New State Coverage Continuation Requirement for Small Employers
October 30, 2018
On April 10, 2018, Gov. Ducey signed SB 1217 into law. The new law, effective Jan. 1, 2019, requires small employer plans with up to 20 employees to provide terminated participants (and their covered dependents) with the right to continue coverage following certain qualifying events (sometimes called “mini-COBRA coverage”). To be eligible, the employee must have been covered under the group health plan for at least three months prior to the qualifying event.
There are a limited number of qualifying events:
- Termination of employment (not including gross misconduct)
- Reduction of hours
- Divorce or separation
- Death of the employee
- The employee becoming eligible for Medicare
- The child reaching the maximum age for coverage under the terms of the plan
- Bankruptcy of the employer (only for covered retirees)
The employer is responsible for providing a terminated participant with notice of the qualifying event, the right to continue the coverage, the cost of continuation coverage and the election procedures. The notice must be postmarked to the participant’s home address within 44 days of the qualifying event. The cost of continuation coverage may not exceed 105 percent of the total premium.
Similar to COBRA, the terminated participant has 60 days from the date of the notice to elect the coverage and 45 days from the date of the election to submit the first premium payment. The maximum coverage period is 18 months. Coverage will terminate earlier if the participant fails to make timely payment, becomes eligible for Medicare or Medicaid, or the employer ceases to provide a group health plan. Also, a dependent child’s coverage will terminate earlier if the child reaches the maximum age under the terms of the plan. There are special rules related to the maximum coverage period for covered employees who are in the military reserve or National Guard, called to active duty, and employment is terminated.
Continuation coverage is available for up to 29 months for a qualified dependent who was disabled at the time of the qualifying event and provides the employer with the Social Security Administration disability determination within 60 days of the determination. The cost of coverage during the disability extension may be up to 150 percent of the total premium.
The Arizona Department of Insurance is tasked with providing a sample notice, which they haven’t yet provided. Small employers should work with the insurer to ensure compliance with AZ state continuation.
Plans Must Provide Coverage of Pain Medicine, Substance Abuse and Urology Through Telemedicine
May 15, 2018
On April 11, 2018, Gov. Ducey signed HB 2042 into law. This bill amends the state’s law on telemedicine to include pain medicine, substance abuse and urology as conditions that can be treated through telemedicine services. The amendments to include pain medicine and substance abuse are effective Jan. 1, 2019. The amendment to include urology is effective Jan. 1, 2020.
HB 2042 »
Arizona's Industrial Commission Releases New Guidance Regarding Paid Sick Leave Law
June 13, 2017
On May 19, 2017, the Industrial Commission of Arizona released new FAQs which clarify implementation of the Fair Wages and Healthy Families Act (Proposition 206). Specifically, the FAQs address many aspects of Arizona’s Paid Sick Leave law and how employers are to implement these requirements effective July 1, 2017.
As discussed in the Nov. 30, 2016, edition of Compliance Corner, Proposition 206 requires employers with 15 or more employees to provide employees with up to 40 hours of paid sick leave in a calendar year. Employers with less than 15 employees must provide no less than 24 hours of paid sick leave during a calendar year. Employees accrue sick leave at a rate of one hour per every 30 hours worked up to a maximum of 40 hours over the span of one year. Time begins accruing as of the first day of employment, but employers may require a 90-day probationary period before sick time may be used. Generally, employees may use sick leave for themselves or to care for an employee’s family member (as defined under the law).
The new FAQs provide detailed information regarding sick time accrual, permissible uses of sick time, calculation procedures, notice/document/recordkeeping requirements, carryover methods and other special circumstances employers may encounter.
Employer is defined as any corporation, proprietorship, partnership, joint venture, limited liability company, trust, association, political subdivision of the state, individual or other entity acting directly or indirectly in the interest of an employer in relation to an employee, but does not include the state of Arizona or the United States. An employer with employees in multiple states will not include their non-Arizona employees in their total employee count for earned paid sick time purposes.
Applicable employers are required to begin accruals as of July 1, 2017. However, employers are required to notify employees of their rights and post the earned paid sick leave announcement in the workplace prior to July 1st.
Press Release »
Proposition 206 FAQs webpage »
Proposition 206 FAQs full copy »
Earned Paid Sick Leave Time Poster »
New Law Mandates Employee Sick Leave
November 30, 2016
On Nov. 8, 2016, Arizona voters approved “The Fair Wages and Healthy Families Initiative,” also known as Proposition 206. Beginning July 1, 2017, the law requires that most Arizona employees accrue paid sick leave.
Specifically, the law requires employers with at least 15 employees to provide employees with up to 40 hours of paid sick leave during a calendar year, excluding those employed by governmental entities. Employers with less than 15 employees are required to provide up to 24 hours of paid leave during a calendar year.
Employees accrue one hour for every 30 hours worked for a maximum of 40 hours paid sick leave over the course of one year and can roll over days to the following year, but employers are not required to provide more than 40 hours of paid sick leave in a calendar year. New employees can start accruing paid sick time on their first day of employment and may use accrued sick leave after an initial 90 day probationary period. The sick leave can be used for an employee’s own medical or health condition or to care for a “family member” as defined by the law.
Certain recordkeeping and notices are required (some prior to the effective date of the law). Employers must comply with the new law by July 1, 2017.
Initiative I-24-2016 »
Arizona Adopts Declaration of Independent Contractor Status
September 20, 2016
Earlier this year, Gov. Ducey signed into law HB 2114, which appears to be the first state law to provide certainty for the status of independent contractors and the businesses that hire them in the form of a signed declaration. Under the law, independent contractors may sign a Declaration of Independent Business Status (DIBS) that acknowledges the contractor operates as an independent business, is not entitled to unemployment status, is responsible for all taxes related to such compensation and responsible for licensing and registration related to services performed. Additionally, the independent contractor must certify that he/she meets at least six of the 10 criteria for independent status. The DIBS is optional but creates a rebuttable presumption for the status of the independent contractor.
HB 2114 »