preferred Provider Organization (PPO), or Health Maintenance Organization (HMO) plans. Separate dental, vision, prescription drug, disability, and specified disease benefits are not covered.

WHAT IS THE MAXIMUM COVERAGE PERIOD?

The maximum coverage period under Illinois state continuation depends on the QE.

The law provides a general maximum coverage period of 12 months for termination of employment or reduction of hours. If the QE is the dependent aging out or the death of the covered employee, then dependents are eligible for a maximum coverage period of 24 months. Following the divorce from or death of the covered employee, the maximum coverage period for a spouse depends on the age of the spouse at the time of the QE.

Generally, spouses are eligible for the following coverage periods:

  • Death of the covered employee, or divorce from the employee.
    • Two years if the spouse is under age 55 at the time of the QE.
    • If the spouse is 55 or older, the period of coverage extends until they are eligible for Medicare.
  • Retirement of the covered employee.
    • If the spouse is 55 or older, the period of coverage extends until they are eligible for Medicare.

WHAT IS THE MAXIMUM PREMIUM THAT CAN BE CHARGED?

100% of the applicable premium. For spouses over age 55 at the time of the QE, an administration fee of 20% may be added after the initial 2 years on continuation coverage.

8. Maryland

WHO IS SUBJECT?

Maryland state continuation applies to all employers with insurance policies in the state.

WHO IS ELIGIBLE FOR CONTINUATION COVERAGE?

Eligibility under Maryland’s law depends on the QE. Please see eligibility per QE below:

  1. Voluntary/involuntary termination of an employee.
    1. Covered employee must be a Maryland resident who had health insurance coverage under a group contract with the same employer for at least three months before the termination.
    2. Covered spouse and dependent children on the day immediately prior to the QE.
  2. Death of the covered employee.
    1. The surviving spouse must have been covered under the contract for at least 30 days prior to the employee’s death.
    2. The dependent child must have been covered immediately before the QE or born after the QE.
    3. The covered employee must have been a resident of Maryland who had coverage under the contract for at least three months before their death.
  3. Divorce from the covered employee.
    1. Spouse must have been covered under the contract for at least 30 days prior to the divorce.
    2. Dependent child must have been covered immediately before the QE or born after the QE.
    3. The covered employee must have been a resident of Maryland who had coverage under the contract.

WHAT BENEFITS ARE SUBJECT TO CONTINUATION?

Maryland state continuation laws only apply to fully insured hospitalization, surgical, and medical group health plans.

WHAT IS THE MAXIMUM COVERAGE PERIOD?

The maximum coverage period under Maryland state continuation depends on the QE.

The law provides a general maximum coverage period of 18 months for termination of employment, divorce or legal separation from the covered employee, or death of the covered employee. However, for dependent children, if the QE is the death of the employee or divorce, then the dependent child’s coverage will end on the date of which the child would no longer be covered under the group contract if the death or divorce had not occurred. For spouses, if the QE is divorce, coverage will terminate when they are eligible for other group coverage, become covered under a non-group plan, or remarry.

WHAT IS THE MAXIMUM PREMIUM THAT CAN BE CHARGED?

The maximum premium that can be charged depends on the QE under Maryland law.

100% of the applicable premium is charged if the QE is divorce. 102% of the applicable premium is charged for other QEs.

9. Massachusetts

WHO IS SUBJECT?

Massachusetts state continuation laws apply to all Massachusetts small employers (at least one, and not more than 19, eligible employees during the previous calendar year).

WHO IS ELIGIBLE FOR CONTINUATION COVERAGE?

Covered employees, their spouse, and dependents who were covered on the day before the QE.

WHAT BENEFITS ARE SUBJECT TO CONTINUATION?

Massachusetts state continuation laws apply to fully insured major medical plans. Standalone dental and vision plans are not covered.

WHAT IS THE MAXIMUM COVERAGE PERIOD?

The maximum coverage period under Massachusetts state continuation depends on the QE.

