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by Jen Leigh on December 19, 2018

Arizona COBRA and Mini-COBRA Compliance Guide


Arizona Mini-COBRA Law Overview

On April 10, 2018, Arizona Governor Doug Ducey signed S.B. 1217 into law, creating a COBRA-like state continuation law (Arizona Mini-COBRA also known as Arizona COBRA).

Effective initially as of January 2019, Arizona Mini-COBRA applies to companies who are not otherwise subject to federal COBRA requirements, those companies that have less than 20 employees.

Prior to the revision effective July 29, 2019, companies with 20 or less (1-20) employees were required to comply. Now, if you are an Arizona employer with less than 20 employees (1-19), you will want to educate yourself on how you can stay in compliance for any employees or their dependents that experience a COBRA qualifying event. 

For more information, you can download our Arizona Mini-COBRA Policy Sample.

Arizona COBRA vs Federal COBRA

Mini-COBRA in Arizona is similar to the federal COBRA laws enacted in 1986, however there are a few specific differences:
  1. Federal COBRA is a federal law and is enforced by the Department of Labor. 
    Arizona COBRA is a state law and is enforced by the Division of Insurance. 
  2. Federal COBRA applies to group health plans offered by employers with 20 or more employees.
    Arizona COBRA applies to group health plans issued by employers with 1-19 employees.
  3. Federal COBRA applies to self-funded plans.
    Arizona COBRA does not apply to self-funded plans.

NOTE: Employers are not required to provide employee with health insurance benefits unless they have over 50 employees, which is referred to as the "Employer Mandate" requirement of the Affordable Care Act (ACA). However, if a company in Arizona does provide health insurance then, regardless of the number of employees they have, that company is required to comply with either federal COBRA or Arizona COBRA laws.

Who is Eligible for Arizona Mini-COBRA?

Employees and their dependents are eligible for COBRA in Arizona if they are covered under an employer’s health benefits plan for at least three months (90 days) and experience a qualifying event. 

What are the Arizona Mini-COBRA Qualifying Event Types? 

An employee can experience a qualifying event when one of the following types of life change events occur:  

  • Voluntary or involuntary termination of employment
  • Reduction of work hours
  • Divorce or separation
  • Death of the employee
  • The employee becomes entitled to Medicare
  • The dependent loses their dependent status under the group plan

NOTE: Employers are responsible for notifying employees and their dependents of their right to continue group coverage if they lose coverage due to one or more of the aforementioned qualifying events. This notification at the time of a qualifying event is known as an Election Notice.

Generally, Initial Notices at the start of the plan year should be distributed to all employees to educate them on their rights if they experience a life change event in the future.

Need some guidance?  See our sample policy below:

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Who is Not Eligible for Arizona Mini-COBRA?

Employees and their dependents that are covered in the employers' health plan are eligible for Arizona Mini-COBRA coverage, except if or when the individual:

  • Becomes covered under another group benefits plan
  • Becomes eligible for federal COBRA
  • Becomes eligible for Medicare or Medicaid
  • Fails to notify the health plan administrator of a qualifying event not able to be tracked by the employer 
  • Fails to enroll in coverage through the Election Notice (usually within 60 days)
  • Fails to pay his or her premium on a timely basis 

How Long Does COBRA Coverage Last in Arizona?

For Arizona Mini-COBRA, the coverage can last up to 18 months, however certain factors can make that period last longer or shorter:

  1. If a dependent experiences a divorce, separation, employee’s death, entitlement to Medicare or a loss of dependent status during their time under continuation coverage, they shall be offered an additional 18 months of continuation coverage (for a total coverage period of 36 months).
  2. If a dependent is deemed disabled by the Social Security Administration within the first 18 months of continuation coverage, they shall be offered an 11 month extension for a total coverage period of 29 months

Cost of Arizona COBRA Coverage

Maximum charges can go up to 105% of the initial cost of the plan premium. However, a plan can charge qualified beneficiaries eligible for the disability extension 150% of the cost of the initial plan during the final 11 months of COBRA coverage. 

NOTE: The employer is not required to bear any premium cost or administrative fees unless desired. Payment, instead, is required by the qualified beneficiary / employee. Premiums are charged by the carrier and collected by either the employer or COBRA administrator (usually along with the administrative fee).

Employee Benefits Management Solution

Arizona Mini-COBRA Policy Sample

COBRA compliance in Arizona can be difficult, but it doesn’t have to be. That is why we have provided this Arizona Mini-COBRA Policy Sample, which you can download here.

Arizona COBRA and Employee Benefits Doesn't Have to Be So Hard

Along with Mini-COBRA, dealing with employee benefits in Arizona can be a hassle. Thankfully, a great Benefits Administration Solution can be worth it's weight in gold. Just avoiding over-payments of premiums to Arizona's Insurance Carriers, which on average can be around $750 per employee per month can provide enough ROI to pay for the solution.  

If you have any other questions or concerns about benefits and compliance, schedule a compliance check with the Inflection HR compliance experts. We offer multiple levels of HR Compliance Support in Arizona and beyond from ACA Compliance to employee offboarding. Being headquartered in Tempe, AZ, we know what it takes to navigate state and federal laws by implementing policies and best practices. 

Feel free to email us with any questions you have or call us at 877-449-0676, we’re happy to help!

What's next?  Learn more about the shifting landscape of HR in the 21st Century.

Jen Leigh

Jen Leigh is a Senior Product Specialist with Inflection HR's Cloud Based HR and Workforce Management Solutions. Connect with Jenni and the rest of the Inflection HR Team on Twitter, Facebook, Linkedin, or Google +.