Human Resource Blog

Texas maternity laws concerning health care / layoff

My company has cut back some full time positions to part time due to the economy. I am required to reduce my stock manager’s hours, thus he and his spouse will be without health insurance. Will they immediately lose coverage in our state by law considering his wife is not currently employeed and is covered under his health insurance plan? Or will the company be required to continue coverage considering her existing condition? I had been told by a friend that some states have laws that require the employee to be remained covered, so that is why I ask. Thank you!

You are a compassionate person, to be concerned about your employee’s health care coverage in this situation. There is no state that requires the health insurance company to cover a pregnancy, simply because the employee (or spouse) had coverage when they became pregnant. If there was such a law, every pregnant woman would cancel her insurance during her second month of pregnancy — because the delivery would still be paid for.

The federal COBRA law applies to companies with 20 or more employees on the group helath insurance policy. Under COBRA, an employee who is terminated can continue his or her group health insurance for up to 18 months. The employee must pay the entire insurance premium under COBRA, including any portion formerly paid by the employer. COBRA (the Consolidated Omnibus Budget Reconciliation Act) applies to employees who lose their health insurance benefits due to hours being reduced, as well as employees who are laid off. It also applies to dependents who lose their health insurance benefits when the employee is laid off, dies, divorces, etc.

An employee who loses their health insurance will recieve COBRA notification within 14 days. The employee has 60 days to decide if they will continue health insurance under COBRA, and an additional 45 days to pay the first premium.

The most recent stimulus package, the ARRA, includes a 65% COBRA subsidy for employees laid off between September 1, 2008 and December 31, 2009. These employees pay just 35% of the usual COBRA premium, with the government picking up the tab on the remainder of the COBRA fee.

Some states have laws that extend COBRA-type coverage to employees of smaller companies. Texas does not.