For termination of employment or reduction of hours, 18 months of continuation coverage applies. 36 months of continuation coverage applies if the QE is death of the covered employee, divorce or legal separation from the covered employee, employee becoming entitled to Medicare, or dependent ceasing to satisfy dependent eligibility conditions.

WHAT IS THE MAXIMUM PREMIUM THAT CAN BE CHARGED?

102% of the applicable premium. 150% may be charged during a disability extension.

10. Minnesota

WHO IS SUBJECT?

Minnesota state continuation applies to all employers with insurance policies in the state and self-insured plans offered by local government units.

WHO IS ELIGIBLE FOR CONTINUATION COVERAGE?

Covered employees, their spouse, and dependents who were covered on the day before the QE.

WHAT BENEFITS ARE SUBJECT TO CONTINUATION?

Minnesota state continuation laws apply to fully insured plans with two or more employees and self-insured plans offered by local government units. It does not apply to self-insured non-governmental employers.

There is also a continuation requirement for life insurance. Those requirements are not discussed in this article.

WHAT IS THE MAXIMUM COVERAGE PERIOD?

The maximum coverage period under Minnesota state continuation depends on the QE.

The law provides a general maximum coverage period of 18 months for termination of employment and reduction in hours, unless the QB becomes covered under another group health plan (GHP) prior to that date. However, if the QE is the death of the employee or divorce, the QB can continue coverage until they become covered under another GHP or the date the coverage would have otherwise terminated had the employee lived or under the policy. If the QE is the employee’s Medicare enrollment or dependent aging out, affected dependents can continue coverage until the earlier of the date coverage would otherwise terminate under the group policy, 36 months after continuation is elected, or the date that the spouse or dependent children become covered under another GHP.

WHAT IS THE MAXIMUM PREMIUM THAT CAN BE CHARGED?

102% of the applicable premium.

11. Missouri

WHO IS SUBJECT?

Missouri state continuation applies to small employers not covered by federal COBRA.

WHO IS ELIGIBLE FOR CONTINUATION COVERAGE?

Employees who are covered under the employer’s group health plan before the QE as well as their covered spouses and dependent children.

WHAT BENEFITS ARE SUBJECT TO CONTINUATION?

Missouri state continuation laws only apply to fully insured hospitalization, surgical, and medical group health plans. It does not apply to standalone dental, vision, specific disease, or accident-only plans.

WHAT IS THE MAXIMUM COVERAGE PERIOD?

The law provides a maximum coverage period of 18 (for termination of employment or reduction of hours) or 36 months for all QEs listed under federal COBRA.

There are separate rules extending coverage for spouses aged 55 or older after their federal continuation period expires, but the rule is not covered further in this article.

WHAT IS THE MAXIMUM PREMIUM THAT CAN BE CHARGED?

102% of the applicable premium during the period paralleling federal COBRA. 125% may be charged during the extension for spouses aged 55 or older.

12. New Jersey

WHO IS SUBJECT? 

New Jersey state continuation applies to small employers (two to 50 eligible employees) who are not subject to federal COBRA. This would apply to employers not subject to federal COBRA because of their size (under 20 employees) or plans exempt from federal COBRA, such as church plans and governmental entities.

WHO IS ELIGIBLE FOR CONTINUATION COVERAGE?

Employees who are covered under the employer’s group health plan immediately before the QE, as well as their covered spouse and dependent children.

WHAT BENEFITS ARE SUBJECT TO CONTINUATION?

Only fully insured group medical and hospitalization plans are subject. Standalone dental or vision plans would not be guaranteed continuation coverage.

WHAT IS THE MAXIMUM COVERAGE PERIOD?

The law mirrors federal COBRA. If the loss of coverage is due to termination of employment, reduction of hours, or a leave of absence, 18 months of continuation coverage applies.

Thirty-six months of continuation coverage applies if the loss of coverage results from the death of the covered employee, divorce, or legal separation from the covered employee, or if a dependent loses eligibility. A disability extension may apply if the QB is originally entitled to 18 months of coverage.

