What are state “mini-COBRA” laws and how do they work?

Forty-four states currently have laws that require the continuation of group health insurance coverage that would otherwise be lost because of the termination of employment, reduction of hours, or other reasons. Many of these laws mirror some or most of the provisions of the federal COBRA law and are for this reason often called “mini-COBRA” laws for short.

Benefits consultants and human resource professionals are generally familiar with the continuation requirements of federal COBRA, but even veteran employee benefits professionals can find it difficult to understand how mini-COBRA laws may or may not apply to their groups and, if so, what their own obligations may be if they do apply.

The key to understanding mini-COBRA laws is the general principle that where a state law and a federal law conflict, the federal law takes precedence. However, state laws do not necessarily conflict with federal law simply because they expand upon its requirements. As an example in the employment context, states may mandate higher minimum wages than federal minimum wage law requires. The minimum wage thresholds differ, but there is no conflict so long as the state’s minimum wage is higher than the federal law requires.

This is why mini-COBRA laws:

1. Often apply only to small employer health coverage: Many mini-COBRA laws apply only to insured plans offered through employers with 19 or fewer employees because employers with 20 or more employees are already subject to federal COBRA.
2. Generally impose their requirements on insurers: ERISA preempts state laws that relate to ERISA employee benefit plans but exempts state laws that regulate insurance from this rule. Thus, insurers rather than employers generally bear the burden of mini-COBRA compliance, and self-insured plans are generally exempt from mini-COBRA laws altogether.
3. May go beyond what federal COBRA requires: Some mini-COBRA laws expand upon the requirements of federal COBRA by extending maximum-duration coverage periods, expanding upon notice requirements, or other means. New York and California, for example, generally require maximum-continuation coverage periods of 36 months after qualifying events for which federal COBRA requires less (e.g., termination of employment or reduction of hours).

Some states (such as New York) may have additional requirements in the event a covered individual no longer qualifies as a dependent. Others, such as Massachusetts and Louisiana, may have very specific provisions for divorced spouses and surviving spouses. Still others may have especially unique requirements, such as Nebraska, which provides special continuation coverage rights to victims of domestic abuse.

Even though insurers largely bear the burden of mini-COBRA compliance, employers have an obligation to plan participants to be familiar with how mini-COBRA laws may apply to the group health insurance offered through the benefit plans they sponsor and to undertake reasonable efforts to ensure that its health insurance carriers are aware of and comply with all applicable mini-COBRA requirements.