There are actually three forms of benefit continuation law that Minnesota group health plans are subject to: federal COBRA, federal PHSA, and Minnesota Continuation Law. Unless you are a governmental plan however, PHSA would not apply. Most of us are familiar with or have heard of COBRA, but did you know that if your group has less than 20 employees, your employees’ continuation rights would actually fall under Minnesota Continuation Law?
Do not panic if you did not understand that separation because the Minnesota Continuation Law, in general contains more liberal provisions than COBRA. In other words, Minnesota continuation mirrors COBRA and in some instances allows longer continuation periods.
The continuation options are never less than COBRA options, and that’s why we have casually referred to both programs as COBRA rights. Regardless of where your group falls, the covered employee or qualified beneficiary (non-covered employees or dependents are not eligible for COBRA or MN continuation) must be “formally”(in writing) notified of their continuation rights. (Coverages that can be continued are: health, dental, life, and Section 125 flexible spending accounts for medical expenses). Once the plan administrator has been notified of the “qualifying event”, they have 14 days under COBRA or 10 days under M N continuation laws to send (first class only) or present this notification. The employee and/or beneficiaries then have 60 days to elect continuation coverage. If the employee or beneficiary elects continuation, they then have 45 days to pay premium for the period of time preceding the election, in other words, there can be no lapse in coverage. The continued member must then submit their premium by the date the plan administrator specifies, or in a timely manner. The law allows for the employer to charge an additional 2% for administrative costs, and it also allows a 30 day grace period on premium payments. If premium is not collected by the end of the 30 days, termination of the continuation coverage is an option.
In general, the main responsibility of the employer or plan administrator is to notify the employee or beneficiary of their continuation options, when a “qualifying event” occurs. If you’re not sure of what events fall into that category, it’s always best to ask.
If the employee or beneficiary does not respond after 60 days of your notice, your job is done. If they do elect continuation, it’s a good idea to note when the clock begins so that you can terminate coverage at the appropriate time. Some insurance companies will also track that, and in most situations, the employee will assume coverage elsewhere before their time is up. If you hear that an employee cannot afford to continue their coverage, tell them to call me and we can talk about short-term coverage. This type of coverage only covers new health issues (not pre-existing) and only goes up to 6 months, but it’s cheaper and fills that gap. Feel free to call me to assist you with any continuation issues; my goal is to keep it simple and help you stay in compliance.