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At Small Companies Insurance Extensions Have More Limits

Now that the layoffs are official, it's time to talk about health insurance.
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Now that the layoffs are official, it's time to talk about health insurance.

When it comes to health insurance, working for a small company often means making do with less than employees get at big firms.

Small companies offer coverage less often. Even when they do make it available, it may cost more and be less comprehensive. One reason: Small employers just don't have the bargaining clout with insurers that larger firms have.

And if you lose your job with a small employer, there's another thing you'll probably get less of: extended health insurance benefits.

Under the federal law known as COBRA, people at companies with 20 or more workers can generally extend their job-based health insurance for up to 18 months, although they're responsible for the entire premium plus a 2 percent administrative fee.

But the federal law doesn't apply to companies with fewer than 20 workers.

Most states have enacted so-called mini-COBRA laws that allow workers at small companies to extend their health insurance coverage through their old job, just like workers at big companies.

But the particulars of state laws can differ a lot from federal law, says Mila Kofman, research professor at the Georgetown Health Policy Research Institute. The laws may permit higher administrative fees, for example, or not extend coverage for as long, she says.

Maryland, Virginia and the District of Columbia all have mini-COBRA laws on the books, according to officials.

Maryland extends coverage for up to 18 months, like the federal law. But in Virginia, extended benefits only last for up to a year.

In the district, the coverage is even skimpier: The law provides for just three months of extended coverage, says Michael Flagg, a spokesman for the district's Department of Insurance, Securities and Banking.

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Michelle Andrews
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