There is a reason the client's HR contact stopped responding about continuing group coverage. Federal COBRA, the law most clients and many brokers default to, only applies to employers with 20 or more employees. A client leaving a 12-person company does not have federal COBRA rights. What they may have instead is a state mini-COBRA option, a Marketplace special enrollment period, or both, depending on the state where the plan was issued. State mini-COBRA laws extend continuation coverage to employees at small employers below the federal threshold, with durations, premium rules, and election windows set by state legislation.
Key Takeaways
- Federal COBRA covers employers with 20 or more employees; state mini-COBRA laws fill the gap for smaller group plans
- Mini-COBRA duration, election periods, and premium rules are set by state law and vary significantly across states
- Employees who lose small-group coverage qualify for a 60-day Marketplace special enrollment period regardless of mini-COBRA eligibility
- The continuation premium under mini-COBRA is typically 100 percent of the full group premium plus a state-allowed administrative fee
- Clients who qualify for APTC subsidies often find the after-subsidy Marketplace premium substantially lower than the full continuation premium
- Electing mini-COBRA does not disqualify a client from Marketplace SEP enrollment, but the SEP clock typically starts from the loss-of-coverage date
Federal COBRA and the 20-employee line
The Consolidated Omnibus Budget Reconciliation Act of 1985 gave employees at qualifying employers the right to continue group health coverage after losing it due to a job change, termination, reduction in hours, divorce, or other qualifying events. The standard duration is 18 months, extended to 36 months for disability-related qualifying events or family member qualifying events such as divorce or a dependent aging off the plan.
The threshold is employer size, not plan type. If the employer averaged fewer than 20 employees during at least 50 percent of business days in the prior calendar year, federal COBRA does not apply to that employer's group plan. Part-time employees count toward the threshold on a pro-rated basis. A company with 18 full-time workers and 4 part-time workers may or may not clear the 20-employee line depending on the calculation.
The premium under federal COBRA is capped at 100 percent of the total group premium, which includes both the employee contribution and the employer's share, plus a 2 percent administrative fee. For a group plan where the employer was covering two-thirds of the premium, the employee's COBRA cost is often two to three times what they were paying while employed.
State mini-COBRA programs
Most states have enacted mini-COBRA laws that cover the gap below the 20-employee federal threshold. The coverage requirement, duration, and administrative rules are set by each state. There is no national standard: a departing employee in California has different continuation rights than the same employee in Texas.
| Dimension | Federal COBRA | State mini-COBRA |
|---|---|---|
| Employer size covered | 20 or more employees | Typically 2 to 19 employees; varies by state |
| Standard duration | 18 months (36 months for disability or other qualifying events) | 3 to 36 months depending on state law |
| Premium cap | 100% of full group premium plus 2% administrative fee | Varies; most states allow 100% of full premium plus an admin fee |
| Election window | 60 days from qualifying event or notice, whichever is later | Varies; some states allow 30 days, others match the 60-day federal window |
| Marketplace SEP | 60-day SEP from loss of coverage; available even if COBRA is elected | 60-day SEP from loss of coverage; mini-COBRA election does not block it |
State mini-COBRA rules vary and change with legislation. Verify current state requirements before advising clients on election windows and coverage duration.
State-by-state overview
The following examples cover states where mini-COBRA rules are well-documented. They are not an exhaustive survey. State legislatures amend continuation requirements periodically, and the rules governing employer thresholds, election periods, and premium caps can change from year to year.
| State | Law | Employer size | Duration | Note |
|---|---|---|---|---|
| California | Cal-COBRA | 2 to 19 employees | Up to 36 months | State administers separately from federal COBRA for small groups |
| New York | State continuation | 2 to 19 employees | Up to 36 months | Follows group plan renewal rather than event-based window in some cases |
| Texas | State continuation | 2 to 19 employees | 9 months | Shorter than federal standard; 60-day Marketplace SEP still applies |
| Illinois | State continuation | 2 to 19 employees | 12 months | Election window and notice requirements differ from federal COBRA |
| Florida | State continuation | 1 to 19 employees | 18 months | Employer size threshold includes single-employee groups |
Illustrative examples. State continuation laws change with legislation. Verify current rules for the state where the plan is issued before advising clients.
The SEP window and timing
Losing job-based coverage, including small-group coverage that does not have a mini-COBRA equivalent, qualifies as a loss-of-coverage life event under ACA rules. The client has a 60-day special enrollment period starting from the date coverage ends. This SEP is available regardless of mini-COBRA eligibility.
The timing interaction can be subtle. A client who elects mini-COBRA has continued group coverage. Their loss-of-coverage SEP has generally closed unless they later lose the mini-COBRA coverage, which opens a new SEP. A client who declines mini-COBRA has a 60-day window from the original coverage loss date to enroll in a Marketplace plan. Missing that window while trying to decide whether to take mini-COBRA can leave the client uninsured until the next open enrollment period.
