COBRA Federal and State Regulations

Arkansas Code of 1987 Annotated

Title 23, Chapter 86

Sections 23-86-114, 23-86-115, 23-86-116.

23-86-114.Group accident and health insurance — Continuation of coverage beyond termination of employment, change in marital status, etc.

(a)Every group accident and health insurance policy, contract, or certificate providing hospital, surgical, or major medical coverage, other than accident only or specified disease policies, shall contain a provision that any certificate holder, member, or spouse whose coverage under the policy would otherwise terminate due to termination of employment or membership or a change in marital status may continue coverage under the policy for themselves and their eligible dependents as provided in this section.

(b)The continued coverage need not include benefits for dental care, vision services, or prescription drug expenses.

(c)(1)Continuation of coverage shall be available only to individuals who have been insured continuously under the group policy during the three-month period prior to the termination of employment membership or change in marital status.

(2)Continuation of coverage shall not be available to an individual who is eligible for:

(A)Federal Medicare coverage; or

(B)(i)Full coverage under any other group accident and health policy or contract.

(ii)This coverage must provide benefits for all preexisting conditions to be considered full coverage.

(iii)Accordingly, under this subdivision (c)(2), an individual may continue his or her previous group coverage until all preexisting conditions are covered or would be covered under another group policy or contract or until termination pursuant to subsection (f) of this section or pursuant to the applicable provisions of federal law.

(d)An individual who wishes to continue coverage must request continuation in writing not later than ten (10) days after the termination of employment or membership or the change in marital status.

(e)An individual who requests continuation of coverage must pay the premium required by the policyholder on a monthly basis and in advance. Payments shall be made in accordance with the group policy.

(f)Continuation of coverage shall end upon the earliest of the following dates:

(1)One hundred twenty (120) days after continuation of coverage began;

(2)The end of the period for which the individual made a timely contribution;

(3)The contribution due date following the date the individual becomes eligible for Medicare; or

(4)(A)The date on which the policy is terminated or the group withdraws from the plan.

(B)However, if the group policy is replaced, continuation shall continue under the new coverage.

(g)At the termination of the continued coverage, an individual shall be offered the conversion policy under the group policy.

(h)Individuals choosing to utilize the conversion privilege under the group policy may do so and thereby waive their right to continuation of coverage.

(i)This section shall not be applicable to health care plans in which the employer is self-insured.

History.Acts 1985, No. 814, §§ 1-10; 1985, No. 853, §§ 1-10; A.S.A. 1947, §§ 66-3721 — 66-3730; Acts 1987, No. 456, § 18; 2001, No. 1063, § 14.

3-86-115.Group accident and health insurance — Entitlement to conversion policy upon termination of group policy.

(a)(1)Every group policy, contract, or certificate of accident and health insurance delivered or issued for delivery in this state that provides hospital, surgical, or major medical coverage on an expense-incurred basis, other than coverage limited to expenses from accidents or specified diseases, shall provide that an employee, member, or covered dependent whose insurance under the group policy has been terminated for any reason, including the discontinuance of the group policy in its entirety, shall be entitled to have issued to him or her by the insurer a policy of accident and health insurance referred to in this section as a “conversion policy”.

(2)An employee, member, or dependent shall not be entitled to a conversion policy, if the termination of the group policy, contract, or certificate was a result of his or her failure to pay any required contribution or if the terminated policy is replaced by similar coverage within thirty-one (31) days.

(3)An individual wishing to exercise his or her conversion privilege must apply for the conversion policy in writing not later than thirty (30) days after the termination of the group coverage.

(b)(1)(A)The conversion policy shall provide coverage equal to or greater than the minimum standards established by the Insurance Commissioner.

(B)All conversion policies shall contain a wording in bold print that “the benefits in this policy do not necessarily equal or match those benefits provided in your previous group policy”.

(2)The conversion policy shall not exclude coverage for pregnancy or other illness or injury on the grounds of a preexisting condition, provided that the combination of time served under the group and the conversion policy equals or exceeds any waiting periods under the group policy or contract. Moreover, the conversion policy shall include benefits for maternity coverage for any pregnancies in existence at the time of the conversion.

(c)(1)The insurer shall not be required to offer the conversion policy to any individual who is eligible for:

(A)Medicare coverage; or

(B)Full coverage under any other group accident and health policy or contract. This coverage must provide benefits for all preexisting conditions to be considered full coverage.

(2)Accordingly, under this subsection, an individual may convert to a conversion policy and remain covered by that policy until all preexisting conditions are covered or would be covered under another group policy or contract.

(d)This section shall not be applicable to self-insured plans.

(e)(1)(A)The initial premium for the conversion policy for the first twelve (12) months and subsequent renewal premiums shall be determined in accordance with premium rates applicable to individually underwritten standard risks for the age and class of risk of each person to be covered under the conversion policy and for the type and amount of insurance provided.

(B)The experience under conversion policies shall not be an acceptable basis for establishing rates for conversion policies.

