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COBRA Benefits, Premium Subsidies and Small Business Employees

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By Caleb Groos on April 19, 2009 7:02 AM

Saturday was the deadline for many workers who previously declined COBRA coverage to be notified of their second chance to take it. This is part of the new government subsidy of up to 65% of eligible participants' premiums. Many businesses with less than 20 employees, however, wonder whether their employees have any access to the new benefits.

Under federal law, COBRA continuation of health plan benefits are available to people who participated in a group health plan of an employer with 20 or more employees.

Many states have enacted "mini-COBRA" laws to provide similar benefits to workers at smaller businesses. As reported recently by the AP (and compiled by the group Families USA), the states that do not have mini-COBRA benefits are: Alabama, Alaska, Arizona, Delaware, Hawaii, Idaho, Indiana, Michigan, Montana, Pennsylvania (legislation is pending) and Maine (only temporarily laid off and injured workers are eligible).

As discussed in this blog post, the American Recovery and Reinvestment Act of 2009 included up to 65% coverage of eligible COBRA participants premiums (first covered by the employer, who can then claim it as a tax rebate. Saturday's deadline related to workers who became eligible for COBRA benefits between September 1, 2008 and February 16, 2009, and who previously declined coverage. Plan administrators should have taken care of the notification of the second chance to accept.

Do those eligible through their state's mini-COBRA laws get the premium subsidy annouced for COBRA participants? In general, yes. State mini-COBRA programs differ, but the Recovery Act included those which are comparable to federal COBRA continuation coverage in eligibility for the premium subsidy.
 
Do workers from smaller businesses get a second chance to opt in if they previously refused mini-COBRA coverage? According to the AP, the following states are giving a second chance at mini-COBRA coverage: Georgia, Kansas, Kentucky, Maryland, New Hampshire, New Jersey, New York, Rhode Island, South Dakota, Utah, Virginia and West Virginia.

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