Key Takeaways
- Arizona requires group life insurance policies to include a conversion privilege allowing departing employees to obtain individual coverage
- Group health insurance policies must provide continuation options (state continuation and federal COBRA) for employees losing coverage
- Employers with 2-50 employees are considered small groups and subject to small group market regulations
- Arizona small group plans cannot exclude individuals based on pre-existing conditions under ACA requirements
- Group policies must provide certificates of coverage to all covered employees
Arizona Group Life and Health Insurance Requirements
Arizona regulates group life and health insurance to protect employees and ensure access to coverage. This section covers key group insurance requirements in Arizona.
Group Life Insurance Requirements
Conversion Privilege
Arizona requires group life insurance policies to include a conversion privilege:
| Requirement | Details |
|---|---|
| Who Qualifies | Employees losing group coverage |
| Conversion Period | 31 days from termination |
| No Evidence Required | Cannot require proof of insurability |
| Premium | Standard individual rates for age |
| Coverage Amount | Up to amount of group coverage |
When Conversion Rights Apply
Employees have conversion rights when:
- Employment is terminated (voluntarily or involuntarily)
- Employee retires
- Employee's class is eliminated
- Group policy is terminated (with notice)
- Dependent coverage ends
Exam Tip: The 31-day conversion period for group life insurance is a key Arizona requirement. During this period, the employee remains covered under the group policy.
Death During Conversion Period
If the employee dies during the 31-day conversion period:
- Group coverage still applies
- Death benefit paid as if group coverage continued
- Conversion application status is irrelevant
Group Health Insurance Requirements
Small Group Definition
Arizona defines small groups as:
| Group Size | Classification |
|---|---|
| 2-50 employees | Small Group |
| 51+ employees | Large Group |
| 1 employee (sole proprietor) | Individual market |
Small Group Protections
Under Arizona and ACA rules, small groups enjoy:
- Guaranteed issue (cannot deny coverage)
- No pre-existing condition exclusions
- Community rating within age bands
- Essential health benefits required
- Guaranteed renewal
Certificate of Coverage Requirements
Arizona requires group policies to provide certificates to employees:
Certificate Contents
| Required Element | Description |
|---|---|
| Benefits Summary | Coverage amounts and types |
| Eligibility | Who is covered |
| Effective Date | When coverage begins |
| Conversion Rights | How to convert to individual |
| Continuation Rights | State and COBRA options |
| Claims Procedures | How to file claims |
| Contact Information | Insurer and administrator info |
Certificate Timing
- Provided within 30 days of becoming covered
- Updated certificate for material changes
- Summary of Benefits and Coverage (SBC) also required
Employer Contributions
Group Life Insurance
Arizona allows various contribution structures:
- Employer-paid (non-contributory)
- Employee-paid (contributory)
- Shared cost arrangements
Participation Requirements
| Contribution Type | Minimum Participation |
|---|---|
| Employer-paid (non-contributory) | 100% of eligible employees |
| Employee-paid (contributory) | Typically 75% |
Dependent Coverage
Dependent Eligibility
Arizona follows federal rules for dependents:
- Children up to age 26 (ACA requirement)
- Spouse or domestic partner
- Disabled children (potentially beyond age 26)
Domestic Partner Coverage
Arizona allows but does not require domestic partner coverage:
- May be offered by employer
- Tax treatment differs from spouse coverage
- Documentation requirements apply
Coordination of Benefits
When employees have multiple group health policies:
Coordination Rules
| Situation | Primary Plan |
|---|---|
| Employee's own plan | Primary for employee |
| Employee as dependent | Dependent plan secondary |
| Children (birthday rule) | Parent with earlier birthday month/day |
| Children of divorced parents | Court order or custodial parent first |
Exam Tip: The birthday rule uses the parent's birthday month and day (not year) to determine which plan is primary for children covered under both parents' group plans.
How long do employees have to convert group life insurance to an individual policy after losing group coverage in Arizona?
What is the employee group size for "small group" health insurance in Arizona?
Under the birthday rule for coordination of benefits, which parent's plan is primary for a child?
If an employee dies during the 31-day group life conversion period, what happens?
Within how many days must an employer provide a certificate of coverage to a newly covered employee in Arizona?