July 2, 2009
- Reflects June 16, 2009 Ohio Department of Insurance
Updated Guidance -
Ohio “Mini-COBRA” Applies to Certain Ohio Employers
Certain Ohio employers are not subject to federal COBRA requirements, but are subject to Ohio's own health care continuation coverage rules, often referred to, including by the Ohio Department of Insurance, as “mini-COBRA.”
For example, Ohio's mini-COBRA law, but not the federal COBRA law, generally applies to employers with at least two, but less than 20 employees, and to government and church employers, that sponsor a group health plan that either is insured through a group policy issued or renewed in Ohio or is self-insured and providing benefits to Ohio residents. This advisory refers to any employer subject to Ohio’s mini-COBRA law as a “Mini-COBRA Employer.”
On April 1, 2009, Governor Ted Strickland signed a law that amended Ohio's mini-COBRA law both in terms of which former employees are eligible and how long benefits are available. But, the new rules generally only apply if the insurance policy is issued, delivered, or renewed on or after April 1, 2009, but prior to January 1, 2010, or if self-insured group health coverage begins or is renewed in such period.
Since the amended law expires on December 31, 2009, and the prior provisions are then reinstated, many Mini-COBRA Employers will not ever have to use the new rules as long as their group health benefits are provided under policies or plans that renew annually in January through March.
Changes to Ohio Mini-COBRA Law
Under the law in effect before April 1, 2009, Ohio’s mini-COBRA rules generally allow a former employee to buy up to six months of continued health care under the employer’s plan, provided the individual has participated in the health plan for the preceding three months, is eligible for unemployment compensation benefits, and is not and does not otherwise become eligible for Medicare or other group hospital, surgical, or medical coverage.
But, when an Ohio Mini-COBRA Employer is subject to the amended Ohio mini-COBRA law (because, for example, its group health policy is issued, delivered, or renewed between April 1, 2009 and December 31, 2009), Ohio’s amended mini-COBRA rules generally allow a former employee to buy up to 12 months of continued health care under the employer’s plan, provided the individual has participated in the health plan for the preceding three months, has experienced an involuntary termination of employment from the employer, and is not and does not otherwise become eligible for Medicare or other group hospital, surgical, or medical coverage.
In addition, if a Mini-COBRA Employer renews its group health insurance policy (or similar annual event for its self-insured coverage) in the period from April 1 to December 31, 2009 when an individual then has in effect mini-COBRA coverage, the individual’s coverage generally is extended from six to 12 months. For example, a former employee who had used only four months of mini-COBRA coverage eligibility at the time the employer’s policy renewed on July 1, 2009, would be entitled to an additional eight months of continued coverage under the renewed policy (rather than only an additional two months as the old law would have provided).
Ohio Mini-COBRA Premium Subject to Federal Subsidy For Up to Nine Months
The American Recovery and Reinvestment Act (“ARRA”), signed by President Obama on February 17, 2009, generally provides taxpayer-subsidized premiums to an “assistance eligible individual,” allowing an eligible individual to purchase continuation coverage under Ohio's mini-COBRA law by paying only 35% of the usual mini-COBRA premium amount. (However, the individual is generally subject to income tax on at least a portion of the 65% premium subsidy if the individual’s adjusted gross income exceeds $125,000 (or $250,000 for a married individual filing a joint return).)
An assistance eligible individual generally includes a former employee of a Mini-COBRA Employer who becomes entitled to the mini-COBRA coverage because he or she is “involuntarily terminated” between September 1, 2008 and December 31, 2009, who is eligible for such coverage during that period, and who elects such coverage.
Subsidized premiums are generally available for the portion of any mini-COBRA coverage period (usually but not always a month) that begins on or after February 17, 2009, but not for more than nine months.
ARRA provides that the applicable insurer, or employer in the case of a self-insured plan, obtains reimbursement from taxpayers for the 65% subsidized part of the premiums by taking a credit against the employer’s employment taxes in the amount of the subsidized premiums.
Note that the changes in Ohio’s mini-COBRA law, if they apply to a health plan of a Mini-COBRA Employer, extend an eligible former employee's right to receive the mini-COBRA premium subsidy provided under ARRA. Prior to amendment, Ohio’s mini-COBRA law would have allowed only six months of premium subsidy to former employees. Now a former employee who is eligible for up to 12 months of coverage under the amended law (because, for instance, the group health policy was issued or renewed on or after April 1, 2009 and prior to January 1, 2010) may be entitled to a full nine months of mini-COBRA premium subsidy.
Mini-COBRA Model Notice and Additional Information
The Ohio Department of Insurance (the “Department”) has issued a model notice that Mini-COBRA Employers can use to provide former employees in order to comply with Ohio’s amended mini-COBRA law.
For more information on how Ohio’s mini-COBRA law applies to your organization and, if so, complying with the temporary changes to the law discussed above, please contact John H. Appel, Rodney E. Driscoll or any other attorney in Frost Brown Todd’s Employee Benefits Practice Group.