"Mini-COBRA" for Small Employers
Take-away: You have probably heard of the federal government's COBRA law -- it requires employers to continue group health coverage for some former employees or their dependents for a specific period of time after the end of employment. However, the federal COBRA requirement only applies to companies with 20 employees or more, so you may think you're off the hook if your property management company or community association has under 20 employees.
Think again. Maryland, Virginia and DC all have their own “mini-COBRA” laws for small companies, that is companies with fewer than 20 employees. Each jurisdiction takes a slightly different approach, so a summary of each is provided below.
District of Columbia: The District of Columbia mini-COBRA law provides for three months of continuing coverage, except for terminations arising from gross misconduct for small companies. The employer (as opposed to the insurer or third party administrator) is required to provide notice to the employee/former employee within 15 days after the date that coverage would otherwise terminate of the employee's rights to continuing coverage. The employee is then responsible for electing coverage and paying the premium within 45 days after the date that coverage would otherwise terminate.
Maryland: The Maryland mini-COBRA law provides for eighteen months of continuing coverage for employees who are terminated without cause by small companies. There is no specific time requirement for providing notice to an employee but the employer must provide an election form within 14 days of request by an employee. We generally recommend that the employer send out a notice within 14 days of the qualifying event, despite the lack of a requirement to do so. Employees then have 45 days to elect coverage and are responsible for paying the premiums.
Virginia: The Virginia mini-COBRA law provides for twelve months of continuing coverage for small businesses. The employer has an obligation to issue a notice to the employee within 14 days of learning that a person covered under the health plan is no longer eligible for coverage. The employee has 31 days to pay the premium and elect coverage.
Summary: Small associations who employ fewer than 20 employees are not off the hook for providing continuing health coverage. All three jurisdictions require that the employer provide certain notice to the eligible employee upon a qualifying event. Accordingly, associations should develop a notice form and policy of providing timely notice to eligible employees. If you need assistance in preparing the notice, contact Jennifer S. Jackman.