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Pennsylvania Law Update - Extended Health Insurance Coverage for Adult Children

Act 4 of 2009 - Act 4 of 2009 was signed into law by Pennsylvania Governor Edward G. Rendell on
June 10, 2009. The new law extends health coverage for children of insured parents until the
child’s 30th birthday. In order to qualify children must meet the following criteria:

-Be a resident of the Commonwealth of PA or enrolled as a full- time student at an institution
of higher learning

-Be unmarried

-Have no dependents of his or her own

-Have no coverage under any other group or individual health insurance policy or government
benefits (including Medicare)

The employer has the discretion to choose whether or not to include the extension in their plans.

In addition, the employer can increase the premiums related to covering children for these
additional years.

The new law applies to health contracts and renewals occurring 180 days or more after the law’s
June 10, 2009 enactment date and then on a rolling basis as contracts are made or renewed. As a
result, calendar year renewals will be subject to the new law.

Mini- COBRA Law - Governor Edward G. Rendell signed into law a mini- COBRA law which took
effect July 10, 2009. The new law applies to group health plans that are issued to employers with
more than two but fewer than 20 employees.

Under the new law, eligible employees and their dependents may elect continuation of group health
coverage if they have one of the following qualifying events:

-Termination of employment
-Divorce
-Death
-Loss of dependent status

Employees eligible under the Mini- COBRA law must have been covered under their employer’s
group health plan for the three months prior to termination, not be eligible for Medicare, and not be
eligible for or covered by other private group health insurance.

Eligible employees have 30 days
to elect Mini- COBRA coverage following their qualifying event.
If elected, employees may be required to pay up to 105% of the group rate. If premium assistance
under the American Recovery and Reinvestment Act of 2009 (ARRA) applies, employees need to
pay only 35% of the ordinary rate. Therefore, if employees are involuntary terminated between
July 10, 2009 and December 31, 2009 they should be offered a Mini- COBRA subsidy. A covered
employee may convert coverage to an individual policy at the expiration of Mini- COBRA.

Although the Mini- COBRA law does mirror the Federal COBRA statute in many aspects, significant
differences include:

-Mini- COBRA is available for nine months versus eighteen or thirty- six months under Federal
COBRA

-Mini- COBRA applies only to hospital, surgical, and major medical plans, not vision and
dental plans

-Mini- COBRA requires three months of coverage before being eligible, whereas Federal
COBRA requires one day of coverage

-Mini- COBRA ends upon being eligible for Medicare or group hospital, surgical or major
medical coverage and Federal COBRA eligibility ends upon actual enrollment

-Mini- COBRA requires verification of non- eligibility of employer- based health insurance as a
dependent through a spouse’s group health plan

-Insurers, not employers, are responsible for notifying eligible employees about their rights
under Mini- COBRA. Plan administrators (or employer if there is no designated plan
administrator) are responsible for notifying the insurer of an employee’s Mini- COBRA
election with 14 days of receipt

Given the tight timeframe for implementation, small employers are encouraged to work with their
broker and/ or group health plan insurer to ensure that the requirements of Mini- COBRA are
satisfied.