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COBRA: What You Need To Know

COBRA: What You Need To Know text overlaying image of cobra written on a wooden table Due to recent events, unemployment in the U.S. has reached an all-time high. And because our healthcare system often ties coverage to work, there are a lot of people who could lose their access to healthcare. If you, like many employers, are worried about your workers in these uncertain times. Remember that if you have to let them go or cut their hours, they can keep their coverage for a certain amount of time. COBRA (the Consolidated Omnibus Budget Reconciliation Act of 1985) lets your workers keep the insurance coverage you provided them. Even though your employee pays the payments, there are still things you need to know and do about COBRA.

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What is COBRA?

COBRA was created in 1986 as part of the larger Employee Retirement Income Security Act of 1974 (ERISA). It gives certain workers the right to pay premiums and keep their group health insurance coverage in certain situations. Before Congress passed the ERISA law, people who had health insurance through their employer lost it as soon as they left their job for any reason. After COBRA was passed, workers who left a company that offered health insurance could choose to keep their coverage temporarily. COBRA coverage is often much more expensive than what active employees pay for their group health plan because the company typically pays for some or all of the coverage. 

 

Under COBRA you, as the employer, are no longer responsible for any health insurance costs. All medical bills can be charged directly to the ex-employee who is receiving the services. COBRA is usually offered to qualifying employees for anywhere between 18-36 months. However, COBRA eligibility and how long the coverage continues depends on certain circumstances.

Who Is Required To Offer COBRA?

First, you should find out which companies are required by federal law to offer COBRA coverage. If you run a private business with 20 or more employees and offer a group health plan, COBRA rules apply to you. Your employee handbook should have information about it.  But even if you don’t think any of the above applies to you or your business, there are still a few other things to think about. COBRA adds up the hours of two or more part-time workers to make one full-time worker. So, if you have two workers who each work 20 hours. The law says that they are the same as one full-time worker. 

 

Another thing to think about is that even if the federal government doesn’t require you to offer COBRA coverage, your state might. Some states have passed “mini-COBRA” rules that cover people who work for businesses with group health plans, but have fewer than 20 employees.

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Mini-COBRA 

Like federal COBRA, mini-COBRA laws require group health plans to give continuing health coverage to eligible employees who would otherwise lose coverage because of a qualifying event. One big difference is that mini-COBRA rules cover a wider range of people. Mini-COBRA rules usually cover employers with less than 20 workers, while federal COBRA only covers employers with 20 or more workers. In a few states, the number of workers is between 2 and 19. Some states require almost all workers, no matter how big or small, to follow the rules of mini-COBRA.

 

The length of coverage changes by state. It can be as short as 2 to 6 months or as long as 39 weeks or even forever if the employee meets certain conditions, such as becoming totally disabled while working. In some places, employees are eligible for mini-COBRA even if they were fired for being a bad employee. There is some kind of mini-COBRA law in the following 40 states:

 

  • Arkansas
  • California
  • Colorado
  • Connecticut
  • District of Columbia
  • Florida
  • Georgia
  • Illinois
  • Iowa
  • Kansas
  • Kentucky
  • Louisiana
  • Maine
  • Maryland
  • Massachusetts
  • Minnesota
  • Mississippi
  • Missouri
  • Nebraska
  • Nevada
  • New Hampshire
  • New Jersey
  • New Mexico
  • New York
  • North Carolina
  • North Dakota
  • Ohio
  • Oklahoma
  • Oregon
  • Rhode Island
  • South Carolina
  • South Dakota
  • Tennessee
  • Texas
  • Utah
  • Vermont
  • Virginia
  • West Virginia
  • Wisconsin
  • Wyoming

If your business is subject to mini-COBRA, you have to let eligible workers know that state law gives them the right to keep their coverage. The date for giving notice varies by state, so check your state’s laws to make sure you get the word out on time. Even though the rules for other mini-COBRA notices vary by state, they may be similar to those for federal COBRA.

When Does COBRA Apply to Group Health Plans?

The law says that a group plan is “any arrangement that an employer sets up or keeps up to provide medical care for employees or their families.” This can be done through insurance, a health maintenance organization, the employer’s assets, or some other way. Group health plans that don’t meet this definition are not covered by COBRA, but they may be subject to certain state continuation rules. COBRA does not apply to other group benefits, like life insurance or disability payments. If your business has 20 or more workers and offers group health insurance of any kind, it’s best to talk to an expert about COBRA eligibility to avoid fines or penalties.

