Cobra Life Insurance: Minnesota's Options Explored

In Minnesota, you can continue your health insurance after job loss by enrolling in COBRA coverage. COBRA, or the Consolidated Omnibus Budget Reconciliation Act of 1985, is a federal law that provides many workers with the right to continue coverage in a group health plan. This law applies to employers with 20 or more employees. In Minnesota, all employers are compelled to offer a continuation of workers' health insurance. The cost of COBRA coverage in Minnesota is, on average, $450 per month for an individual. Minnesota also has a COBRA-like law that requires group life insurance be extended to qualifying individuals.

Qualifying events for continuation coverage

Continuation coverage is a temporary extension of coverage under the State Employees Group Insurance Program (the Plan) when coverage would otherwise end because of a life event known as a "qualifying event".

Qualifying events for employees include:

• A reduction in hours of employment
• Employment ends for any reason other than gross misconduct
• The employee becomes entitled to Medicare benefits
• The employee becomes divorced or legally separated
• The employee's child loses eligibility for coverage under the plan as a dependent child
• The employer files for bankruptcy

Qualifying events for spouses of employees include:

• A reduction in the employee's hours of employment
• The employee's employment ends for any reason other than gross misconduct
• The employee and spouse become divorced or legally separated

Qualifying events for dependent children include:

• The parent-employee dies
• The parent-employee's hours of employment are reduced
• The parent-employee's employment ends for any reason other than gross misconduct
• The child stops being eligible for coverage under the plan as a dependent child

Continuation coverage for spouses and dependents

Continuation coverage is a temporary extension of coverage under the State Employees Group Insurance Program (the Plan) when coverage would otherwise end because of a qualifying life event.

Qualifying Events

Qualifying events for spouses include:

• Reduction in the employee's hours of employment
• End of the employee's employment (for any reason other than gross misconduct)
• Divorce or legal separation from the employee

Qualifying events for dependent children include:

• Death of the parent-employee
• Reduction in the parent-employee's hours of employment
• End of the parent-employee's employment (for any reason other than gross misconduct)
• The child stops being eligible for coverage under the plan as a "dependent child"

Duration of Continuation Coverage

The duration of continuation coverage for spouses and dependent children depends on the qualifying event:

• When the qualifying event is the death of the employee, divorce, or legal separation, continuation of medical and dental coverage may last indefinitely.
• When the qualifying event is the end of employment or reduction in the employee's hours of employment, continuation coverage generally lasts for up to 18 months. This period can be extended if a second qualifying event occurs.
• If the qualifying event is a dependent child losing eligibility, continuation of medical and dental coverage lasts for up to 36 months.

Cost of Continuation Coverage

The cost of continuation coverage cannot exceed 102% of the cost to the group health plan, including both employer and employee contributions. If the qualifying event is due to disability, the cost cannot exceed 150% of the total cost.

Notification Requirements

It is important to notify the Plan Administrator when a qualifying event occurs. For certain qualifying events, such as divorce or legal separation, you must notify the Plan Administrator within 60 days after the event occurs.

Cost of continuation coverage

The cost of continuation coverage in Minnesota depends on the type of coverage and the qualifying event. Here is a detailed breakdown:

• End of Employment or Reduction in Hours: In the event of the end of employment or a reduction in work hours, continuation coverage for medical and dental insurance typically lasts for up to 18 months. The cost for this coverage cannot exceed 102% of the total cost for a similarly situated plan participant, including both employer and employee contributions. This means that the qualified beneficiary may be required to pay the entire cost of continuation coverage, plus an additional 2% for administrative costs, but it will not be more than 102% of the total cost.
• Death of Employee: If the employee passes away, their surviving spouse and dependent children can continue medical and dental coverage indefinitely. The cost for this coverage is the same as the cost for other employees, and cannot exceed 102% of the plan cost, including any portion paid by the employer.
• Divorce or Legal Separation: In the event of divorce or legal separation, the former spouse and dependent children can continue medical and dental coverage. Under fully-insured group coverage or individual health coverage, there is no additional premium charged to the former spouse. However, under self-insured group coverage, the former spouse must pay an additional premium for coverage, which is limited to 36 months.
• Dependent Child Losing Eligibility: When a dependent child loses eligibility, they can elect to continue medical and dental coverage for up to 36 months. The cost of this coverage is 102% of the premium, including any employer contributions.
• Eligibility for Medicare: If the employee becomes eligible for Medicare, their spouse and dependent children can continue health coverage for up to 36 months. The cost for this coverage is 102% of the premium, including any employer contributions.

For life insurance, employees have the option to continue basic life, employee optional life, spouse optional life, and child life insurance in the event of termination of employment, layoff, or reduction in hours. The maximum period for continuation of life insurance is 18 months, or until the employee is covered by other group insurance, whichever comes first. The cost of continuation coverage for life insurance is paid by the employee and can continue all or any portion of the life insurance benefits that were in force at the time of the qualifying event.

