State Continuation and COBRA
COBRA (Consolidated Omnibus Budget Reconciliation Act)
State Continuation (or Texas Continuation) of Health Insurance Coverage
These two forms of group insurance are in some ways the same and yet are different. They are both the form of Health Insurance an employee can access in order to continue coverage when they leave the employment of a company that has group health insurance and where employee was enrolled in and did meet the minimum participation requirements. For Texas Continuation you have to have been enrolled and participated in the plan for a minimum of 3 months.
COBRA governs groups over 20 people (and is ruled by Federal law (ERISA))
State Continuation is for less than 20 people. (Is ruled by the individual states, IE Texas)
COBRA lasts for up to 18 months (when exhausted you can apply Texas Continuation for 6 mo)
State Continuation last for up to 6 months
COBRA offers even more generous time limits for spouses and dependent children.
If the employee is terminated for “cause” the company does “not” have to allow the ex employee to enroll in the continuation of coverage whether COBRA or State Continuation.
I have learned this week from a client that State Continuation Coverage in this persons case (Aug 2010) can go for an extra three months or a total of 9 months. This individual was looking for options thinking his state continuation of group health insurance was going to end. He did look for individual coverage but could not pass the underwriting and so went to the Texas Health Insurance Pool for coverage.
He now has learned he can put this off for the group plan can keep him, as long as he pays the monthly premium to his former employer for an additional three (3) months. So now he can put off enrolling in the Texas Health Insurance Pool coverage and will save a few hundred dollars every month he can keep his previous coverage. If He had qualified for individual coverage he could have saved some money on his monthly premium as well, but he did not pass the underwriting.
We shall all see what happens with the GI (Guaranteed Issued) that the new “Health Care Reform” law will do to premiums for Health Insurance.
TDI notes on Texas Continuation and COBRA