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Coming Soon: Arizona’s Mini-COBRA Law

Beginning January 1, 2019, Arizona businesses with fewer than twenty employees will be required to offer COBRA (Consolidated Omnibus Budget Reconciliation Act of 1985.)

This new mandate applies to medical group plans only.  Stand-alone dental and vision plans do not apply.  

Here’s the bill passed last spring by the Arizona Senate.

  • Who must comply?   Employer groups with one or more covered employees.  Traditional COBRA applies to companies with 20+ employees.
  • When must they comply?   At issuance of a medical plan or at the benefit plan’s renewal (after 12/31/2018.)
  • Which employees are eligible?  Employees covered under an employer’s health benefits plan for at least three months (90 days) before the qualifying event.  Also, a spouse or dependent child(ren) who is covered immediately before the qualifying event.  (There are special considerations for divorce, dependency status changes, and military members.  See Sections K-M.) 
  • How long can the coverage last?  Coverage can continue under the plan for up to 18 months (longer under certain conditions, shorter under certain conditions.  See S.B. 1217, Section H.)
  • Administrative fee added to full premium?  The employee will pay the full cost of coverage, including the enrollee’s contribution, the employer’s contribution and an administrative fee for the employer of up to 5% of the premium.
  • Notification requirements? The employer must send the employee a notification of their right to continue coverage within 30 days of the qualifying event.  A written letter sent to the employee’s last known address within 44 days of the event meets this requirement.  A separate letter must also be sent to a covered dependent known to live at a different address.  Failure to properly notify will trigger an extension to the employee’s election period.
  • Election?  If proper notification is given by the employer, the employee has 60 days from the date of notice to elect COBRA coverage.  The employee has 45 days to provide the first month’s premium.

Focus HR, Inc. will administer this process for medical benefits clients.  More information is expected from the U.S. Department of Labor.

To get help with your benefits administration click here.

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