Some states have mini-COBRA election windows shorter than the Marketplace SEP. In those states, a client who spends most of the 60-day SEP window evaluating mini-COBRA before declining it may still have enough time to enroll in a Marketplace plan, but the overlap is not guaranteed. The practical advice is to run the Marketplace comparison first and have the enrollment ready to submit before the client makes the mini-COBRA decision.
Cost comparison: mini-COBRA vs Marketplace with APTC
The full continuation premium, including both the employee and employer share plus administrative fees, is often the number that surprises clients. A small-group plan where the employee was paying $180 per month while employed might cost $720 per month under mini-COBRA if the employer was covering 75 percent of the premium.
For clients whose household income falls between 100 and 400 percent of the federal poverty level, APTC subsidies can reduce the Marketplace premium to a fraction of that continuation cost. A 40-year-old individual at 250 percent FPL receiving a meaningful subsidy might pay $150 to $250 per month for a Silver plan in many rating areas, well below the mini-COBRA cost. For clients above 400 percent FPL, the comparison is between the full group premium and the unsubsidized Marketplace plan, which depends heavily on age, rating area, and the specific plan.
Quoting platforms like GetInsured surface ACA plan options and APTC estimates but typically do not flag mini-COBRA eligibility or show the client what their continuation premium would be for comparison. Running the APTC subsidy calculator alongside the group plan premium gives the client a side-by-side view before the mini-COBRA election window closes.
What brokers need to do
When a client mentions they are leaving a job at a small employer, the diagnostic questions are: how many employees does the employer have, what state is the plan issued in, and when does coverage end. If the employer is below the 20-employee federal COBRA threshold, ask whether the state has a mini-COBRA law and what the election window is.
Do not assume the client knows about mini-COBRA or that the employer's HR contact communicated it correctly. Many small employers do not administer mini-COBRA well because it is a state-regulated obligation they may not have invested in understanding. The notification requirements under state mini-COBRA laws also vary, and some are less rigorous than federal COBRA's required notices.
The practical workflow: confirm coverage end date, pull the Marketplace SEP window, run the plan finder with the client's household data, and show the after-APTC cost before the mini-COBRA election deadline arrives. In most cases where the client has meaningful APTC eligibility, the Marketplace plan wins on cost. In cases where the client has a specific specialist or prescription that requires the existing plan's network, the mini-COBRA cost may still be worth paying.
State mini-COBRA: frequently asked questions
Common questions from brokers working with clients leaving small employer group coverage.
What is mini-COBRA?
Mini-COBRA refers to state laws that extend continuation coverage rights to employees at small employers who are not subject to federal COBRA. Federal COBRA applies only to employers with 20 or more employees. State mini-COBRA laws cover employers below that threshold, typically groups of 2 to 19 employees, though the exact employer size range, continuation duration, and election period rules differ by state. Employees who lose coverage at a small employer and live in a state with a mini-COBRA law have the right to continue group coverage for the duration the state specifies.
Does mini-COBRA affect Marketplace SEP eligibility?
No. Losing job-based health coverage is a qualifying life event that opens a 60-day special enrollment period for Marketplace coverage regardless of mini-COBRA eligibility. A client who is eligible for state mini-COBRA is also eligible for the Marketplace SEP. The SEP window generally runs from the date coverage is lost. Clients who elect mini-COBRA and then exhaust it later experience another qualifying life event at that point and may be eligible for another SEP.
How does the mini-COBRA premium compare to a Marketplace plan?
Under mini-COBRA, the employee typically pays 100 percent of the full group premium (both the employee and employer share) plus any administrative fee the state permits, often 2 percent. The full continuation premium for a group plan can be $500 to $800 or more per month for individual coverage depending on the plan and the employer group. Clients who qualify for APTC subsidies based on income may find the net Marketplace premium after the subsidy is substantially lower than the continuation premium. The break-even comparison depends on the client's income, the local benchmark plan, and the group plan's total premium.
What states have mini-COBRA laws?
Most states have enacted some form of mini-COBRA or continuation coverage requirement for small employers. California's Cal-COBRA applies to employers with 2 to 19 employees and provides up to 36 months of continuation. New York has an extended continuation program for small groups. Texas requires 9 months of continuation coverage for small employer groups. Illinois and Florida each have continuation requirements for small employers, with durations that differ from the federal 18-month standard. State laws change over time; brokers should verify the current rules for the state where the plan is issued before advising clients.
When should a broker recommend Marketplace over mini-COBRA?
For clients whose household income falls between 100 and 400 percent of the federal poverty level, the APTC subsidy often reduces the Marketplace premium below the full continuation cost. For clients above 400 percent FPL, the comparison is between the full group premium and the unsubsidized Marketplace plan, which may be similar. Beyond the premium, ACA Marketplace plans cover essential health benefits without lifetime or annual dollar limits, which mini-COBRA plans inherit from the underlying group plan. Clients with ongoing prescriptions or planned procedures should also consider whether the Marketplace plan's formulary and network match their needs.
