*Basic Concept

Senate Bill 1217 was passed to offer employees continuation of group medical insurance (much like federal COBRA) upon experiencing a "qualifying event" that causes a loss of coverage. The law requires employers to act as the liaison (and not the insurance company) to offering this "mini-COBRA," collect premiums, track enrollment time frame, provide information at insurance plan renewal, extend the maximum time frame when "multiple qualifying events" occur and terminate coverage upon completion. Employees and/or dependents electing to continue coverage, will receive the benefits at the group cost (plus a 5% administration fee).

Mandated Firms

Arizona-based "small" employers (with 20 or less on average in the previous calendar year) that offer a "Health Benefit Plan" (which is loosely defined as a group medical insurance plan) to one or more employees.

Eligible Employees

To be eligible for state continuation coverage, an employee and covered dependents must be enrolled on the medical insurance plan for a minimum of 3 months, ineligible for Medicare and experience a "Qualifying Event" thereafter losing coverage.

Qualifying Events

The following events experienced by both the employee and their covered dependents will trigger the employer needing to send a Qualifying Event Letter and offer the "Qualifier" 18 months of continuation coverage:

• Termination of employment or called to Active Duty;
• Reduction in work hours;
• Divorce or separation;
• Employee's death;
• Employee becomes eligible for Medicare;
• Child loses "dependent status" under the plan; and
• Employer Bankruptcy and retired employees/dependents lose coverage.

Required Notices

Mandated Employers must mail a letter to employees and/or covered dependents when one of the above events is experienced within 30 days from the date of the event. (But the law will consider the notice to be timely if it is postmarked within 44 days of the event.) If a covered dependent is known to live at a separate address, a notice should be sent separately to them.

Employers are also required to notify mini-COBRA qualifiers in their election period and participants of any changes (including rates, plan, benefits, time frames, etc.) at least 30 days in advance of the change (usually the date of the renewal). Participants may elect to enroll in a newly offered plan. This is not an Open Enrollment meaning participants may not add dependents.

Election Period

Employees and/or covered dependents have 60 days from the date of the qualifying event letter to notify the employer of their desire to continue coverage. If the employer's notice is considered late, qualifiers will receive 120 days to elect Arizona mini-COBRA. Starting on the date they provide the election notice to the employer, the "participant" has 45 days to make their first premium payment. Coverage should be reinstated back to the date it was terminated so there is no lapse in coverage. Participants cannot elect to start at a later date.

Multiple Qualifying Events

If a Participant's dependent experiences a divorce/legal separation, employee's death or a child's loss of "dependent status," they should be offered an additional 18 month (for a total of 36 months) of continuation coverage. (The law does not state time frames associated on providing this information to the employer.)

Disability Extension

If a Participant's dependent is deemed "disabled" by the Social Security Administration (SSA) at the time of the initial qualifying event, the employer should provide an 11 month extension (for a total of 29 months). To receive the extension, the participant is required to provide the SSA determination within 60 days after the date of determination notice. The medical insurance plan may charge the disabled dependent 150% of the group employee rate (during the 11 month extension). Only the "disabled" dependent receives the extension and is required to notify the employer within 30 days after the date SSA determines the dependent is no longer considered disabled.

Mini-COBRA Completion

Arizona mini-COBRA will end on the earliest of the following dates:

• On the day the Participant has completed his/her total time frame (18, 29 or 36 months) under mini-COBRA;
• On the paid through date if the participant does not meet the initial 45 day (30 days thereafter) grace period to pay premiums;
• On the day the employee/dependent becomes eligible for Medicare, Medicaid or obtains other coverage; or
• On the day the employer terminates the group plan for all employees.

Military Administration

If an employee is in the Military Reserve or National Guard and is called to active duty and their employment is terminated either after or during their active duty period, the termination will be considered a separate qualifying event and he/she will be eligible for a new 18 month mini-COBRA period (with qualifying event date of the later of the date active duty ends or the date of termination. If the employee dies, divorces (or has a legal separation) or has a child experienced a loss of dependent status while on active duty, the employer should offer a new mini-cobra 18 month period.

Active Duty employees electing to continue coverage and enroll in mini-COBRA ("participants") who then have their coverage terminated because they are enrolled in TRICARE shall be eligible to re-enroll on mini-COBRA upon losing military coverage. They should be allowed to continue for a total of 18 months of mini-COBRA (regardless of the time spent on TRICARE.

* The above summary is a general description of Senate Bill 1217 and should not be considered as legal advice. COBRA Solutions, Inc. requests you contact a Benefits Attorney for interpretation on the law.