Big changes for Arizona Small Business Owners who Offer Employee Benefits to Their Employees

In the past, Arizona’s employers with under 20 employees have never had to be concerned with COBRA compliance because it did not apply to them.  However, as of Jan 1st, 2019, Arizona’s Mini-COBRA law (codified as A.R.S. § 20-2330) requires employers who offer health/dental/vision insurance and who averaged between one and twenty employees during the prior calendar year to allow enrollees to continue coverage. To be eligible for continued coverage, the former employee had to have been enrolled in the plan for at least 90 days prior to their Qualifying Event causing them to lose coverage. The law applies to health/dental/vision plans issued or renewed after December 31, 2018, and compliance with the new law will be effective after your 2019 renewal date. For example, if the plan year begins on January 1, the employer would have to offer Mini-COBRA to eligible enrollees who have a Qualifying Event on or after January 1, 2019. However, if the plan renews July 1st then Mini-COBRA would not start until July 1^st.

Why is this important for former employee’s:  It gives them the chance to stay on their plan for up to 18 months. If the former employee or one of their dependents had already reached their deductible or out of pocket maximum, it would be very beneficial for them to stay on the plan.  Also, if the former employee or dependents had providers that they wanted to continue to see at ”In-Network” pricing, they may want to stay on the plan.

Why is it important for the employer to make sure they follow the new law:  Although there are currently no state penalties for non-compliance, there could be substantial liability arising from the former employee if they are not offered continued coverage and end up having large medical bills.

Employers subject to this law must issue a notice to enrollees within 30 days of a “Qualifying Event” informing them of:

• Their right to continue coverage at the full cost of the premium plus an additional 5% administration fee
• The full cost for the enrollee and his or her qualified dependents to have such coverage
• The deadline for the enrollee to elect continuation coverage
• The deadline for the enrollee to submit the initial and ongoing payments to the employer
• How the enrollee can lose coverage if the enrollee fails to pay premiums and the administrative fee
• Other information specified by law.

At Hershenberg & Stone-Walsh Insurance services we have many processes and solutions to help our client deal with the administrative burden of this new law. If you would like to learn more about the new Mini-COBRA law or on how we help our clients, please give us a call or contact us through our website.

Blog post written by Joseph Sidman, Operations Manager