If you are a small employer with 19 or less employees, your group qualifies for “State Continuation” when an employee leaves the organization. Under State Continuation a soon to be ex-employee would then qualify to receive 9 months of continuing coverage under the existing group health plan. For those employers who have 20 or more employees, or for those with 19 or fewer but get their benefits as part of a larger group such as a Trust or an Association plan would become eligible for COBRA Continuation for up to 18 months. There are other extenuating circumstances that may extend the length of COBRA continuation.
When an employee leaves your company having the option to extend existing health care coverage can be a great thing, especially if he or she is in the middle of medical treatment. What most employers, (and employees for that matter) may not realize is that once that employee has left and has elected to enroll in either COBRA or State Continuation they are essentially committed to those benefits and premiums until they become eligible for another group health plan, or when it is open enrollment in the individual marketplace. Where the confusion seems to lie is in the idea that they can cancel the COBRA or State Continuation coverage at any time and enroll in an individual health plan instead. Unfortunately, this is no longer an option with health care reform.
If you are considering offering a partial severance to an employee who is leaving please be sure to educate them about the potential pitfalls of electing to continue group benefits as it could leave them potentially without health insurance if they discover that they can not afford it once the employer stops paying.
Ready to learn more about COBRA and State Continuation? Contact us at get-benefits today to learn more.