WHAT IS THE MAXIMUM PREMIUM THAT CAN BE CHARGED?

102% of the applicable premium. 150% may be charged during the disability extension.

13. New York

WHO IS SUBJECT?

New York state continuation applies to all employers with insurance policies in the state, including private employers, public employers, non-profit employers, church plans, and governmental entities. Even employers who are subject to federal COBRA are subject and may need to provide extended coverage under the state rules, beyond what is required by COBRA.

WHO IS ELIGIBLE FOR CONTINUATION COVERAGE?

Employees who are covered under the employer’s group health plan immediately before the QE as well as their covered spouse and dependent children.

WHAT BENEFITS ARE SUBJECT TO CONTINUATION?

New York continuation applies only to fully insured group medical, surgical, and hospitalization plans. It does not apply to standalone dental, vision, or prescription plans.

WHAT IS THE MAXIMUM COVERAGE PERIOD?

New York’s state continuation provides for 36 months of coverage in the event of any QE listed under federal COBRA.

For employers not subject to federal COBRA, the law provides for 36 months of state continuation coverage for any QE. For employers subject to federal COBRA, the law would extend coverage from 18 months (or 29 months in the event of a disability extension) to 36 months after federal COBRA is exhausted.

New York continuation would not apply for QBs guaranteed 36 months of coverage under federal COBRA.

WHAT IS THE MAXIMUM PREMIUM THAT CAN BE CHARGED?

102% of the applicable premium. 150% can be charged during a disability extension.

14. Ohio

WHO IS SUBJECT?

Ohio state continuation applies to all employers not covered by federal COBRA.

WHO IS ELIGIBLE FOR CONTINUATION COVERAGE?

Employees who are covered continuously under the employer’s group health plan for at least three months prior to the QE. Continuation also applies for spouses and dependents are covered immediately before the QE.

WHAT BENEFITS ARE SUBJECT TO CONTINUATION?

Ohio state continuation laws only apply to fully insured hospitalization, surgical, and medical group health plans. It does not apply to standalone dental, vision, specific disease, or accident-only plans.

WHAT IS THE MAXIMUM COVERAGE PERIOD?

The law provides a maximum coverage period of 12 months in the event of a termination of employment, death of the covered employee, or divorce from the covered employee.

WHAT IS THE MAXIMUM PREMIUM THAT CAN BE CHARGED?

100% of the applicable premium. No administration fee applies.

15. Pennsylvania

WHO IS SUBJECT?

Pennsylvania state continuation applies to all small employers (two to 19 employees), including non-profits, church plans, and governmental entities.

WHO IS ELIGIBLE FOR CONTINUATION COVERAGE?

Employees who are covered under the employer’s group health plan for at least three consecutive months before the QE as well as their covered spouse and dependent children.

WHAT BENEFITS ARE SUBJECT TO CONTINUATION?

Fully insured hospital, surgical, and major medical benefits. It does not apply to standalone dental or vision plans. 

WHAT IS THE MAXIMUM COVERAGE PERIOD?

The law provides a maximum coverage period of nine months for all QEs listed under federal COBRA.

WHAT IS THE MAXIMUM PREMIUM THAT CAN BE CHARGED?

105% of the applicable premium.

16. Tennessee

WHO IS SUBJECT?

Tennessee state continuation applies to all employers with insurance policies in the state.

WHO IS ELIGIBLE FOR CONTINUATION COVERAGE?

Employees, their spouse, and dependents who are covered continuously under the employer’s group health plan for at least three months prior to the QE.

WHAT BENEFITS ARE SUBJECT TO CONTINUATION?

Tennessee state continuation laws only apply to fully insured hospitalization, surgical, and medical group health plans.

WHAT IS THE MAXIMUM COVERAGE PERIOD?

The maximum coverage period for termination of employment is through the end of the month in which the QE event occurred and three additional months.

The maximum coverage period for divorce from the covered employee or death of the covered employee is through the end of the month in which the QE occurred and 15 additional months.

WHAT IS THE MAXIMUM PREMIUM THAT CAN BE CHARGED?

