New York Extends Benefits for COBRA and Over-Age Dependents

The state of New York recently passed two pieces of legislation that ensure continued access to health insurance for certain individuals:

• Bill S5471 - Extends the period of coverage for COBRA benefits under certain insurance contracts from 18 to 36 months.
  
  

• Bill S6030 - Provides for the extension of health insurance coverage to the unmarried child of an insured through age 29.

Bill S5471 - Extends COBRA Continuation Coverage

On July 29, 2009 New York Governor David Paterson signed bill S5471 that extends COBRA continuation coverage from 18 to 36 months for some individuals. The bill allows an employee or member who has otherwise exhausted federal COBRA benefits to maintain coverage for up to 36 months if the employee or member is otherwise entitled to fewer than 36 months of federal COBRA benefits. 

Non-New York residents who are insured under a New York-issued contract are covered under this law. The law does not apply to New York based employees whose group insurance contracts are issued in other states.  Additionally, the law does not apply to self-insured employers.

The provisions of the bill are effective retroactive to July 1, 2009 and apply to contracts issued, renewed, modified, altered or amended on or after that date.  Individuals losing their COBRA eligibility before the group plan’s next renewal date (or in-force date if a new plan) are not eligible for the state extension.  Individuals within their COBRA eligibility period at the time of the group plan’s renewal (or in-force date if a new plan) are eligible for the state extension.

• Example 1 – An individual became eligible for COBRA on August 1, 2008 and has been continuously enrolled in COBRA.  The group plan renews on January 1, 2010.  The individual would be eligible for the state extension on his/her Federal COBRA expiration date of February 1, 2010 because the plan became subject to the COBRA extension while he/she was still covered under Federal COBRA.
  
  
• Example 2 – An individual will lose their COBRA eligibility on September 1, 2009 and the group plan renews January 1, 2010.  This individual would not be eligible for the state COBRA extension because his/her federal COBRA eligibility ends after the plan becomes subject to the law.

To be eligible for the extended coverage, individuals must elect state COBRA continuation coverage within 60 days of the event which qualifies them for coverage or within 60 days of receiving notice of their right to elect state continuation coverage.  In most instances the qualifying event will be the exhaustion of federal COBRA continuation.

There is no direct cost to the employer for continuation coverage. The former employee or member pays the full premium, which is capped at 102% of the group rate.

At this time it is not clear whether the employer or insurer is responsible for administering COBRA for the full 36 months.  ArlenGroup will advise once New York State has clarified this point. 

For additional information:

• Summary of the bill

• Full text of the bill
  
  
  

Bill S6030 - Dependent Eligibility Age Raised

A second bill signed by Governor Paterson, bill S6030, requires insurers to allow unmarried children through age 29 – regardless of financial dependence – to be eligible for coverage under a parent’s group health insurance plan.  To be eligible, the dependent child must not be eligible for coverage under their own employer-sponsored group health plan and must live, work or reside in New York State or the service area of the insurer. 

The law does not require the parent’s employer to pay any part of the cost of coverage for an over-age dependent child.  Like other state mandates, the law does not apply to self-insured employers.

As with any plan where health coverage is provided to individuals who are not tax qualified under federal law (i.e. domestic partners or dependents who fall outside of federal guidelines), there are premium taxation considerations.  The premium associated with the non-qualified dependent either must be paid on a post-tax basis or reported as taxable income to the employee if the premium is funded by the employer or funded by the employee with pre-tax income.

The bill will take effect on September 1, 2009 and applies to contracts issued, renewed, modified, altered or amended on or after that date.

For additional information:

• Summary of the bill

• Full text of the bill