COBRA is an important area of concern for employers. Most employers with 20 or more employees already know that they need to comply with the federal COBRA regulations, wherein a terminating employee may be allowed to retain his group coverage for up to 18 months (or longer, in some cases). What many of these same employers often forget, however, is that the COBRA rules apply to employers who have 20+ employees on their payroll for at least 6 of the past 12 months, regardless of how many are actually covered on the group medical plan (of course, only those insured may elect COBRA continuation).
Employers with less than 20 employees on their payrolls often breathe a sigh of relief, knowing that they don’t need to worry about the COBRA requirements. However, what some may not realize is they do need to comply with the state Continuation of Coverage rules, which apply to all employers with a group medical plan, regardless of the number of employees. These regulations are essentially the same as the federal COBRA rules, except that the terminating employee may only retain coverage for an additional 3 months in Georgia, or 6 months in South Carolina. Here are a few suggestions to help you avoid the most common problem – notification:

When an employee who has been covered under your benefit program terminates, you have 30 days to notify him, in writing, of his option to retain his group coverage (at his cost). If you have a termination interview, present him with his election letter (see the sample attached). Be sure to have 2 copies and have him sign one acknowledging receipt of the offer (put this in his file & fax a copy for our file). While he has 60 days to decide, “encourage” him notify you as soon as possible. If you do not meet with the employee, be certain that you mail the election letter to him, preferably certified mail, so that you have “proof” that notification was attempted.
* New note: If a terminating employee is also insuring their spouse, we are strongly recommending that a separate election notice be mailed to the covered spouse (recent court decisions have caused us to suggest this change. (For more specific information, please contact your Cobra administrator or legal advisor.)
On your next billing statement from the carrier, strike through the employee’s name & put his date of termination (conversely, you may notify the carrier directly by phone, fax, email, or their website, if available). If you’ve already paid a premium for the employee, don’t worry – the carrier will credit the amount on the next statement. After the employee’s (& spouse’s) notifications have been sent, make a note of the date on your calendar, and a note 60 days later. If you’ve not received word, you may terminate the employee’s coverage.
Be aware that every group insurance provider also has a “conversion” plan available to terminated employees. This is available to the employee directly from the insurance company; you are not required to provide this to the employee (although you should point this out to him

Finally, feel free to advise each terminating employee that they should contact AC Forrest Insurance Group for any assistance they need or questions they may have regarding their coverage options. Many employees find that a comparable individual plan is a much better value, or that an individual short-term health insurance plan is an effective way to bridge the gap to a new employer’s plan while maintaining continuous/creditable coverage at a MUCH lower price.
DISCLAIMER: AC Forrest Insurance Group is not a Cobra administrator, nor do we hold ourselves to be anything other than an insurance broker with only a limited and general understanding of both Cobra and HIPAA’s broad outlines. Each employer should consider seeking the services of a qualified Cobra/HIPAA administrator (we’ll be happy to provide you names of several) and/or your company’s legal counsel for specific questions or rules interpretations.

COBRA and Continuation of Coverage for Terminated Employees