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Health Benefit Continuation Requirements for Group Health Plans

The Consolidated Omnibus Budget Reconciliation Act (COBRA) gives employees (and their families) who lose their sponsored health plan benefits the right to continue group health coverage for around 18 months during specific circumstances (e.g., job loss, reduction of working hours, and certain life events). Most employer-sponsored group health plans must fall in line with the COBRA’s continuous coverage requirements.

However, certain small employers may be an exception to the rule. Small employers can ask for an exemption if fewer than 20 employees were employed on typical business days during the previous calendar year. The main considerations when determining eligibility for the small employer exemption are:

  • Counting less than 20 employees (including all full-time, part-time, and common law employees working in and outside of the United States) for at least 50% of the calendar year.

  • Determining whether being part of an association or affiliated group of small employers will increase the total number of employees.

If you have a fluctuating workforce or can’t afford to constantly make sure you fall within the requirements, you may decide to offer COBRA coverage to avoid legal complications - but before doing so, make sure to consult with your health insurance issuers or brokers. Furthermore, analyzing the ownership or controlling interests of related employers can be a complex and daunting task - one that should be reviewed by your legal advisors.

Providing benefits like continuous group health coverage during global crises can be a blessing or burden depending which end of the employment spectrum you belong to. As an employer, you want to be sure to double and triple check that your business can claim the COBRA exemption without complications or violations. Get in touch with the tax and insurance experts at NY Small Health today to see if you can take advantage of this exemption.

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