Eligible Employees

Employees may be qualified for COBRA continuation coverage if they are enrolled in an eligible group health plan and meet certain qualifying event requirements. This could mean:

 

  • Full-time employees
  • Part-time employees
  • Spouses of eligible employees
  • Dependents of eligible employees
  • Retirees

There are limits to how long a company has to offer COBRA coverage. Even if the business has at least 20 employees, some employees won’t be able to get COBRA coverage because they didn’t choose a qualifying plan, the reason they were fired, or there were other special situations. This could mean:

 

  • Employees who are ineligible for coverage in the group plan
  • Workers who declined to participate in the group health coverage
  • Employees who are enrolled for benefits under Medicare
  • Employees terminated for gross misconduct

In addition to being an employee and being enrolled in a qualified group health plan, an employee must also have a qualifying event for COBRA coverage to continue. Usually, this will include something that causes the employee to lose group health benefits. For example, if an employee is fired for something other than gross misbehavior, their hours are cut, or they are laid off temporarily or permanently, they lose their benefits. Qualifying events can also include an employee’s spouse or dependents if they cause a change in status for the whole family and affect the family’s ability to keep health care. COBRA can be used to continue coverage for a spouse or child if:

 

  • The covered employee passes away
  • If a spouse gets divorced or legally separated
  • The spouse or child lost coverage because the employee qualifies for Medicare
  • The dependent child is no longer dependent on the employee (aging out of their parent’s coverage)

Employer Responsibilities

Plan administrators are required by law to tell people who are qualified when their status changes. In some cases, the employer is in charge of running the plan and must take care of all of these tasks. If you have workers who might be eligible for COBRA, you must do the following:

 

  • Tell the group health plan administrator within 30 days of a qualified event if a person is eligible for COBRA.
  • Give notice to employees who are qualified for COBRA within 44 days about their COBRA rights.
  • If COBRA coverage is rejected for any reason, let the people who need it know within 14 days.
  • If the employee chooses to keep coverage under COBRA, give them the same coverage as the plan they were on before the qualified event.

Once an employee has a qualifying event, COBRA requires group health plans to give the employee and any qualifying partner or dependents a time to decide if they want to keep their coverage under COBRA. Once the qualifying event happens, the person must have 60 days to choose to keep benefits or not. Even though everyone in a household who went through the same qualifying event has the same election period, each person’s election method is different. The employee, their partner, and any qualifying dependents can choose to get coverage or not, depending on what is best for them.

How EZ Can Help

Taking care of your workers is part of being the boss, and that means making sure they can get health care. A big part of your job is to know what their rights are and let them know about them, even after they’ve left your company. If you don’t stay on top of things like COBRA, you could face fines. We at EZ.Insure know that running a business is hard and that insurance is just one more thing to think about. We’d like to take some of that weight off your shoulders by giving you free, instant access to an informed agent. Enter your zip code in the bar below to start, or call 877-670-3531 to talk to an agent if you have questions or are looking for a new plan.

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The Advantages of Group Insurance

Being a small business owner means being on a tight budget, so fitting in a group health insurance plan for your employees can seem a bit overwhelming. Offering group health insurance, though, is not something that you should overlook. If you do not offer a healthcare plan, you might find that it is more difficult to recruit and retain good employees. In fact, surveys show, most employees say that they would prefer to be offered health insurance over a pay raise. While group health insurance can seem unaffordable or unattainable, providing healthcare has many advantages that can balance out the costs – and there are ways to get great plans at an affordable price.

Tax Credits & Deductionstax deduction written on a tellow post it note sitting on top of a calculator and money next to it

Contributing to your employees’ premiums can be expensive, but you can get some of that money back through tax credits and deductions. If you run a small business, you might qualify for the small business health care tax credit if you offer your employees a plan through the Small Business Health Options Program, or SHOP. To qualify for the minimum credit, you must have fewer than 25 full-time or full-time equivalent employees earning an average of $50,000 or less per year; to qualify for the maximum credit, you must have fewer than 10 employees earning an average of $25,000 or less per year. 

If you decide to offer a HRA or HSA, your employees will get tax advantages (all of their  contributions and reimbursements are pre-tax), and so will you. Contributions to your employees’ HSAs and HRA reimbursements are tax-deductible. 

Lower Payroll Taxes

Another tax benefit of offering group insurance is the ability to lower your payroll tax. When employees pay for health insurance, the cost of their premiums is typically excluded from their taxable income. This lowers most workers’ tax bills, and in turn reduces their after-tax cost of coverage. Lower taxable income for your employees means lower business payroll taxes for you. In addition, if you contribute to your employees’ HSAs, you can also save on payroll taxes because HSA contributions are deducted from your payroll on a pre-tax basis.

caucasian hand with a suit on holding a blue card with a heart on it and a family holding hands together
You and your family can participate in your group insurance plan.

