You're in Virginia and you employ fewer than 20 employees, which means you're not required to provide terminating employees with any notice regarding continuation of health insurance coverage, right?  Wrong.

Under Virginia Code § 38.2-3541, every group health insurance policy issued in Virginia is required to include either a conversion option or a continuation option.  Under the conversion option, a person who is no longer eligible to receive coverage under an employer’s group health insurance plan can receive an individual accident and sickness policy, without evidence of insurability, subject to certain conditions.  Under the continuation option, such a person could also elect to have his present coverage continue for a period of 12 months.  The Virginia continuation option, however, does not apply if the employer/group policyholder is covered by the federal Consolidated Omnibus Budget Reconciliation Act (COBRA).

The Virginia “mini-COBRA” statute requires employers to provide “each employee and other covered person under such a policy written notice of the availability of the option chosen and the procedure and time fame for obtaining continuation or conversion of the group policy.”  The notice must be provided within 14 days of the date the employer becomes aware that the employee or other person is ineligible under the group health insurance policy. 

The law’s notice requirement is particularly important to small businesses, i.e., those with fewer than 20 employees, which are not bound by the notice requirements imposed by the federal COBRA law.  Employers must develop a standard, written notice which satisfies the requirements of the Virginia statute, and must issue such a notice within 14 days of learning that a person covered under the health plan is no longer eligible for coverage.  This includes situations in which an employee's employment is terminated, as well as situations where an employee’s spouse is no longer eligible for coverage because of a divorce.