Iowa Code Chapter 509B.3 and Regulation 29 provide for continuation and conversion of group insurance. the provisions are not identical to Federal Cobra. The employee or member, a spouse, former spouse or surviving spouse, and eligible dependents who have been continuously insured under the group policy for 3 months before termination are eligible for 9 months after the date group coverage terminates. Iowa Statute Title XII Chapter 509B
For high risk applicants, consider the Iowa Comprehensive Health Association.
509B.3 Continuation of benefits
A group policy delivered or issued for delivery in this state which insures employees or members for accident or health insurance on an expense-incurred or service basis, other than for specific diseases or for accidental injuries only, shall provide that employees or members whose coverage under the group policy would otherwise terminate because of termination of employment or membership may continue their accident or health insurance under that group policy, for themselves and their eligible dependents, subject to all of the group policy's terms and conditions applicable to those forms of insurance and subject to all of the following conditions:
1. Continuation shall only be available to an employee or member if the employee or member was continuously insured under the group policy, and for similar benefits under any group policy which it replaced, during the entire three months' period immediately preceding the termination.
2. Continuation shall not be available for a person who is or could be covered by medicare. Continuation shall not be available for a person who is or is eligible to be covered by another group insured or uninsured arrangement which provides accident or health coverage, unless the person was covered by that other group policy immediately prior to the termination.
3. Continuation may exclude dental care, vision care, or prescription drug benefits or other benefits provided under the group policy which benefits are in addition to accident or health benefits.
4. An employee or member who wishes continuation of coverage must request continuation in writing to the employer or group policyholder within the ten-day period following the later of either of the following:
b. The date the employee is given notice of the right of continuation as provided in section 509B.5 by either the employer or the group policyholder.
If proper notice is given, the employee or member is not eligible to elect continuation more than thirty-one days after the date of termination.
5. An employee or member electing continuation shall pay monthly to the employer or group policyholder, in advance, the amount of contribution required by the employer or group policyholder, but not more than the group rate otherwise due for the insurance being continued under the group policy. If proper notice is given, the election of continuation by the employee or member together with the first contribution required to establish contributions on a monthly basis in advance, shall be given to the employer or group policyholder within thirty-one days of the date the group insurance would otherwise terminate.
6. Continuation of insurance under the group policy for any person shall terminate when the person becomes eligible for medicare or another group insured or uninsured accident or health arrangement, or earlier, when any of the following first occurs:
a. Nine months after the date the employee's or member's insurance under the policy would otherwise have terminated because of termination of employment or membership.
b. At the end of the period for which contributions were made if the employee or member fails to make timely payment of a required contribution and if proper notice is given as provided in section 509B.5, subsection 2.
c. If the person covered is a former spouse, upon the former spouse's remarriage.
d. The date on which the group policy is terminated or, in the case of an employee, the date the employer terminates participation under the group policy. However, if this paragraph applies and the coverage which would cease because of the employer's termination is replaced by similar coverage under a different group policy, all of the following apply:
(1) The employee, member, spouse, or eligible dependent may become covered under the different group policy, for the balance of the period that the employee or member would have remained covered under the prior group policy had a termination of the group policy as specified in paragraph "d" not occurred.
(2) The minimum level of benefits to be provided by the different group policy shall be the applicable level of benefits of the prior group policy, reduced by any benefits payable under the prior group policy.
(3) The prior group policy shall continue to provide benefits to the extent of its accrued liabilities and extensions of benefits as if the prior group policy had not been replaced by the different group policy.
7. A notification of the continuation privilege shall be included with or in each certificate of coverage and as otherwise provided in section 509B.5 and shall contain the time limits for requesting the continued coverage.
8. The spouse of an employee or member, and any covered dependent children of the employee or member, whose coverage under the group policy would otherwise terminate because of dissolution or annulment of marriage or death of the employee or member shall have the same contribution and notice responsibilities and privileges as provided under this chapter to the employee or member upon termination of employment or membership.
Section History: Recent form
86 Acts, ch 1124, § 3; 87 Acts, ch 115, §62
Iowa Regulation 29:
CHAPTER 29
CONTINUATION RIGHTS UNDER GROUP ACCIDENT
AND HEALTH INSURANCE POLICIES
191—29.1(509B) Definitions. As used in this chapter:
"COBRA" means Title X of the federal Consolidated Omnibus Budget Reconciliation Act (P.L.
99-272), as amended by the Tax Reform Act of 1986 (P.L. 99-514).
"Continuation right" refers to the right under Iowa Code chapter 509B of an employee or member
or the employee's or member's spouse and dependent children whose coverage under a group accident
and health insurance policy would terminate because of termination of employment or membership or
dissolution or annulment of marriage or death of the employee or member to continue their accident
and sickness insurance under the policy for the period, and under the terms specified, in that chapter.
"Employer" means that person which provides group accident or health insurance to its employees,
or former employees, or the dependents of such persons, regardless of whether the employer directly
contracts with an insurance company for a policy or obtains insurance by virtue of its membership in an
organization which is deemed to be a "group policyholder."
"Group policyholder" means a person which both contracts with an insurance company for accident
or health insurance policies and provides group accident or health insurance to individuals by virtue
of their membership in an organization. An organization shall not be deemed to be a "group policyholder" to the extent that its members are "employers" and those "employers" in turn provide benefits
to their employees and their dependents under the "employer's" benefit plan. Hence, if an individual
has group accident or health insurance by virtue of employment, all obligations fall on the "employer" even if that insurance is provided by virtue of the "employer's" membership in an organization which
is deemed to be a "group policyholder."
"Policy" means the group accident and health insurance policy maintained by an employer or group
policyholder for the employer's employees or group policyholder's members to implement the employer's
or group policyholder's benefit plan for its employees or members.
