Continuation Coverage

If you run a Minnesota business, state law requires that your insured group health plans, and any plan you establish through an HMO certified under Minnesota law, allow a covered employee who is voluntarily or involuntarily terminated or laid off (other than for gross misconduct) to elect to continue coverage for the employee and the employee’s dependents, as long as the plan stays in force for your active employees.45 46

Your terminated employee is eligible to continue that coverage for up to 18 months after termination, or until the employee becomes covered under another group health plan, whichever is shorter.215 That 18-month Minnesota period is set by the state continuation statute, not by federal law.

For most employers the same termination triggers federal COBRA continuation as well. COBRA’s maximum continuation period is also 18 months for a termination or reduction in hours, measured from the qualifying event.218 Both the Minnesota period and the COBRA period are keyed to the same termination or reduction-in-hours event. The equivalence holds only for terminations and reductions in hours: for other qualifying events, such as the covered employee’s death, a divorce, or a dependent child ceasing to qualify, COBRA allows up to 36 months. Minnesota also provides its own continuation rights for some of those events: on the covered employee’s death, a separate statute lets a surviving spouse and dependents continue coverage, and on dissolution of marriage another statute lets a former spouse and dependents continue coverage.219

COBRA’s continuation coverage may also end early if your former employee, after electing it, becomes covered under another group health plan that contains no preexisting-condition exclusion or limitation as to that person.220 In practice, federal limits on preexisting-condition exclusions in group health plans mean that nearly any subsequent group coverage now meets this condition.

COBRA applies only to employers that normally employed 20 or more employees during the preceding calendar year, so if you employ fewer than 20 you are exempt from COBRA. You are not exempt from Minnesota law: the state continuation requirement has no minimum-employee threshold, so a smaller employer that offers an insured group policy covering Minnesota employees remains bound by it.

When you terminate or lay off an eligible employee, you must inform the employee within 14 days of:

  • the right to elect to continue coverage;
  • the amount the employee must pay monthly to you to retain coverage;
  • the manner in which and where the payment must be made; and
  • the time by which the employee must make payments to retain coverage.216

The notice must be in writing and sent by first class mail to the employee’s last known address. Your employee then has 60 days within which to elect coverage.216

Conversion to Individual Policy

This is the part of the older guidance that no longer states current law, so it is worth understanding the change before you rely on any conversion language.

Under the version of the statute in effect through 2013, a group health plan subject to Minnesota continuation law also had to allow a covered employee, surviving spouse, or other dependent to obtain an individual conversion policy from the insurer at the end of the continuation period, and to do so without further evidence of insurability and without interruption of coverage.217

That affirmative conversion-to-individual-policy right was repealed effective January 1, 2014, as part of Minnesota’s conformity with the federal Affordable Care Act, which opened a guaranteed-issue individual market that no longer turns on medical underwriting.221 The current statute no longer creates a going-forward right to convert and no longer requires any insurer to issue a conversion policy without evidence of insurability or without interruption of coverage. It now governs only the renewability of an individual policy that was already issued as a conversion policy before January 1, 2014, with a limited path (added in 2016) for an issuer with five or fewer covered individuals to nonrenew those older conversion policies.222 If you are advising a former employee about coverage after continuation ends, the route now runs through the ACA individual market, not the old group-to-individual conversion mandate.

A point that has not changed: employers that do not offer coverage through an insurance policy or HMO plan subject to state law (in other words, all self-insured employers) were never reached by this requirement, because the continuation and conversion provisions apply only to insured group policies and HMO plans.

CREDITS: This is an excerpt from An Employer’s Guide to Employment Issues in Minnesota, provided by the Minnesota Department of Employment and Economic Development & Linquist & Vennum P.L.L.P., Tenth Edition, 2009. The continuation-period and conversion-coverage sections above have been updated to reflect current Minnesota and federal law. Copies of the original guide are available without charge from the Minnesota Department of Employment and Economic Development, Small Business Assistance Office.

This post is also part of a series of posts covering the Continuation of Group Health and Life Insurance Coverage Law (COBRA). This information is not legal advice. You should consult with an experienced employment attorney before dealing with COBRA-related employment issues.

45 Minn. Stat. § 62A.17, subd. 1 (gross-misconduct exclusion) (available at https://www.revisor.mn.gov/statutes/cite/62A.17).
46 Minn. Stat. § 62A.17, subd. 1 (continuation election), with covered-plan scope set by Minn. Stat. § 62A.16 (insured group policies and employer-established HMO plans certified under Chapter 62D) (available at https://www.revisor.mn.gov/statutes/cite/62A.17 and https://www.revisor.mn.gov/statutes/cite/62A.16).
215 Minn. Stat. § 62A.17, subd. 2 (18-month Minnesota continuation period) (available at https://www.revisor.mn.gov/statutes/cite/62A.17). (The prior edition cited 29 U.S.C. § 1132(g); that ERISA subsection governs attorney’s fees and costs in enforcement actions and does not set continuation-coverage duration.)
216 Minn. Stat. § 62A.17, subd. 5 (notice content, written first-class-mail requirement, and 60-day election period) (available at https://www.revisor.mn.gov/statutes/cite/62A.17).
217 Minn. Stat. § 62A.17, subd. 6 (2010) (former conversion-to-individual-policy right, available without further evidence of insurability and without interruption of coverage; repealed effective January 1, 2014 by 2013 Minn. Laws ch. 84, art. 1, § 20) (available at https://www.revisor.mn.gov/statutes/cite/62A.17).
218 29 U.S.C. § 1162(2)(A)(i) (18-month COBRA maximum period for a termination or reduction-in-hours qualifying event) (available at https://www.law.cornell.edu/uscode/text/29/1162).
219 29 U.S.C. § 1162(2)(A)(i) (18 months for termination or reduction of hours) and (2)(A)(iv) (36 months for other qualifying events) (available at https://www.law.cornell.edu/uscode/text/29/1162); Minn. Stat. § 62A.146 (continuation for a surviving spouse and dependents after the covered employee’s death) (available at https://www.revisor.mn.gov/statutes/cite/62A.146); Minn. Stat. § 62A.21 (continuation for a former spouse and dependents on dissolution of marriage) (available at https://www.revisor.mn.gov/statutes/cite/62A.21).
220 29 U.S.C. § 1162(2)(D)(i) (early termination on becoming covered under another group health plan with no preexisting-condition exclusion) (available at https://www.law.cornell.edu/uscode/text/29/1162).
221 2013 Minn. Laws ch. 84, art. 1, § 20 (amending Minn. Stat. § 62A.17, subd. 6, effective January 1, 2014) (available at https://www.revisor.mn.gov/laws/2013/0/84/).
222 Minn. Stat. § 62A.17, subd. 6 (renewability of pre-2014 conversion policies; small-issuer nonrenewal path added by 2016 Minn. Laws ch. 155, § 1) (available at https://www.revisor.mn.gov/statutes/cite/62A.17).