100% of the applicable premium. No administration fee applies.

17. Texas

WHO IS SUBJECT?

Texas state continuation applies to all employers with insurance policies in the state. The law even applies to employers who are subject to federal COBRA and may require them to provide extended coverage under the state rules, beyond what is required by COBRA.

WHO IS ELIGIBLE FOR CONTINUATION COVERAGE?

Employees who are covered under the employer’s group health plan for at least three months before the QE as well as their covered spouse and dependent children.

WHAT BENEFITS ARE SUBJECT TO CONTINUATION?

Texas state continuation laws only apply to fully insured hospitalization, surgical, and major medical group health plans. It does not apply to standalone dental, vision, and prescription plans.

WHAT IS THE MAXIMUM COVERAGE PERIOD?

The maximum coverage period under Texas state continuation depends on whether the employer is subject to federal COBRA. For small employers not subject to COBRA (or exempt employers, such as church plans, and governmental entities), the law provides nine months of continuation coverage for all QEs.

For employers subject to federal COBRA, the law provides for an additional six months of state continuation after the federal COBRA coverage period is exhausted (up to a maximum of 42 months of coverage).

WHAT IS THE MAXIMUM PREMIUM THAT CAN BE CHARGED?

102% of the applicable premium.

18. Virginia

WHO IS SUBJECT?

Virginia state continuation applies to all employers with insurance policies in the state, except those subject to federal COBRA.

WHO IS ELIGIBLE FOR CONTINUATION COVERAGE?

Employees, their spouse, and dependents who are covered continuously under the employer’s group health plan for at least three months before the QE.

WHAT BENEFITS ARE SUBJECT TO CONTINUATION?

Virginia state continuation laws apply to fully insured hospitalization, surgical, and medical group health plans.

WHAT IS THE MAXIMUM COVERAGE PERIOD?

The law provides a maximum coverage period of 12 months for all QEs listed under federal COBRA.

WHAT IS THE MAXIMUM PREMIUM THAT CAN BE CHARGED?

102% of the applicable premium.

19. Wisconsin

WHO IS SUBJECT?

Wisconsin state continuation applies to all employers with insurance policies in the state.

WHO IS ELIGIBLE FOR CONTINUATION COVERAGE?

Employees, their spouse, and dependents who are covered continuously under the employer’s group health plan for at least three months before the QE.

WHAT BENEFITS ARE SUBJECT TO CONTINUATION?

Wisconsin state continuation laws only apply to fully insured hospitalization, and medical group health plans. It does not apply to specific disease, or accident-only plans.

WHAT IS THE MAXIMUM COVERAGE PERIOD?

The law provides a general maximum coverage period of 18 months for all QEs listed under federal COBRA. However, it may last indefinitely. Insurers may require persons with continuation coverage to convert to an individual policy after 18 months.

WHAT IS THE MAXIMUM PREMIUM THAT CAN BE CHARGED?

100% of the applicable premium. No administration fee applies.

This blog article is the last of a four-part series.

In case you missed it, click the following links to read parts one through three of our COBRA blog series:

  1. COBRA Series Part 1: A Quick Overview of Required Notices
  2. COBRA Series Part 2: The Top COBRA Compliance Mistakes Employers Make
  3. COBRA Series Part 3: COBRA Premium Assistance: Overview, Claiming Credits & Recordkeeping

Have questions about COBRA or state continuation?

PrimePay provides COBRA administration in just three simple steps. That means you can avoid costly penalties and excise taxes from COBRA audits. Fill out the form below to learn more:

Disclaimer: Please note that this is not all inclusive. Our guidance is designed only to give general information on the issues actually covered. It is not intended to be a comprehensive summary of all laws which may be applicable to your situation, treat exhaustively the subjects covered, provide legal advice, or render a legal opinion.  Consult your own legal advisor regarding specific application of the information to your own plan. 

Editor’s Note: This post was originally published in August 2019 and has been updated for freshness, accuracy, and comprehensiveness.