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New continuation-of-coverage law is broader than it appears

A new state law is having unintended, and potentially major consequences for Connecticut health insurers and for Connecticut employers who administer COBRA/state-continuation-of-coverage. The new law - PA 03-77, titled “An Act Concerning the Extension of Group Health Insurance Benefits for Individuals Age Sixty-Two and Over ”mandates health insurance sold in this state to provide for an extended continuation-of-benefits period in certain situations far longer than the usual 18 months.

     While its title indicates that the expanded extension of group health insurance was targeted towards individuals age 62 and over, the text of the Public Act fails to refer to any particular age of eligible individuals. According to the specific statutory text of PA 03-77, the expanded extension period is to be offered to employees whose “reduction of hours, leave of absence or termination of employment results from an employee’s eligibility to receive Social Security income…” Employees in this situation are to be offered the opportunity to purchase continuation coverage “until midnight of the day preceding such person’s eligibility for [Medicare benefits]”.

     The Connecticut Department of Insurance (DOI) has interpreted, and indicates it is enforcing, the new law in accordance with this specific statutory text. The department is requiring that continuation coverage be offered to any employee who loses coverage due to a reduction in hours, leave of absence or termination and who, without regard to age, is eligible for Social Security survivor’s, disability or retirement income benefits prior to, or at the time of, the qualifying event.

     In addition, the DOI states that the employee only has to be eligible for Social Security income to take advantage of this extension; he or she does not actually have to be receiving benefits. The DOI has indicated that plan administrators and/or employers may require individuals to provide evidence of Social-Security income eligibility.

     The DOI also states that any notices required under federal COBRA should be updated to reflect the extension of continuation-of-coverage provided under PA 03-77.

     PA 03-77 became effective Oct. 1, 2003, and the DOI is requiring health insurers to apply this extension to any new business and any renewals on or after this date.

     Check with your health insurance carriers to determine how they will be implementing the coverage mandate. If you have general questions about the issue, call CBIA'a Human Resources Department at 860-244-1900.