COBRA and Florida continuation coverage for employers

Ares will help you understand which rule attaches to your plan and how notices and qualifying events should be handled. Plan administration and formal legal determinations belong with the plan administrator and, where needed, counsel.

What it is

The U.S. Department of Labor states that federal COBRA applies to private-sector group health plans offered by employers with at least 20 employees working on more than 50 percent of business days in the previous calendar year. It also applies to state and local government plans, and it does not apply to federal government plans or to churches and certain church-related organizations. Part-time employees count as a fraction of a full-time employee, based on hours worked.

Qualified beneficiaries — generally the covered employee, spouse, and dependent children who were covered the day before the qualifying event — may elect continuation coverage that matches the coverage offered to similarly situated active employees. Qualifying events include termination of employment (other than for gross misconduct), a reduction in hours, and, for spouses and dependents, events such as the employee's death, a divorce or legal separation, or a child's loss of dependent status.

DOL states that the maximum a plan may charge is 102 percent of the total premium, or 150 percent during a disability extension. Continuation after a termination or reduction in hours generally lasts up to 18 months, with longer periods for certain other qualifying events and disability extensions, as described in DOL's employer materials. Initial payment is due within 45 days after election; later payments have at least a 30-day grace period. DOL publishes model general and election notices.

Florida's statute, section 627.6692, is cited as the Florida Health Insurance Coverage Continuation Act. It applies to group health plans issued to a small employer that, for this section, employs fewer than 20 employees, and it does not apply if federal COBRA (or the parallel public-sector continuation law) is already available. A qualified beneficiary may elect continuation without evidence of insurability. Coverage must last at least 18 months from the date benefits would otherwise have ceased, unless an earlier statutory end date applies, and may last 29 months in the disability situation the statute describes. The premium may not exceed 115 percent of the applicable premium, or 150 percent during the disability extension. The qualified beneficiary must give written notice to the insurance carrier within 63 days after the qualifying event; the carrier then has 14 days to send the election and premium notice; the beneficiary has 30 days after receiving that notice to elect and pay the initial premium.

Other states have their own continuation statutes. We will check the rule that applies to each work site, not only Florida's.

Who it fits

Every employer that sponsors a group health plan should know which continuation rule applies. Federal COBRA is the rule once the 20-employee test is met. Florida's continuation act is written for insured small-employer plans below that line. Companies approaching 20 employees, and companies already there, should also read the mid-size page, because this is one of the administrative duties that attaches as headcount grows.

Continuation is not a product you buy in place of a medical plan. It is a right that sits on top of the group plan, large-group plan, or other group health plan you already sponsor. How it interacts with a PEO-arranged plan depends on who sponsored that plan.

How it works for employers

At plan setup, we will note whether federal COBRA, Florida section 627.6692, or another state's statute applies, and we will point you to the notice procedures and, for federal COBRA, to DOL's model notices. When a qualifying event occurs, the plan's notice and election steps have to be followed on the statute's timeline. We will help you coordinate those steps with the carrier or administrator. Formal determinations — for example, whether a termination was for gross misconduct — belong with the employer and counsel, not with a website.

How it compares

Federal COBRA and Florida continuation both exist so that people who would otherwise lose group coverage can elect to stay on the plan for a limited time. They differ in the employers they cover, the premium cap (102 percent federally, 115 percent under the Florida statute), and the notice mechanics. Individual-market coverage, including coverage reimbursed by an ICHRA, is a different path that some departing employees will also compare. We will describe the rights that attach to your plan rather than rank those paths as better or worse.