SB1035 - 541R

Be it enacted by the Legislature of the State of Arizona:

Section 1. Section 20-2330, Arizona Revised Statutes, is amended to read:

START_STATUTE20-2330. Continuation of small group coverage; notice; duration; definitions

A. For health benefit plans issued or renewed after December 31, 2018, a health benefits plan shall provide that an enrollee and any qualified dependent may continue coverage under the plan as provided in this section.

B. A small employer shall notify the enrollee in writing of the enrollee's qualifying event and right to continue the enrollee's and any qualified dependent's coverage within thirty days after the qualifying event. A written communication or a notice postmarked within forty‑four days after a qualifying event mailed by the employer to the enrollee's last known address satisfies this notice requirement. Notice to the enrollee constitutes notice to any qualified dependent unless the employer knows there is a qualified dependent who does not live at the same address and knows the dependent's address, in which case a separate notice shall be sent to the qualified dependent. The notice shall inform the enrollee and any qualified dependent of the following information:

1. The enrollee's and any qualified dependent's right to continue coverage at the full cost of the coverage, which includes the employer's contribution and the enrollee's contribution and an administrative fee for the employer that may not exceed five percent of the premium.

2. The amount of the full cost of the coverage, stated separately for the enrollee and qualified dependent.

3. The process and deadline for the enrollee to elect continuation coverage for the enrollee and any qualified dependent.

4. The date and time by which the enrollee must submit the initial and ongoing payments to the employer to continue coverage.

5. The loss of continuation coverage if the enrollee fails to pay the premium and administrative fee in a timely manner.

C. The department shall prepare a sample notice of coverage continuation form and make the form available on its website. Use of the department's form, if properly completed, is presumed to satisfy the requirements in subsection B of this section.

D. To continue coverage, the enrollee or a qualified dependent shall elect continuation coverage in writing for the enrollee and any qualified dependent within sixty days after the date of the notice to elect continuation coverage and submit the first month premium to the employer within forty‑five days after the date of election to continue coverage. If the enrollee or qualified dependent elects coverage pursuant to this section, coverage continues as if there had been no interruption.

E. Notwithstanding subsection D of this section, if the employer fails to provide complete, accurate and timely notice of the right to continue coverage as specified in subsection B of this section, the enrollee has one hundred twenty days after the date of the notice to elect continuation coverage and pay the required premium and administrative fee.

F. If an insurance renewal occurs during the enrollee's or qualified dependent's period of eligibility for continuation coverage, the employer shall notify the enrollee or qualified dependent of any change to the premium due at least thirty days before the change is effective through the process prescribed in subsections B, C, D and E of this section.

G. This section does not apply if continuation coverage benefits are available to enrollees or qualified dependents pursuant to 29 United States Code sections 1161 through 1169 or 42 United States Code sections 300bb-1 through 300bb-8 or if the enrollee or qualified dependent seeking to continue coverage is eligible for medicare.

H. Continuation coverage ends on the earliest of the following:

1. Eighteen months after the date the continuation coverage begins.

2. The date on which coverage ceases under the health benefits plan due to the enrollee's failure to timely pay the premium and administrative fee.

3. The date on which the enrollee or a qualified dependent becomes eligible for medicare or medicaid or obtains any other health care coverage, with respect only to that person.

4. The date on which the employer terminates coverage under the health benefits plan for all employees. If the employer terminates coverage under the health benefits plan for all employees and replaces the plan with coverage under another plan, the enrollee and any qualified dependents who have continuation coverage have the right to become covered under the new plan for the balance of the period that the enrollee or qualified dependent could have remained covered under the continuation coverage.

5. As to a dependent child of the enrollee, the date the dependent child would otherwise lose coverage under the terms of the health benefits plan due to attaining a certain age.

I. A qualified dependent who is determined to have a disability, under title II or title XVI of the social security act, at the time of a qualifying event may be eligible to continue coverage for an additional eleven months if the qualified dependent provides the written determination of disability from the social security administration to the employer within sixty days after the date of that determination and before the end of the eighteen‑month continuation period. The health benefits plan may charge up to one hundred fifty percent of the group rate during the eleven‑month disability extension. The qualified dependent shall notify the employer within thirty days after the social security administration determines that the qualified dependent no longer has a disability under title II or title XVI of the social security act.

J. If a qualifying event as defined in subsection N, paragraph 3, subdivision (b), (c), (d) or (e) of this section occurs during the eighteen‑month continuation period, a qualified dependent may be eligible to continue coverage for an additional eighteen months.

K. If an enrollee is in the military reserve or national guard and is called to active duty and the enrollee's employment is terminated either after or during the active duty period, the termination is a separate qualifying event, distinct from the qualifying event that may have occurred when the enrollee was called to active duty, and the enrollee and any qualified dependent are eligible for a new eighteen‑month benefit period beginning on the later of the date active duty ends or the date of employment termination.

L. If an enrollee is in the military reserve or national guard and is called to active duty, the following events are qualifying events distinct from the qualifying event that may have occurred when the enrollee was called to active duty:

1. The enrollee dies during the period of active duty.

2. A divorce or legal separation of the enrollee from the enrollee's spouse occurs.

3. A dependent child ceases to be a dependent child under the requirements of the employer's health benefits plan.

M. Notwithstanding subsection H of this section, if an enrollee who is in the military reserve or national guard has elected to continue coverage and is thereafter called to active duty and the coverage under the employer's health benefits plan is terminated by the enrollee or the health benefits plan due to the enrollee becoming eligible for a health care program provided by the United States department of defense, the eighteen‑month period or any other applicable maximum time period for which the enrollee would otherwise be entitled to continuation coverage is tolled during the time that the enrollee is covered under the health care program. Within sixty‑three days after the federal health care program coverage terminates, the enrollee may elect to continue coverage under the employer's health benefits plan retroactively to the date coverage terminated under the federal health care program for the remainder of the eighteen‑month period or any other applicable time period, subject to termination of coverage at the earliest of the conditions specified in subsection H of this section.

N. For the purposes of this section:

1. "Enrollee" means an employee who is covered under an employer's health benefits plan for at least three months before a qualifying event.

2. "Qualified dependent" means a person who is covered under an enrollee's health benefits plan immediately before a qualifying event and who is the spouse or dependent child of the enrollee.

3. "Qualifying event" means the date coverage ends due to:

(a) Voluntary or involuntary termination of employment for a reason other than gross misconduct or reduction of hours required to qualify for health benefits under the employer's health benefits plan.

(b) Divorce or separation from the enrollee.

(d) The enrollee becoming eligible for medicare.

(e) A dependent child ceasing to be a dependent child under the generally applicable requirements of the employer's health benefits plan.

(f) A retired enrollee or the spouse or dependent child of a retiree losing coverage within one year before or after commencement of a bankruptcy proceeding under title XI of the United States Code by the employer from whose employment the retired enrollee retired.

4. "Small employer" means an employer that employs an average of at least one but not more fewer than twenty eligible employees during the preceding calendar year. END_STATUTE