PENNSYLVANIA PASSES NEW MINI-COBRA LAW
by
Andrew N. Howe

Recently, Pennsylvania passed a new law affecting small employers (those employing 2-19 employees) by mandating that these employers offer continuation of health or medical benefits coverage to former employees and covered dependents upon the occurrence of certain “qualifying” events. Specifically, On June 10, 2009 Governor Edward G. Rendell signed Act 2 of 2009, known as Pennsylvania’s Mini-COBRA law (named after the federal law entitled the Consolidated Omnibus Budget Reconciliation Act). The law became effective July 10, 2009.

This new law allows former employees and/or covered dependents of small businesses to continue to purchase health or medical benefits just as they would have been receiving under their former employer’s plan. The coverage will be effective as of the date of a “qualifying event”, such as the employee’s termination or, for the spouse, divorce from or death of the employee, or for the child, ceasing to be a dependent, etc. The maximum period for the continuation coverage is nine months.

Generally speaking, Mini-COBRA applies to those employees and/or covered dependents who: have a “qualifying event” (such as termination of employment) 30 days or later after June 10, 2009 and who had coverage under the employer’s group health or medical benefits policy for three continuous months prior to termination; are not eligible for Medicare; and are not eligible for or covered by other private group health insurance. As with the federal law, former employees and/or covered dependents may be required to pay up to 105 percent of their former employer’s group rate to continue the coverage.

Additionally and importantly, qualifying employees involuntarily terminated between the effective date of the law (July 10, 2009) and December 31, 2009, also may be able to take advantage of the federal stimulus package 65% premium assistance subsidy for Mini-COBRA benefits. However, if a former employee is eligible for the federal premium assistance, the employee is required to notify the plan when he or she becomes eligible for Medicare or other group coverage, or the employee could be subject to a penalty of 110 percent of any premium assistance received.

Thus, any Employer employing between two and nineteen employees and providing employee health and/or medical benefits now will have to offer continuing benefits coverage at the employee’s cost, subject to the 65% federal premium subsidy in involuntary employment termination situations.

This article provides only a brief overview of the new law (which is not intended to be legal advice) and it is recommended that any Employer who has any questions contact Andrew Howe, Esquire, head of Hartman Shurr’s labor and employment practice, to gain a better understanding any compliance issues and mandates of this law.