AZ State Mandates Change – Bill 1217 State Continuation Required for Fully Insured AZ Medical Plans
In the Arizona States beginning January 2019, all employers offering fully insured group medical insurance, even groups of one employee only must begin offering continuation coverage by AZ Senate Bill 1217. All-new fully insured plans must start offering this option, as of January 1, 2019. Policies that renew after December 31, 2018, must comply with this law as of the date of renewal.
Self-funded or level-funded medical insurance plans are not mandated to offer state continuation under Senate Bill 1217. If employers with self-funded plans want to provide continuation coverage, check with your insurance provider to make sure if they will allow this option.
State Employer Requirements
Unlike Federal COBRA, this new AZ state continuation law does not require an initial general notice. However, it is advisable to provide initial advice, so they are aware of the need to notify you of qualifying events like divorce, death, or someone turning age 26. So, a qualifying event notice provided to the individual.
When an employee or their dependents experience a qualifying event and have participated in the medical plan for at least 90 days, the employer is to send the employee notification of their right to continue coverage within 30 days of the event. A written letter sent to the employee’s last known address within 44 days of the game meets this requirement.
Any notice the employer communicates to the employee will constitute notice to affected dependents unless the employer is aware a dependent has a different address than the employee. Please note, the language and requirements that go in opinions are particular and not up to employers to send some note offering coverage to eligible participants. Employers should work with a professional third Party COBRA/Benefits administrator to ensure they have the right notices. Also, to ensure they go out as required, and to eliminate the risks and hassles of these new COBRA requirements.
The employee has 60 days after receiving the notice to notify the employer that he or she wants the continuation of coverage.
The new AZ continuation coverage laws allow the employer or Third Party Administrator to charge eligible participants the full premium cost of the insurance. In addition to an additional 5% surcharge of the premium cost— in total, up to 105% of the insurance premium cost.
Similar to Federal COBRA, organizations with less than 20 employees must allow participants to remain on the plan for up to 18 months. This could extend an additional eleven months for disabilities, or as much as 36 months for divorce, military activation, or death.
Federal COBRA and the new AZ Continuation is a maze of rules, required notices, and procedures. Missing any step or requirement could result in hefty fines or consequences. For example, what if the employer forgets to send the required notice within the period necessary? Or if the former employee or dependent develops a severe medical condition like cancer? Such circumstances could leave the employer responsible for an employee’s costly claim. The insurance provider could argue against any liability for employees past the likely continuation or COBRA enrollment period.
Most employers find it is just not worth the risk of potentially making costly mistakes to self-administer COBRA or state continuation.
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