State Continuation Coverage
What Is State Continuation Coverage?
State continuation coverage allows employees of companies of 20 employees or less to keep the company insurance for up to nine months after job or coverage loss due to a reduction in hours. Those who are eligible are employees who have had continuous coverage for at least three months before losing the job or coverage. Spouses and children are also included.
Aside from job loss and coverage loss, other eligibilities include an employee becoming eligible for Medicare but other family members still needing the coverage or the employee divorces or pass on and the spouses and/or children still need coverage.
How State Continuation Coverage Works
It works with employer contribution, which is the dollar amount that the employers pay toward health coverage. However, with state continuation, you’re then responsible for the full premium. Hence, your employee’s contribution will likely increase significantly. Your employer can let you know about the cost, the due date, and the form in which they want you to provide the payment. You may also want to explore other options before deciding for sure whether state continuation is right for you and/or your family. However, you’re not obligated to use your state continuation for yourself. For example, if you have a child(ren) under the age of 19, you may find the individual plan for them cheaper than the family one.
If, however, your employer drops coverage and/or goes out of business, state continuation is no longer possible.
How Long Does State Continuation Coverage Last?
State continuation typically lasts up to nine months. This gives you and your family plenty of time to make the necessary decisions and to start considering other plans.
State Continuation Laws
The last update for state continuation laws was in 2011. That was when coverage due to coverage loss was made legal, when insurance companies became legally required to notify employees of their eligibility, and that was also when spouses and children became legal for coverage if the employer is now eligible for Medicare. State continuation laws also require that eligible employees notify their insurance provider within 10 days of their eligibility notice. Employers are legally expected to give employees notification, however, not all employers do so on time. Hence, you may want to contact your insurance provider to know for sure whether you’re eligible for state continuation coverage.
State Continuation Coverage Vs. Cobra
COBRA stands for Consolidated Omnibus Budget Reconciliation Act. It was passed in 1986 when Congress recognized loss of health insurance as one of the many disadvantages of job loss. However, one major difference between COBRA and state continuation coverage is that companies with over 20 employees are eligible for COBRA. COBRA covers for 18 months and employees have to pay 100% of the premiums. If it’s due to job loss, it can’t have been over gross misconduct on your part. You also have to let your former employer know that you want it or you’ll lose your chance.
However, it does have some similarities with state continuation laws. In both cases, spouses are covered in case of divorce or death, and children are eligible if they lose their dependent status. Both make for an easier transition from one job to the next.
If you become eligible for state continuation coverage, you will need to start deciding immediately whether it’s right for you and/or your family. If state continuation coverage is right for you and/or your family, you and/or your family will need to be familiar with the state continuation laws.