(2)For purposes of subdivision (e)(1) of this section:

(A)The phrase “premium rates applicable to individually underwritten standard risks” means the premium charged to individuals who qualify for coverage without modification, determined from a rate table based on aggregate individually underwritten policy experience;

(B)“Aggregate individually underwritten policy experience” means the policy experience is drawn from a mature combination of newly selected insureds and insureds for whom selection effects no longer exist; and

(C)“Class” means any actuarially determined characteristic, except health status or individual claims experience.

(3)If an insurer experiences incurred losses that exceed earned premiums for a period of two (2) successive years on conversion policies that have been in force for at least one (1) year, the insurer may file with the commissioner amended renewal rates for the subsequent year, which will produce a loss ratio of not less than one hundred percent (100%).

(4)(A)Even though a renewal premium is established in accordance with subdivision (e)(3) of this section, a holder of the conversion policy shall not be required to pay the full renewal premium until the beginning of the policy’s fourth year.

(B)The premium for the second policy year shall be the initial premium plus thirty-three and one-third percent (33 ⅓%) of the difference between the initial premium and the renewal premium in effect on the policy’s first anniversary date.

(C)The premium for the third policy year shall be the initial premium plus sixty-six and two-thirds percent (66 ⅔%) of the difference between the initial premium and the renewal premium in effect on the policy’s second anniversary date.

(D)The premium for the fourth year shall be one hundred percent (100%) of the renewal premium in effect on the policy’s third anniversary date.

(5)This subsection shall be applicable to any conversion policy issued after March 22, 1995.

History.Acts 1985, No. 815, §§ 1-4, 6; 1985, No. 854, §§ 1-4, 6; A.S.A. 1947, §§ 66-3731 — 66-3735; Acts 1987, No. 456, §§ 19, 20; 1995, No. 733, § 1; 2001, No. 1063, § 15.

23-86-116.Continuation of benefits upon termination of policy.

(a)Every group accident and health insurance policy, contract, or certificate that provides coverage for hospital or medical services or expenses shall provide that the insurer shall continue its obligation for benefits under the policy or contract for any person insured under the policy or contract who is hospitalized on the date of termination, if the policy or contract is terminated and replaced by a group health insurance policy or contract issued by another insurer or by a self-funded health care plan.

(b)Any payment required under this section is subject to all terms, limitations, and conditions of the policy or contract except those relating to termination of benefits. Any obligation by an insurer under this section continues until the hospital confinement ends or hospital benefits under the policy or contract are exhausted, whichever is earlier.

History.Acts 1987, No. 253, § 1; 1989, No. 772, § 18; 2001, No. 1063, § 16.

All copyrights and other rights to statutory text are reserved by the State of Arkansas.

Arkansas’ Mini Cobra Summary

Arkansas mini-Cobra applies to insurance plans whose employers have less than 20 employees.

Health and Accident Insurance Plans

Group health and accident insurance plans must grant insurance coverage for up to 120 days for members, spouses, and dependents if their normal group coverage ends due to dismissal from employment or membership or change in marital status.

This requirement does not apply to self-insured employers.

Eligibility for continuation coverage requirements:

• Individuals must have been covered by the group policy for at least 3 months on the date that coverage ended.

• Individuals who elect continuation coverage must apply in writing 10 days prior to the change that would end their eligibility for group coverage.  They must pay in advance the premium that’s required by the “policy holder.”

Continuation is not required for individuals who are:

• Eligible for Medicare or other group policies that provide “full” insurance coverage, without penalizing for pre-existing conditions.

Continuation coverage is not required to include dental, vision, or prescription drug benefits.

Coverage can end when :

• Individual defaults on premium payments
• Individuals becomes eligible for Medicare
• Plan terminates and is not replaced

Individuals who choose to switch to individual policies give-up continuation rights to their group plans. Individuals may convert their group coverage at the end of continuation coverage.

Group health and accident plans should continue coverage of employees and dependents who are enrolled in a plan and if the plan becomes discontinued and replaced within 60 days.

The law applies only if the group plan covers more than 15 individuals and only individuals who are members of a class that is eligible by the succeeding carrier, regardless of circumstances such as confinement in a hospital or status at work.

Hospital Confinement

Group health plans should allow continued coverage for individuals who are hospitalized on the termination date of the policy if the plan is replaced by a policy from another insurance carrier.

Conversion Rights

Group health and accident plans should allow employees, members, and covered dependents to transfer to individual policies if their coverage becomes terminated, with two exceptions:

• Individual defaulted on premium payments
• The group plan was not replaced within 31 days

Those who convert must apply in writing within 30 days of termination of coverage.

The law does not apply to individuals who are eligible for Medicare or are covered under another group plan that covers pre-existing conditions.

Federal law 

Employers who offer group health plans to a minimum of 20 employees need to comply with the Employee Retirement Income Security Act of 1974(ERISA). The amendment, the Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA), requires that most group health plans provide temporary continuation of coverage.

You can find the COBRA regulation in the Federal Code section and the Official Employer’s Guide to COBRA in the Guides section.