You Can Participate In The Plan

Offering health insurance to your employees means that you and your family can also participate in the plan. Compared to individual plans, group policies offer more pre-deductible benefits such as preventative care and primary doctor visit coverage. They also offer lower copays for prescription drugs and routine care.

Lower Costs Due To Larger Risk Pool

The higher the number of employees that participate in your group plan, the lower the cost of  health insurance. When more people are included in your plan, you have a larger risk pool, and everyone will have more options at a lower price. 

Attract & Retain Employees

Do you want healthy, productive employees who show up to work and boost your bottom line? Then provide them with group health insurance! If you want  employees who come to work and work hard for you, there’s no better way to ensure you’ll get that than by offering health insurance. They’ll be able to receive care when they need it, and they will feel like you have invested in them, so they will invest in you. This will lower your hiring costs, improve morale, and reduce absenteeism and risks associated with poor health. 

Health insurance can help you keep your current employees happy and healthy, and it can also help you to attract the best employees when it comes time to hire. Job seekers expect employers to offer health insurance and partially pay for their premiums, so you risk missing out on great candidates and potential employees if you’re not offering some sort of plan. You don’t want to be disappointed if a candidate rocks the interview, you offer them the job, and they turn it down because you’re not offering the benefits they’re looking for!

You Can Save Moneylittle figurines holding coins passing it to the next person until it reaches a figure on top of a yellow piggy bank

When searching for a group health insurance plan, you have to look beyond the premium. The costs associated with group health insurance plans include premiums, which you contribute to, but also co-payments, deductibles, and coinsurance, which your employees are responsible for. If you are looking for a way to lower your premium costs, consider offering a high deductible health plan. The higher the deductible a plan has, the lower the premium costs will be, so you can save on contributions. You can also offer a HSA with qualified high deductible health plans, so your employees will be able to put money aside to help with the cost of the higher deductible. 

Affordable group health insurance plans are out there, and you can find the right one for your business as long as you use a licensed, trained agent to help you. There are ways to offer everyone the most coverage while saving the most money. The best way? Start by talking to an EZ agent! All of our services are completely free, and there’s never any hassle or obligation. To instantly compare plans in minutes from top rated carriers around the country, enter your zip code in the bar above, or to speak directly to one of our agents, call 888-998-2027.

Small Business Group Health Insurance FAQ

Starting a small business is a great accomplishment! It takes a lot of hard work, and you probably have a to-do list a mile long. One very important thing on your list should be finding a great group health insurance plan. Offering health insurance to your employees leads to so many advantages for your business, like healthier, happier employees who are more likely to stay in their jobs, and tax breaks for you. There are many high-quality affordable plans to choose from, but you might be wondering where to begin, and you’ll probably have a lot of questions as you search for the right one for your business and your employees. That’s where EZ comes in: we’ve also got the answers to your most frequently asked questions and can give you a free quote to help you compare local group health insurance plans from all of the top carriers.

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An agent will be able to offer you exclusive deals and promotions from insurance companies.

Should I use an agent or broker?

Both insurance brokers and insurance agents act as the middlemen between insurance buyers like you, and insurance companies. Using an insurance agent, like one of EZ’s, is the best option for small business owners looking to purchase a healthcare plan. Agents can expedite the buying process, they have specialized knowledge about the policies they sell, and they can keep you up-to-date on any changes to your plan. Our agents also have access to exclusive products from the top-rated insurance companies, which can save you more money than if you go it alone. 

What is the minimum number of employees to get a group plan?

If you have 50 or more full-time employees, you are required to provide health insurance or you will be penalized under the employer mandate of the Affordable Care Act. You are eligible for a group plan as long as you have 2 full-time (or full-time equivalent) employees, including yourself. Full-time employees are considered those who work 30 hours or more a week. 

The 2-employee rule is always true for tax-advantaged small business health insurance options program (SHOP) plans (although you will need 70% participation in your plan). If you’re looking into other group plans, some insurance companies may have different requirements. Ask one of EZ’s agents to check for you. 

What is the average cost for a group health insurance plan?

Small business health insurance costs are determined by your location, number of employees, and how much you would like to contribute to your employees’ coverage. The average cost of annual premiums for employer-sponsored health insurance was $7,188 for individual coverage and $20,576 for family coverage in 2019. The average annual deductible amount for individual coverage was $1,655 for covered workers. 

tax credit written on a notepad with money behind it

SHOP plans, as mentioned above, can offer some savings through the small business health insurance tax credit, if you have fewer than 25 full-time employees and meet certain requirements.  Speak with an EZ agent about this possibility, or use our online tool to check fast, no-cost quotes for all available plans. We can help cut costs – but not benefits – by comparing multiple plan options.

