State Continuation Coverage

State continuation coverage refers to a right, enacted in 41 states, for some employees and/or their dependents who have lost group health insurance coverage to continue receiving their existing coverage following specified qualifying events.

Eligibility for state continuation coverage

Unlike COBRA, state continuation rights apply to groups with less than 20 employees that maintain fully insured group health plans. In some states, these laws apply to fully insured group coverage purchased by larger employers, as well. However, there is little uniformity between each of the 41 states in regards to qualifying events, duration, covered benefits and the cost of state continuation coverage.

Each state defines different qualifying events that trigger the right to continue group coverage. Depending on the state, these qualifying events are not necessarily the same as those under COBRA. For example, in Ohio, continuation coverage is only available in cases of lost employment.

Also, most states require people to have been covered under their group plan for a minimum period (such as 3 months) in order to be eligible for state continuation coverage. By contrast, COBRA only requires a person to have been covered under the group health plan on the day before the qualifying event.

Electing state continuation coverage

Each state has different requirements concerning the election of state continuation coverage. Most states have a specified period of time following the notification and/or qualifying event during which an eligible person must elect continuation coverage and pay the specified premiums. However, in some states, such as Florida, the qualified person must give notice of a qualifying event to the insurance carrier before the insurance company will send out any notification and/or election forms. Finally, some states have different election requirements depending on the qualifying events, for example, 30 days to elect continuation coverage following a divorce and 60 days to elect continuation coverage following a death of an employee.

Coverage under state continuation coverage

In most states, the continuation coverage policy has the same types of benefits as were available under the group plan. However, for some states, the coverage is limited to hospital, surgical or major medical benefits, and might not include dental, vision care, prescription drugs, or similar supplementary benefits that are provided under the group policy in addition to its hospital, surgical or major medical benefits.