Level--Funded Premium Plans Do Not Allow State Continuation (Mini-COBRA)

[Kurt Stockbauer]

I have a small group medical client in Missouri with only 5 employees who changed from an ACA fully-insured plan to a Level-Funded Premium plan effective May 1.  It turns out that they have a former employee (who resides in Kansas) who may be interested in continuing her former group medical coverage; this employee's coverage terminated with this employer effective March 31.  This former employee was informed of her right to continue her coverage under Missouri law in April.

Unfortunately, the insurer for the Level-Funded Premium plan does not offer state continuation coverage, so now the employer cannot offer this former employee coverage under state law.  The employer is concerned that this former employee may decide to sue.  Does anyone have any experience with a similar situation or have any advice to give?  Thanks.

[Luke Bailey]

If it's a self-insured plan (which it probably is, based on your terminology), then it presumably is not subject to Missouri insurance law, unless the promoter has in effect built a MEWA, which is its own separate set of issues. Too small to be subject to COBRA, so you may be OK. But this is the superficial legal theory. The actual facts could make things more complicated.

Note that going forward the employer may want to look into doing a QSEHRA. Largely avoids the problem of what happens when employee terminates.

[Chaz]

Two comments:

1-It is distinctly possible that a five-employee health plan, whatever it is represented to be, level-funded or not, may be a fully insured plan for all intents and purposes and therefore subject to the Missouri mini-COBRA law.

2-If the plan is truly a "self-insured plan," the "insurer" is the employer.  If the plan's "administrator" is making the determination who is eligible to participate (presumably for underwriting purposes, what else could it be?), that indicates that the arrangement is more akin to an insured product.

One more comment:

3-This arrangement seems shady to me.  I like the idea that Luke suggests above of the employer instead offering a QSEHRA.