How do I communicate the new benefits to my employees?

Simple, just ask your EZ agent! EZ’s agents are experienced in helping you communicate new benefits to your employees. Our agents will provide a Summary of Benefits Coverage (SBC) to participants and their beneficiaries before enrollment in the plan, at renewal of the plan, within 90 days of a Special Enrollment, and within 7 business days of a written request. They will also help you provide each employee covered under the plan a Summary of Material Modification (SMM) when there are changes made to their health benefits. 

How much do I charge employees to be on the plan?

red "50%" sign
Employers are required to contribute at least 50% of their employee’s health insurance premiums, but you can contribute more.

Employers are required to contribute at least 50% of each employee’s health insurance premiums. On average, employers contribute approximately 82% of individual insurance premiums, and around 71% of family plan premiums. The more that you contribute to your employees’ premiums, the more likely employees are to enroll, and the more you will save – and don’t forget all of these contributions are tax-deductible! 

You have options when it comes to plans and premium prices, so talk to an EZ agent about what’s best for you and your employees. For example, if you choose a plan with a low deductible, but higher premium, you may not be able to contribute more than 50%, and your employees might find it too expensive to enroll in your plan. In this case, you might want to look into a high deductible health plan, which would allow your employees to contribute to a health savings account (HSA). An EZ agent can help you determine how much you can afford to contribute, and other ways you can save!

Will offering health insurance help me attract better employees?

Businesses that offer health insurance tend to attract and recruit the best candidates. Most job seekers won’t even look twice at a posting if an employer does not offer health insurance – job seekers want to know that a prospective employer is willing to invest in them. Surveys show that 46% of job seekers said that healthcare was a deciding factor in taking a job, and that 60% of employees would take a job with lower pay but better benefits. 

Will my employees be happier if they have health insurance?

Offering health insurance can mean having more loyal employees and a lower turnover rate. 83% of employees say health insurance is extremely important when deciding whether or not they should change jobs. Employees with health insurance are happier, less likely to leave their jobs, and healthier. 3 people sitting next to each other at a table with their laoptops and smile son their faces.

One survey found that 72% of employees said having more work benefits would increase job satisfaction. Knowing that they will be protected in case of an emergency, that their chronic conditions will be covered, and that they will not have to worry about large medical bills, means less stress for them and more productivity for you. 

Will productivity go up if we offer health insurance?

Absolutely! In one recent study, 60% of employers said that offering health insurance led to higher productivity levels at their businesses. Not only will offering health insurance to employees lower their stress levels, but it will also keep them healthy – and healthier employees are less likely to take time off for being sick. When you invest in your employees, you’re boosting your bottom line.

What other benefits should I consider offering?

caucasian man laying in bed with the laptop on his lap with a doctor on the screen.
Offering telemedicine to your employees is a great benefit that can help you save money.

When choosing a plan, look at what “extra” benefits it offers – for example, telemedicine. This convenient option can actually save you thousands due to the reduced cost of healthcare claims from unnecessary visits to the doctor and reduced visits to the emergency room. It is more convenient (and less expensive) for employees to call and speak with a doctor to receive care.

You can also consider offering a workplace wellness program. These programs help keep healthcare costs down by giving incentives to  employees to live healthier lives. These programs can include things like health screenings, programs to quit smoking, gym membership stipends, diet and weight loss programs, or diabetes management programs. To find out what extra benefits you can offer, talk to an EZ agent. 

How will I know if my doctor and my employees’ doctors are in-network?

If you are looking for a plan that includes specific doctors, speak to an EZ agent to find a plan that includes the best network for you and your employees. Our agents can easily access any insurance company’s networks and included providers in minutes. 

If you already have a plan, check your plan info to see if there’s a list of covered doctors. You can also call your doctor’s office, ask for their tax ID number, and then call your insurance carrier to find out if they are covered. Or you can avoid this long and annoying process by simply asking one of EZ’s agents to check for you!  

EZ.Insure understands how time consuming and overwhelming finding a group health insurance plan for your small business can be. To make the process easier, we provide you with a personal agent who will answer all of your questions, compare plans, and provide you with free, instant, and accurate quotes. We do all the heavy lifting for you so that you can provide the best insurance for your employees, without breaking the bank. Let us help you save time and money. To get started, enter your zip code in the bar above, or to speak to a specialized agent within your area, call 888-998-2027.

