Having fewer than 20 employees does not mean you owe no one continuation coverage.
Many states give employees of smaller employers continuation rights similar to COBRA, and some add months beyond the federal maximum for larger groups too. These rules generally follow the insurance policy, not your headquarters, which is why we track which of your plans each state law reaches.
No two state continuation laws are built the same way.
State laws differ on almost every term that federal COBRA fixes. We read the law that applies to each policy rather than assuming it mirrors the federal rules.
Who Is Covered
Some states apply continuation only to smaller employers; others add rights on top of COBRA for groups of any size. The threshold and the way employees are counted can differ from the federal test, so we check both. State continuation coverage rules are checked policy by policy.
How Long It Lasts
Maximum periods vary by state and sometimes by qualifying event. An employee can reach the end of federal COBRA and still have state continuation left, which the notices have to explain. State continuation length is one of the details that most often differs from federal COBRA.
Who Sends the Notice
Under some state laws the carrier, not the employer, carries the notice and election duties; others split them. We confirm who does what, because an assumption on each side leaves nobody sending it. Clear notice duties are the core of state mini-COBRA compliance.
What It Costs
States set their own premium limits and payment rules. We apply the state’s terms to billing rather than the federal ones, so the amount charged is one the state permits. State continuation premium rules can differ from the federal 102 percent limit, so billing follows the state.
State continuation laws reach insured plans. Funding changes the answer.
State insurance laws regulate insurance policies. A self-funded ERISA plan is generally outside their reach, while a fully insured plan usually follows the law of the state where the policy is issued.
Changing Funding Changes Rights
A small employer moving from a fully insured plan to a self-funded or level-funded one may leave state continuation behind. We raise that with you before the switch, and counsel confirms how it applies to people already on continuation. Funding changes and continuation rights have to be reviewed together.
Where the Policy Is Issued
An employer with a policy issued in one state and employees in others usually follows the issuing state’s law. Where a state asserts its rules for residents covered under an out-of-state policy, we read closely and bring in counsel if needed.
Crossing the Federal Threshold
An employer that grows past the federal COBRA threshold moves from state continuation to federal COBRA, and one that shrinks can move back. We track headcount year to year, so each qualifying event gets the right rules. Tracking the 20-employee count each year keeps COBRA and state continuation straight.
The right answer depends on the policy, the state and the date.
We keep a record for each policy of which continuation law applies and what it requires, and we update it when the facts change. See which law applies to self-funded and insured plans, the COBRA notice deadlines and Michigan conversion coverage.
By Policy
Medical, dental and vision can sit on different policies with different continuation rules. We record the rule for each line of coverage rather than for the employer as a whole. Line-by-line tracking keeps state continuation notices accurate for each policy.
By Event
Some state laws treat events such as divorce or an employee’s death differently from termination. We map the rule to the event, so the notice describes the right period. Event-specific rules keep state continuation periods accurate for every qualifying event.
By Change
A renewal, a new carrier or a new state of issue can change the applicable law. We review continuation terms at each of those points, so people already on continuation stay under the correct rules. Reviewing continuation terms at each change protects employees already on state continuation.
What employers ask about state continuation.
We are under 20 employees. Do we owe anyone continuation?
Federal COBRA likely does not apply, but a state law might, depending on where your insured policy is issued. We check the specific policy before you answer an employee. Michigan has no state continuation law for smaller employers, but policies issued in other states may carry one. The other Michigan-specific rules are on our Michigan benefits compliance page.
Can someone have both COBRA and state continuation?
In some states, yes: state continuation can pick up where federal COBRA ends. The notice needs to describe both, so the employee does not lose rights they never knew they had. Clear notices protect both the employee and the employer when COBRA and state continuation overlap.
Who answers the employee’s questions?
Whoever holds the notice duty under the state law, which may be the carrier. We make sure you know who that is and give you language to point the employee to the right place. Knowing who owns the state continuation notice keeps employee questions from going unanswered.
Does Michigan have a state continuation law?
Michigan has no general state continuation law for private employers, so federal COBRA does the work here. Employers with staff in other states may face one there.
Which state’s law applies to an employee in another state?
It usually depends on how the plan is funded and where the policy was issued. Self-funded plans are generally outside state insurance continuation rules. We check each case instead of assuming.
How long does state continuation last?
It varies by state. Some run shorter than federal COBRA and some longer, so the answer comes from the state in question.
Who pays for state continuation?
Generally the person, usually with a cap tied to the group premium. The exact rule varies by state.
Does the carrier handle it?
For fully insured plans the carrier often administers state continuation, but not always. Confirm who sends the notice before the first event, not after.
Can we offer continuation we are not required to?
Often yes, if the plan document and the carrier allow it. Some employers extend a COBRA-like offer voluntarily. We help you decide and document it. See every COBRA deadline.
Related reading: Rebate and COBRA or State Continuation Participants
Where the Rules Come From.
The laws and rules named on this page link to the statute or regulation they come from. This is general information, not legal or tax advice, and rules change, so check the current text.
ERISA (29 U.S.C. Chapter 18)
The federal law that sets reporting, disclosure and fiduciary rules for employer-sponsored benefit plans.
COBRA Continuation Coverage (29 U.S.C. 1161)
Requires many group health plans to offer temporary continuation coverage after a qualifying event.
Family and Medical Leave Act (29 U.S.C. Chapter 28)
Job-protected leave and group health coverage continuation for eligible employees.
Plan Reporting (29 CFR Part 2520)
The Department of Labor rules for annual plan reports, including Form 5500.
Send us your renewal.
We’ll tell you whether it looks competitive, where we see opportunity, and the five questions we’d put to your carrier. No cost, and no obligation to move anything.
The renewal letter
Your current plan summary
Contribution split by tier
Enrolled counts by tier
Four documents — two more if your group is 50 or more. Nothing else; every extra one is a reason to postpone.
An independent employee benefits consulting firm. We look at the entire benefits program — cost, plan performance, risk and administration.
Switch to CFH. Unhappy with your broker? Your employees won’t notice. You will. →