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 January 1st, 2019, Arizona Mini-COBRA applies to companies that are not otherwise subject to federal COBRA requirements, are providing employee benefits / health insurance, and have less than 20 employees (1-19).
Arizona employers should be aware of the unique provisions under Arizona's Mini-COBRA law, as well as the federal COBRA law, to maintain compliance for any employees or their dependents who experience a COBRA qualifying event.
Arizona Mini-COBRA vs Federal COBRA
Federal COBRA |
Arizona Mini-COBRA |
| Federal Law: Enforced by the US Department of Labor |
State Law: Enforced by the Division of Insurance & Financial Institutions |
| Applies to Employers w/ 20 or More Employees |
Applies to Employers w/ 1-19 Employees |
| Applies to Self-Funded and Fully Insured Health Plans | Only Applies to Fully Insured Health Plans |
NOTE: Employers are not required to provide employees 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 COBRA qualifying event in Arizona when one of the following types of life change events occurs:
- 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.
Arizona Mini-COBRA Policy Sample
COBRA compliance in Arizona can be challenging to manage. That is why we created this Arizona Mini-COBRA Policy Sample that your company can leverage and utilize in your employee handbooks today.
Who is Not Eligible for Arizona Mini-COBRA?
Employees and their dependents who are covered in the employer's 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:
- 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).
- 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 COBRA Insurance in Arizona
Under both federal COBRA and Arizona Mini-COBRA, the qualified beneficiary (the employee or their dependent) is responsible for paying the full cost of COBRA coverage. This includes the employee's and employer's share of the insurance premium, as well as a 2% administrative fee.
The maximum charges can go up to 102% of the initial cost of the plan's 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. Of course, you should factor these into your tracked labor costs.
NOTE: Premiums are charged by the carrier and collected by either the employer or COBRA administrator (usually along with the administrative fee). Plans must allow for 45 days after the election of the initial premium payment, and a 30-day grace period for further payments.
Managing Arizona Mini-COBRA and Employee Benefits
Along with Mini-COBRA, managing employee benefits in Arizona takes up a lot of your HR team. Thankfully, a great Benefits Administration Solution can streamline your process tenfold. Just avoiding over-payments of insurance premiums to carriers can provide enough ROI to pay for the solution. Additionally, you can enhance your COBRA workflows with automated carrier communications and feeds.
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 for Arizona employers and beyond, from ACA Compliance, to Arizona minimum wage compliance, to Arizona Sick Leave solutions. Being headquartered in Gilbert, 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!
