Small employers may have to offer COBRA coverage, too


We are a small business with fewer than 20 employees. Is it true that we are not required to offer COBRA coverage?


It depends. It is true that, under federal law, there is no requirement for small employers to offer COBRA coverage. However, 39 states and the District of Columbia now require employers with fewer than 20 employees to offer COBRA continuation of group health coverage to their covered employees and dependents who would otherwise lose coverage due to a qualifying event.

While federal COBRA regulations exempt employers with fewer than 20 employees, states may enact provisions that expand the COBRA requirements. Only 11 states have no COBRA expansion requirement for small employers: Alabama, Alaska, Arizona, Delaware, Idaho, Indiana, Michigan, Montana, Pennsylvania, Virginia and Washington.

The most common maximum coverage extension period for employers with fewer than 20 employees is 36 months, required by 11 states, followed by 18 months and six months, required by seven states each. The shortest small employer state COBRA continuation maximum is three months, required by the District of Columbia, Georgia and Hawaii, while a four-month period is required by Arkansas.

The most common maximum premium required for small employers is 100 percent of the actual cost of coverage, required by 22 states, followed by 102 percent, required by 15 states. Two states, California and Florida, allow COBRA premiums to reach 110 percent and 115 percent, respectively.

Source: Expanded COBRA Continuation Coverage for Small Firm Employees, 2007, prepared by the Kaiser Family Foundation and reported on; CCH Employee Benefits Management Directions.

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