The old law (Va. Code § 38.2-3541), required every group health insurance policy issued in Virginia to include a conversion option or continuation option. Under the conversion option, a person who is no longer eligible to receive coverage under an employer’s group health insurance plan can receive an individual accident and sickness policy, without evidence of insurability, subject to certain conditions. Under the continuation option, such a person could also elect to have his present coverage continue for a period of 90 days.
Virginia Mini COBRA notification requirements
Virginia recently enacted a new law which increases small businesses’ obligation to notify their employees of their right to receive ongoing health insurance coverage.
The new law imposes two changes upon all policies issued or renewed after July 1, 2010. First, the new law extends duration of the continuation option from 90 days to 12 months. Second, and more importantly to employers, the new law requires all employers to provide “each employee and other covered person under such a policy written notice of the availability of the option chosen and the procedure and time fame for obtaining continuation or conversion of the group policy.” The notice must be sent within 14 days of the date the employer becomes aware that the employee or other person is ineligible under the group health insurance policy.
Virginia Mini COBRA & Employers
The new law’s notice requirement is particularly important to small businesses, i.e., those with fewer than 20 employees, which are not bound by the notice requirements imposed by the Consolidated Omnibus Budget Reconciliation Act (COBRA). Small businesses must develop a standard, written notice which satisfies the requirements of the statute, and must develop a policy of issuing such a notice within 14 days of learning that a person covered under the health plan is no longer eligible for coverage. This includes situations in which an employee is terminated, as well as situations where an employee’s spouse is no longer eligible for coverage because of a divorce.
Large employers accustomed to issuing notices under COBRA need only take particular heed of the timeline by which the notice must be issued.
The Virginia Bureau of Insurance has not yet issued a model notice, but one may indeed be forthcoming. Please check back for further updates.
Virginia Code § 38.2-3541.
Continuation on termination of eligibility.
Each group hospital policy, group medical and surgical policy or group major medical policy delivered or issued for delivery in this Commonwealth or renewed, reissued or extended if already issued, shall contain, subject to the policyholder's selection, one of the options set forth in this section. Option 1 shall apply if the insurance on a person covered under such a policy ceases because of the termination of the person's eligibility for coverage, prior to that person becoming eligible for Medicare or Medicaid benefits unless such termination is due to termination of the group policy under circumstances in which the insured person is insurable under other replacement group coverage or health care plan without waiting periods or preexisting conditions under the replacement coverage or plan. Option 2 shall apply if the insurance on a person covered under such a policy that remains in force ceases because of the termination of the person's eligibility for coverage prior to that person becoming eligible for Medicare or Medicaid benefits. Option 2 shall not be applicable if the group policyholder is required by federal law to provide for continuation of coverage under its group health plan pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA).
1. Option 1: To have the insurer issue him, without evidence of insurability, an individual accident and sickness insurance policy in the event that the insurer is not exempt under § 38.2-3416 and offers such policy, subject to the following requirements:
a. The application for the policy shall be made, and the first premium paid to the insurer within thirty-one days after issuance of the written notice required in subdivision 3, but in no event beyond the 60 day period following the date of the termination of the person's eligibility;
b. The premium on the policy shall be at the insurer's then customary rate applicable: (i) to such policies, (ii) to the class of risk to which the person then belongs, and (iii) to his or her age on the effective date of the policy;
c. The policy will not result in over-insurance on the basis of the insurer's underwriting standards at the time of issue;
d. The benefits under the policy shall not duplicate any benefits paid for the same injury or same sickness under the prior policy;
e. The policy shall extend coverage to the same family members that were insured under the group policy; and
f. Coverage under this option shall be effected in such a way as to result in continuous coverage from the date of the insured's termination of eligibility for such insured if requested and paid for by the insured.
2. Option 2: To have his present coverage under the policy continued for a period of 12 months immediately following the date of the termination of the person's eligibility, without evidence of insurability, subject to the following requirements:
a. The application and payment for the extended coverage is made to the group policyholder within 31 days after issuance of the written notice required in subdivision 3, but in no event beyond the 60 day period following the date of the termination of the person's eligibility;
b. Each premium for such extended coverage is timely paid to the group policyholder on a monthly basis during the twelve-month period;
c. The premium for continuing the group coverage shall be at the insurer's current rate applicable to the group policy plus any applicable administrative fee not to exceed two percent of the current rate; and
d. Continuation shall only be available to an employee or member who has been continuously insured under the group policy during the entire three months' period immediately preceding termination of eligibility.
3. The group policyholder shall provide each employee or other person covered under such a policy written notice of the availability of the option chosen and the procedures and timeframes for obtaining continuation or conversion of the group policy. Such notice shall be provided within 14 days of the policyholder's knowledge of the employee's or other covered person's loss of eligibility under the policy.
(1979, c. 97, § 38.1-348.11; 1982, c. 625; 1984, c. 300; 1986, c. 562; 1988, c. 551; 2010, c. 503.).
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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