Strategic HR Lawyer

Governor Paterson recently signed into law an extension of COBRA coverage in New York state.  According to the press release from his office, the following are the most significant changes affecting employers:

• Expansion of COBRA coverage for Employees to 36 Months: This law will increase the period for employees who lose their jobs to continue their health insurance under COBRA from 18 to 36 months. Under the federal Consolidated Omnibus Budget Reconciliation Act (COBRA), workers who lose their jobs can continue purchasing group health insurance provided by their former employers’ group health plans for limited periods of time under certain circumstances for themselves and their families. Federal COBRA generally applies to employers with 20 or more employees, while the State’s “mini-COBRA” law requires that smaller employers – those who have fewer than 20 employees – offer the same continuation coverage. This allows employees to maintain health insurance at a lower cost than if they had to buy it independently on the open market. The Governor’s new law will allow New Yorkers who lose their jobs to extend their health insurance coverage for a longer period of time, which is particularly important in the current economy with its record high level of unemployment.

• Insure Dependents through Age 29: This law, outlined by the Governor in his State of the State address, requires insurers to allow unmarried children through age 29 – regardless of financial dependence – to be covered under a parent’s group health insurance policy. Young adults ages 19 to 29 represent 31 percent of uninsured New Yorkers. They often become ineligible for coverage under their parents’ policies at age 19 or upon high school or college graduation, find themselves in entry-level jobs that do not provide employer-based health insurance, and cannot afford to pay premiums for individual insurance policies – which are much more expensive than group policies. Under the new law, premiums will be paid for by families, not employers, and would cost less because coverage is under group policies rather than individual policies. The law also requires insurers to offer employers an option to purchase coverage that includes young adults as dependents in family policies through age 29.

Now in theory, this looks like a bad thing for employers.  However, if your company is small, and thus community rates, the former employee on COBRA will be paying the premiums and his/her claims experience will not have an impact on the employer's premiums.  However, employers looking to avoid costs may rethink their contributions to family coverage if they will have to cover dependents longer - to age 29.

Here's the link to the Governor's press release:  GOVERNOR PATERSON SIGNS LEGISLATION TO MAKE HEALTH INSURANCE MORE AFFORDABLE AND IMPROVE ACCESS TO HEALTH CARE