Continuation of Benefits Coverage (COBRA) - Virginia

Summary of differences between federal and state regulations

Federal COBRA applies to employers who offer group health plans, and have 20 or more employees, but state laws may also apply. Under Virginia law, all employers must offer either continuation or conversion.

Each group hospital policy, group medical and surgical policy or group major medical policy delivered or issued for delivery in VA or renewed, reissued, or extended if already issued, must contain, subject to the policyholder's selection, one of the options below. Option 1 must apply if the insurance on a person covered under such a policy ceases because of the termination of the person's eligibility for coverage, prior to that person becoming eligible for Medicare or Medicaid benefits unless such termination is due to termination of the group policy under circumstances in which the insured person is insurable under other replacement group coverage or health care plan without waiting periods or preexisting conditions under the replacement coverage or plan. Option 2 must apply if the insurance on a person covered under such a policy that remains in force ceases because of the termination of the person's eligibility for coverage prior to that person becoming eligible for Medicare or Medicaid benefits. Option 2 must not be applicable if the group policyholder is required by COBRA to provide for continuation of coverage under its group health plan.

Option 1: To have the insurer issue him, without evidence of insurability, an individual accident and sickness insurance policy in the event that the insurer is not exempt under §38.2-3416 and offers such policy, subject to the following requirements:

• The application for the policy must be made, and the first premium paid to the insurer within thirty-one days after issuance of the written notice required, but in no event beyond the 60 day period following the date of the termination of the person's eligibility;
• The premium on the policy must be at the insurer's then customary rate applicable: (i) to such policies, (ii) to the class of risk to which the person then belongs, and (iii) to his or her age on the effective date of the policy;
• The policy will not result in over-insurance on the basis of the insurer's underwriting standards at the time of issue;
• The benefits under the policy must not duplicate any benefits paid for the same injury or same sickness under the prior policy;
• The policy must extend coverage to the same family members that were insured under the group policy; and
• Coverage under this option must be effected in such a way as to result in continuous coverage from the date of the insured's termination of eligibility for such insured if requested and paid for by the insured.

Option 2: To have his present coverage under the policy continued for a period of 12 months immediately following the date of the termination of the person's eligibility, without evidence of insurability, subject to the following requirements:

• The application and payment for the extended coverage is made to the group policyholder within 31 days after issuance of the written notice required, but in no event beyond the 60-day period following the date of the termination of the person's eligibility;
• Each premium for such extended coverage is timely paid to the group policyholder on a monthly basis during the 12-month period;
• The premium for continuing the group coverage must be at the insurer's current rate applicable to the group policy plus any applicable administrative fee not to exceed two percent of the current rate; and
• Continuation must only be available to an employee or member who has been continuously insured under the group policy during the entire three months' period immediately preceding termination of eligibility.

The group policyholder must provide each employee or other person covered under such a policy written notice of the availability of the option chosen and the procedures and timeframes for obtaining continuation or conversion of the group policy. Such notice must be provided within 14 days of the policyholder's knowledge of the employee's or other covered person's loss of eligibility under the policy.

Virginia has provisions reflecting the COBRA requirements under the federal American Recovery and Reinvestment Act (ARRA).

State

Contact

Virginia Bureau of Insurance

Regulations

Code of Virginia

Title 38.2 Insurance

Chapter 35 - Accident and Sickness Insurance Policies

§38.2-3541 Conversion or continuation on termination of eligibility

Federal

Contact

Employee Benefits Security Administration (EBSA)

Regulations

26 CFR 54.4980B-1 et seq.