PA 09-126—sHB 5669

Insurance and Real Estate Committee

AN ACT CONCERNING EMPLOYER HEALTH INSURANCE PREMIUM PAYMENTS FOR TERMINATED EMPLOYEES

SUMMARY: Under this act, an employer may elect to stop paying group health insurance premiums for an employee and his or her dependents as of 72 hours after the employee quits or is terminated for any reason but a layoff. It outlines requirements and conditions for employers and insurers. The act does not apply if a collective bargaining agreement requires an employer to pay an employee's insurance premiums after his or her termination.

EFFECTIVE DATE: October 1, 2009

REQUIREMENTS AND CONDITIONS

Employer

An employer electing to stop health insurance premium payments due to an employee's termination must, within 72 hours of the employee's termination, notify the (1) employee and (2) affected insurance company, HMO, hospital or medical service corporation, or fraternal benefit society (“insurer”).

The act requires an employer to reimburse the affected employee his or her portion, if any, of premiums that the insurance carrier credits or refunds to the employer.

Insurer

An insurer must:

1. when a policy is issued or renewed, give an employer information about the election option, including a notice that it is the employer's responsibility to return to an affected employee his or her portion of credited premiums;

2. credit prepaid premiums to an employer that (a) makes a permissible election and (b) notifies the employee and insurer within 72 hours of the employee's termination;  and

3. apply the credit to the employer's next monthly premium bill or, if the policy is not renewed, issue the employer a refund.

Amount of Credit or Refund

The act requires the premium credit or refund to equal the amount of premium previously paid attributable to insuring the employee and his or her dependents for a period after the employee's termination date. But, it specifies that no credit will be made for the first 72 hours following the employee's termination (which is the time period in which the employer must give notice of its election to the employee and insurer).

EMPLOYER DEFINED

Under the act, “employer” means any owner, person, partnership, corporation, limited liability company, or association acting as or on behalf of an employer, or in an employer's interest in relation to employees, including the state and any state political subdivision.

BACKGROUND

Related Labor Law

Under state labor law, an employer that moves out-of-state or closes its business for reasons other than bankruptcy or natural disaster must continue and pay for in full, for each affected employee and his or her dependent, coverage under an existing group health insurance policy for 120 days from the date of the relocation or closing or until the employee becomes eligible for other group coverage, whichever provides the shortest continuation period (CGS 31-51o). This labor law does not affect an employee's or dependent's right to continue coverage as provided under federal and state insurance law. The coverage continuation under the insurance laws begins when the continuation under the labor law ends.

Related Insurance Law

Federal law, the Consolidated Omnibus Budget Reconciliation Act (COBRA), and state law provides certain former employees, retirees, spouses, former spouses, and children the right to temporarily continue being covered under an employer's group health plan after their coverage would otherwise end, so long as the insured pays the required premiums. A person may be required to pay the full premium and administrative costs, up to 102% of the full premium at the group rate. COBRA applies to employer groups with 20 or more employees. Connecticut law applies to all groups regardless of size (CGS 38a-554(b)).

COBRA establishes the time period for which coverage must continue for a qualified person. A plan may, however, provide longer periods of coverage. COBRA requires coverage to extend for 18 months when a person would otherwise lose coverage because his or her employment ends or work hours are reduced. Other qualifying events, or a second qualifying event during the initial period of coverage, may extend coverage up to 36 months. Longer periods may be available for a disabled person. Under state law, coverage continues for the same duration as under COBRA. In addition, state law permits an employee and his or her covered dependents to continue coverage until midnight of the day preceding the employee's eligibility for Medicare if the employee's reduced hours, leave of absence, or termination of employment results from his or her eligibility for Social Security income.

Connecticut law also requires each group plan to provide for a right to convert to an individual policy when coverage under the group policy would otherwise cease (CGS 38a-554(d)).

OLR Tracking: JLK: JK: JM: TS