For the Medical-Dental Expense Account, individuals may continue participation by making monthly payments on an after-tax basis. The cost of continuation coverage for this account is determined by the individual's contribution amount, and coverage will end if the required contribution is not paid on time.

The cost of continuation coverage for the HRA Plan depends on the qualifying event:

• Dependent Child Losing Eligibility: Continuation coverage lasts for up to 36 months.
• Death of Employee or Divorce/Legal Separation: Continuation coverage may last indefinitely.
• Termination from Employment: Continuation coverage runs for 18 months following the date that coverage ended.

Please note that the costs for continuation coverage may change yearly, and it is important to refer to the most current information provided by the State of Minnesota for the most accurate and up-to-date details.

Minnesota Mini-COBRA Law

Minnesota's Continuation of Health Coverage laws, also known as Minnesota Mini-COBRA, are designed to offer a safety net for those who might lose their health insurance. These laws apply to a wide range of plans, including those underwritten by commercial carriers, HMOs, and Blue Cross Blue Shield of Minnesota. They also extend to Multiple Employer Welfare Arrangements (MEWAs), as well as political subdivisions like counties, school districts, and municipalities. Even fully-insured church plans fall under this umbrella.

Minnesota Mini-COBRA shares similarities with federal COBRA provisions, but there are key differences. Minnesota Mini-COBRA applies to all group health plans that are subject to state regulation, irrespective of the size of the employee group. Interestingly, Minnesota's laws can sometimes be more lenient than federal COBRA laws. However, they may lack the specificity found in federal regulations, often leading plan administrators to consult COBRA regulations or related case law to make well-informed decisions about continuation coverage.

Under Minnesota Mini-COBRA, all employers are required to offer a continuation of an employee's health insurance. This is known as COBRA coverage, and it allows employees and their families to temporarily extend their existing insurance under certain circumstances when their coverage would otherwise end. This includes situations where an employee loses their health insurance due to job loss, reduction in hours, or other qualifying events.

To enroll in COBRA coverage, individuals will need to fill out and return a COBRA enrollment form, indicating which coverages they want to continue. They can choose to continue some or all coverages, and they are not required to maintain the same level of coverage they had prior to losing their insurance. The cost of COBRA coverage in Minnesota is approximately $400-$700 per month, per insured person.

It is important to note that COBRA coverage is not the only option for individuals who lose their health insurance. They may also be eligible for other alternatives, such as enrolling in a new healthcare plan through the public healthcare exchange or choosing a private short-term health plan to fill the insurance gap.

Enrolling in COBRA

The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) is a federal law that allows you to temporarily extend your existing insurance coverage under certain circumstances when you would otherwise lose it. This includes group health, dental, and life insurance coverage.

Who is eligible for COBRA?

You may qualify for COBRA if you experience any of the following:

• Job termination (for reasons other than gross misconduct)
• Reduction in hours
• Divorce or legal separation
• Death of a spouse
• Becoming a dependent child
• Reaching the maximum age for dependent coverage
• Retirement of a covered parent

How to Enroll in COBRA:

When you experience a qualifying event, follow these steps to enroll in COBRA:

• Check Your Eligibility: Take the COBRA eligibility survey to confirm if you qualify for COBRA.
• Read the COBRA Election Notice: Your previous employer will send you a COBRA election notice within 45 days of the qualifying event. This notice will include your monthly COBRA premium and instructions on how to apply.
• Enroll within the Special Enrollment Period: You have a 60-day special enrollment period to sign up for COBRA. Follow the instructions in your election notice to restart your previous employer's health plan.
• Choose Your Coverage Level: You can choose to continue some or all of your previous coverages, and you may reduce the coverage level if desired. For example, you can reduce the dollar amount of life insurance or change from family to single coverage.
• Return the Enrollment Form: Complete and return the COBRA enrollment form to the State Employee Group Insurance Program (SEGIP). Include your telephone number on the form so they can contact you with any questions.
• Wait for Your Invoice: Do not mail your first payment with the enrollment form. Wait until you receive your first invoice to submit your payment.

COBRA Coverage Period:

The duration of your COBRA coverage depends on the reason for your eligibility:

• If you lose coverage due to a change in employment status or that of your spouse/parent, you can continue benefits on COBRA for 18 months.
• If you turn 26 and were enrolled on your parent's coverage, you can continue Medical and Dental benefits on COBRA for 36 months.
• If you lose coverage due to divorce or the death of your spouse, you can continue Medical and Dental benefits on COBRA indefinitely.

COBRA Costs:

The cost of COBRA may change yearly, and you will receive updated rate information each fall. The COBRA premium is typically the same as major medical insurance, averaging $400-$700 per month per individual. You can calculate your monthly cost based on your previous paycheck contributions and the amount your employer subsidized.

Frequently asked questions