29.2(1) An employer or group policyholder must provide written notice of the continuation right
arising by virtue of termination of employment or membership, other than the notice required by Iowa
Code section 509B.3(7), no later than ten days after termination.
29.2(2) The employee or member shall make an election regarding continuation of coverage in
writing within ten days of the later of the date the insurance coverage would cease by virtue of termination
of employment or membership or the date the notice set forth in subrule 29.2(1) is given and pay
the premiums for the continuation coverage within 31 days of the date the group insurance would
otherwise terminate. Payment by the employee or member shall be made in advance of coverage commencing.
29.2(3) An employer or group policyholder need only give written notice of termination of continuation
coverage by reason of nonpayment of premium by the employee or member once, in advance, to
the employee or member in some general form such as the certificate of coverage referred to in section
509B.3(7).
29.2(4) In the event of a right to continuation coverage arising because of dissolution or annulment
of marriage or death of the employee or member, the person eligible for continuation, who shall be the
spouse or the custodial parent or legal guardian on behalf of a dependent child, must notify the employer
or group policyholder of the occurrence of the event within 30 days after the dissolution or annulment
of marriage or death of the employee or member. Within ten days of receipt of that notice, the
employer or group policyholder shall give the person notice of the continuation right, and that person
shall have ten days from the date the latter notice is received to elect continuation coverage in writing
from the employer or group policyholder.
29.2(5) An election to continue coverage received by an employer or group policyholder from an
employee or member or other eligible person shall be promptly transmitted to the issuer of the policy.
Ch 29, p.2 Insurance[191]
The issuer shall then cause coverage to be effective within ten days of receipt by the employer or group
policyholder of the election, subject to receipt of the premium from the employee or member.
29.2(6) Notwithstanding subrule 29.2(5), continuation coverage shall run from the date of the
qualifying event. An adequate premium to cover this period may be charged by an insurer.
191—29.3(509B) Qualifying events for continuation rights.
29.3(1) A dependent child ceasing to be a dependent of its parent or legal guardian is not an event
qualifying for a continuation right.
29.3(2) Loss of continuation rights under COBRA, chapter 509B, or any other state group health
insurance continuation law, is not an event qualifying for a continuation right.
29.3(3) Multiple qualifying events shall not be recognized under chapter 509B.
29.3(4) Voluntary termination of membership in an association shall not be a qualifying event.
191—29.4(509B) Interplay between chapter 509B and COBRA.
29.4(1) In the event an employee is eligible for a continuation right under Iowa Code chapter 509B
and is also eligible for continuation of benefits from the employer under COBRA, an employer shall be
deemed to comply with the requirements of chapter 509B if the employer offers to qualified beneficiaries
the continuation right under COBRA. An election in favor of COBRA continuation shall satisfy
the requirements of chapter 509B.
29.4(2) In lieu of, and as an alternative to the procedure set forth in subrule 29.4(1), the employer
may give the employee continuation benefits, and charge the employee for continuation costs, on
terms most favorable to the employee, as between chapter 509B and COBRA.
For example, an employee
could offer continuation for the period provided in COBRA — 18 months, as opposed to the 9
months under chapter 509B — but only at the cost to the employee allowable under chapter 509B —
100 percent of the per-employee cost, as opposed to the 102 percent per-employee cost allowable under
COBRA.
191—29.5(509B) Effective date for compliance.
29.5(1) An insurer renewing an existing policy on or after July 1, 1987, shall provide a continuation
right in its policy no later than the renewal date of the policy.
29.5(2) Policies issued or delivered on or after July 1, 1987, shall contain the continuation right as
of the date of issuance or delivery.
These rules are intended to implement Iowa Code sections 509B.3 and 509B.5.
[Filed 7/24/87, Notice 6/17/87—published 8/12/87, effective 9/16/87]
[Filed emergency 9/18/87—published 10/7/87, effective 9/18/87]
Federal COBRA law
Under COBRA, a terminated employee is entitled to continue his or her group health insurance for 18-36 months. The employee is entitled to the same coverage as current employees, since it is a seamless continuation of the current plan.
Cobra Insurance Notice
Most problems and confusion regarding COBRA Insurance involve misinformed employers who aren't aware they're supposed to offer employees COBRA. Read our Sample COBRA Notice. Also some employees thinking they should get their COBRA upon termination. Read about COBRA notification time requirements.
COBRA Insurance Cost
The 65% COBRA subsidy was for employees losing their health insurance from
Sept. 1, 2008 to after May 31st, 2010. That was part of the stimulus bill. Now the employee will be required to pay the full cost of health insurance, including any portion formerly paid by the employer. In addition, the employer can charge a 2% COBRA administration fee, bringing the total payment to 102% of the premium.
Who Qualifies for COBRA?
Employers with over 20 full time employers usually have to offer COBRA to an employee within 45-60 days of the qualifying event. Qualifying events include the employee losing their health insurance for a variety of reasons including a reduction in hours or termination. Dependents who lose insurance for other reasons, such as divorce, also qualify for COBRA. Exceptions include employees terminated for willful gross misconduct, employers with less than 20 total employees, non profits or churches organizations.
No Mini Cobra Coverage
47 of the 50 U.S. states have COBRA laws that cover smaller employers, generally called state mini-cobra laws. States that have not passed a mini-cobra law include Alabama, Alaska, and Delaware.
Among States that have mini-cobra laws, the lengths of coverage vary from 30 days to 36 months. Please refer to our Mini State COBRA Law Directory.
Written by Craig J. Casey
Craig Casey is an Writer, Coach, Blogger, Husband, and Former Health Insurance Agent helping people on the web since 1999 with their health insurance problems.
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