The Federal Statute commonly referred to as “COBRA” (the Consolidated Omnibus Budget Reconciliation Act of 1985), gives employees who lose their group health benefits the right to continue benefits at their own cost. COBRA only covers workers whose employers have twenty or more employees. However, the Massachusetts “Mini-COBRA” statute (M.G.L. c. 176J § 9) extends that right to Massachusetts employees of small businesses with between two and nineteen employees.
The law, which was enacted in 1996, requires small group health insurers to provide continuation of coverage benefits similar to those required of larger group insurers under COBRA. Health and dental insurance coverage must be continued when the following events, which otherwise would cause the loss of coverage, occur: death; termination; reduction in work hours; divorce or legal separation; and entitlement to Medicare benefits, among others. Notably, an employee who is terminated for “gross misconduct” is not entitled to insurance continuation benefits under Mini-COBRA.
An employee who elects continued coverage under Mini-COBRA may be charged up to 102% of the applicable premium cost for their plan, though the applicable premium must be equivalent to the premium cost of the plan for active employees. The 2% premium is permissible, in order to cover the employer’s administration of the medical insurance continuation process. An employer’s responsibility to notify an employee of his or her rights under COBRA/Mini COBRA is important because the election for continued coverage under Mini-COBRA must be made within 60 days of either: a) the date of the qualifying event (e.g. separation from employment); or b) the date the notice to elect coverage was sent, whichever is later.