Group Health Plan VS Group Health Insurance Plan

Group health plan, and group health insurance plan. These two words are used interchangeably, because they are almost the same thing. Almost. There are some key differences between the two. One is actual health insurance, while the other is a blanket term for different kinds of group plans. Knowing the difference will help you can use the terms correctly in conversation, without confusion.

Group Health Plan

a drawing of a light red umbrella
Group health plan is an umbrella term used to define different kinds of employer-provided benefits plans.

A group health plan, in a way, is an umbrella term. It is a term used to define different kinds of employer-provided benefits plans. This includes group health insurance plans, self-insured health plans, and self-insured medical reimbursement plans. 

Group Health Insurance Plan

A group health insurance plan is a plan that provides actual health insurance coverage, and not just a general term like group health plan. Group health insurance plans are purchased by employers to be given to their employees  that are eligible and their dependents. 

Group health insurance is usually job-based, and can be a number of different kinds of plans such as HMO, PPO, POS, etc. 

When referring to a group health plan, you can be talking about different kinds of employer-based plans. But if you refer to a group health insurance plan, you are talking about a plan that provides insurance coverage.

Looking For A Group Insurance Plan?

Because there are so many different group health insurance plans to choose from, and from many different companies, it can be time consuming, and downright frustrating. There are different things that go into what affects the premiums for your employees. 

red location symbol over a colorful map
Your business’ location factors into your group health insurance premiums.

Factors That Affect Premiums

  • Business Location–  This factor takes an average number from one overall area, meaning if you live in a more expensive state, then it will be used as an excuse to raise your premium. Here is more information on the most expensive states that you can operate in. 
  • Enrollee’s Age– Like any health coverage, insurance companies judge heavily on age. The rule is set for a 21-year-old as the standard. The coverage grows in response to being older or younger than this.

Trying to figure out which plan is best to go with is not easy. It is best to have an experienced and qualified insurance agent help you with comparing plans, and how to get you the most for your money. EZ.Insure can assist with figuring everything out and making sure you get the best plan for your budget. Your agent will answer any questions you have, compare the plans for you, and even sign you up, free of charge. To get started simply enter your zip code in the bar above, or you can speak to an agent by emailing replies@ez.insure or calling 888-998-2027. EZ.Insure makes the entire process easy, and quick.

Are Employers Required To Offer Health Insurance?

Medical costs in the U.S. are high, which is why a lot of employees look for a job that offers health insurance. Over 88% of people consider health insurance benefits when choosing a job. For companies, providing group insurance to

cartoon of a man in a suit pointing at a clipboard with magnifying glass over a certain part.
There is no specific law that requires employers to provide health insurance coverage to their employees, but there is a penalty.

employees costs a lot of money, so some companies opt out of providing insurance. But are they required to? Yes, and no.

 

 

 

Affordable Healthcare Act

There is no specific law that requires employers to provide health insurance coverage to their employees. However, in January of 2015, the Affordable Care Act, ACA, required that employers who have 50 or more full-time employees provide health insurance. If they do not, they will face a tax penalty.

According to the ACA, full-time employees are employees who work an average of 50 hours a week.

Group Insurance Penalties

If a larger company with 50 or more full-time employees does not offer health insurance, they are subject to IRS penalties. 

The IRS will penalize the company if one or more of their full-time employees gets a premium tax credit for getting their own health insurance coverage from the Marketplace. The company can owe up to $2,500 for each employee. 

gavel with money sign on the wood

The company must offer insurance to 95% of their employees to avoid a penalty, and it must be year round. If the business offers healthcare for some months, and not others, then they will face a portion of the annual penalty.

Small Businesses

people working inside many cubicles.
Small businesses (less than 50 employees) do not have a penalty if they do not offer health insurance to their employees.

Small businesses are not required to offer healthcare coverage to their employees. Since they have less than 50 full-time employees, they will not face penalties. If a small business does not offer health insurance, then a person can seek their own health insurance plan from the Marketplace or a private company.

While there is no longer a penalty for going without healthcare coverage, it is important to seek out information on different plans. There are plans within your budget that will meet your needs and lifestyle. If you need help searching and comparing all the group insurance plans around, EZ.Insure can help. We offer local specialized insurance agents that can do all the comparisons for you, and just provide you the quotes. All for free! It’s that simple. To begin, enter your zip code in the bar above, or to speak to an agent, email replies@ez.insure, or call 888-998-2027. There is no hassle involved, and no obligation to buy, and no headaches. Just easy, fast, and free quotes!

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