The federal Consolidated Omnibus Budget Reconciliation Act, popularly known as COBRA, allows employees separated from employment as a result of a “qualifying event” (quit, lay-off, or termination, unless resulting from “gross misconduct”) to remain enrolled in an employer-sponsored health insurance plan. Whereas COBRA applies to employers with 20 or more employees, some states, including Minnesota, extend this right to employees of smaller employers. Minnesota’s “Mini-COBRA” law (Minn. Stat. § 62A.17), for example, covers employers with 2 or more employees. Unlike COBRA, however, the Minnesota law excludes self-funded plans, applying only to policies provided by commercial carriers and HMOs, such as Blue Cross Blue Shield. The rub is that employees who elect to continue coverage, which under federal and Minnesota law must be done within 60 days of receiving written notice of COBRA rights, are required to pay the full amount of the premium: employee and employer share.
Under Federal and State law, an employee electing coverage continuation can remain on the plan for a maximum of 18 months. Minnesota law requires the COBRA notice be sent to eligible employees within 14 days of a qualifying event. This period is a surprisingly large 44 days under federal law. The usefulness and effect of COBRA was arguably minimized by enactment of the federal Affordable Care Act, allowing employees who lose a job, retire early or become self-employed to obtain policies for themselves and their families regardless of any pre-existing conditions. Owing to uncertainties with the federal law, and ever rising premiums, COBRA policies may begin to become popular again. If you lose your job under unfair or arguably unlawful circumstances, you may consider negotiating employer payment of at least the employer portion of the COBRA premium for some period of time after your lay-off or termination. While at the same time examining costs and benefits under policies available on your state’s ACA exchange. That way, you may avoid getting bitten by ever increasing ACA health insurance premiums.