Q&A: COBRA coverage for voluntary resignations
Is a Voluntary Resignation (not an Involuntary Termination) considered a Qualifying Event for COBRA Coverage?
If the employer has 20 or more employees and provides group health plans to its employees, it is responsible for ensuring that terminated employees and other qualified beneficiaries receive proper federal COBRA notice of their right to continue health insurance at their own expense. Both voluntary and involuntary terminations are considered qualifying events under COBRA triggering the continuation coverage, except terminations that are the result of an employee’s gross misconduct. Employers must notify plan administrators of the termination within 30 days of the event, and the plan administrator must then provide written notice to qualified beneficiaries within 14 days after receipt of a notice of a qualifying event from the employer. In cases where the employer is the plan administrator, this notice is due within 44 days of the event or loss of coverage (whichever applies). The Department of Labor provides a COBRA Model Election Notice, which includes information on purchasing health insurance through the ACA Health Insurance Marketplace, https://www.dol.gov/agencies/ebsa/laws-and-regulations/laws/cobra.
Note, Pennsylvania also has a so-called “mini-COBRA” law indicating that all employers that provide health insurance must allow employees to elect to continue health insurance coverage for the part of the policy month remaining at termination plus three additional policy months. The law does not specify what type of notice should be provided, but where the federal COBRA is more generous, its provisions will apply when the employer is covered by both laws. As confirmed by the PA Division of Insurance website at Mini-COBRA (pa.gov), the state’s mini-COBRA coverage law applies to employees who terminate voluntarily or involuntarily.
Covered employers and plans
Employers with fewer than 20 employees. Continuation required for hospital, surgical, and medical plans.
Citation: 40 Pa. Stat. § 764j.
Continuation: Employee
Nine months upon termination of employment, but only if employee was covered for the previous three months.
Continuation: Dependents
Nine months upon death of employee, employee’s becoming eligible for Medicare, divorce, or dependent’s exceeding plan’s age limit, but only if covered for the previous three months. Coverage of dependent children who are eligible for coverage under a parent’s health care insurance because they are full-time students continued for the duration of active duty if the dependent is called to active military duty in the Reserves or National Guard for the duration of the dependent’s service on active duty or until the dependent is no longer a full-time student.
Citation: 51 Pa. C.S. § 7309 and 40 Pa. Stat. § 764j.
Conversion: qualifying event
Termination of group coverage for any reason, including discontinuance of the group policy in its entirety, but not for employee failure to pay premiums. Employee must have been covered for previous 3 months and not be eligible for other group coverage or Medicare.
Citation: 40 Pa. Stat. § 756.2(d).
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