What Is State Continuation for Health Insurance?

State continuation for health insurance provides a temporary extension of group health coverage for individuals and their families who lose employer-sponsored benefits due to certain life events. Often referred to as “mini-COBRA,” state continuation aims to bridge gaps in health coverage, particularly for those employed by smaller businesses.

Understanding Eligibility Requirements

Eligibility for state continuation coverage depends on specific conditions and varies by state regulations. Generally, individuals qualify upon experiencing a “qualifying event” that causes a loss of group health coverage. Common qualifying events include job termination, a reduction in work hours, or other employment status changes. Dependents may also qualify if they lose coverage due to the death of an employee, divorce from an employee, or no longer meeting the plan’s age requirements. While federal COBRA applies to employers with 20 or more employees, state continuation laws often fill the gap for smaller employers. Some states may also stipulate that an individual must have been continuously covered under the group health plan for a minimum period, such as three to six months, prior to the qualifying event.

Coverage Terms and Costs

The duration for which state continuation coverage can be maintained typically ranges from six to eighteen months, with specific timeframes determined by state law. The types of benefits continued usually mirror those provided under the original employer-sponsored group plan, commonly including medical, dental, and vision coverage. Individuals electing state continuation are generally responsible for 100% of the premium. This premium often includes both the portion previously paid by the employer and the employee’s contribution, plus an administrative fee. This administrative fee is typically a small percentage of the total premium, often up to two percent.

Steps for Electing Coverage

The process for electing state continuation coverage typically begins with a notification from the employer or plan administrator, informing the individual of their right to continue coverage and outlining the necessary steps. Employers usually have a timeframe, which can range from 10 to 45 days, to provide this election notice after a qualifying event. The election period commonly lasts at least 60 days from the date the election notice is furnished or the date coverage would otherwise be lost, whichever is later. To elect coverage, the individual must typically notify the insurer in writing. While an initial premium payment is not usually required with the election form, it must generally be made within 45 days after the date of election, covering the period from the loss of original coverage to the date of payment.

State Continuation and Federal COBRA

State continuation laws and the federal COBRA (Consolidated Omnibus Budget Reconciliation Act) both allow for the temporary extension of group health benefits, but they apply under different circumstances. A primary distinction lies in the size of the employer: Federal COBRA typically applies to employers with 20 or more employees, while state continuation laws are often designed for smaller employers who are exempt from COBRA requirements.

Another difference lies in the typical duration of coverage. COBRA generally provides coverage for 18 to 36 months, depending on the qualifying event. State continuation periods can vary significantly, often ranging from six to nine months, though some states offer durations comparable to or even longer than COBRA. State continuation rules are specific to each state and can supplement federal COBRA protections, sometimes offering more generous terms or applying to situations not covered by federal law.