6.1 Colorado Group Life and Health Insurance Requirements
Key Takeaways
- Group life policies must include a 31-day conversion privilege to an individual policy without proof of insurability when group coverage ends
- If an employee dies during the 31-day conversion period, the group death benefit is paid even if no conversion application was filed
- Colorado's small-group market changed to employers with 1-50 employees effective January 1, 2026 (down from 1-100), with grandfathering for existing 51-100 groups
- Small-group health is guaranteed issue with no pre-existing condition exclusions, essential health benefits, and mental-health parity
- Federal COBRA covers employers with 20+ employees; Colorado state continuation (C.R.S. 10-16-108) covers smaller employers for 18 months
Colorado regulates group life and health insurance to protect employees and dependents and to preserve access to coverage when employment ends.
Group life conversion privilege
Colorado group life policies must include a conversion privilege allowing a covered person to convert to an individual policy when group coverage ends.
| Feature | Rule |
|---|---|
| Who qualifies | An insured losing eligibility under the group plan |
| Conversion window | 31 days from termination of group coverage |
| No insurability proof | Conversion is guaranteed-issue; no medical questions |
| Premium | Standard individual rate for the person's attained age and class |
| Coverage amount | Generally up to the amount of group coverage lost |
When conversion rights apply
Conversion rights arise when employment terminates (for any reason), the employee retires, the employee's class is eliminated, or the group policy ends (subject to notice), and when a dependent loses eligibility.
Exam tip: The 31-day window is the most tested group-life number. The converted policy is usually whole life or another permanent form, not term, because the consumer is converting to a guaranteed individual contract.
Death during the conversion period
If the insured dies within the 31-day conversion period — even if no conversion application has been submitted — the group death benefit is payable as though coverage had continued. The conversion-application status is irrelevant.
Exam tip: This is a classic exam scenario. The death benefit is paid from the group policy during the 31 days; the beneficiary does not need to have completed conversion or paid an individual premium.
The Colorado small-group market
Colorado's small-group definition determines which employers receive ACA-style protections. This definition changed effective January 1, 2026.
| Market | Employees (from January 1, 2026) |
|---|---|
| Small group | 1-50 employees |
| Large group | 51 or more employees |
Important update: Before 2026, Colorado defined small group as 1-100 employees. Effective January 1, 2026, the small-group market contracted to 1-50 employees, aligning with the federal default. Employers with 51-100 employees that already had small-group coverage may keep their small-group plan under a transition (grandfathering) allowance for a limited number of years.
Exam tip: If an exam item still references the older 1-100 figure, the current correct Colorado answer is 1-50 effective 2026. Watch the date in the question.
Small-group protections
Colorado small-group health plans must provide:
- Guaranteed issue — carriers cannot deny based on health
- No pre-existing condition exclusions
- Essential health benefits
- Modified community rating within allowed age bands
- Guaranteed renewability
Carriers may impose participation (commonly around 70% of eligible employees) and employer contribution (commonly at least 50% of premium) requirements, except during the annual special open-enrollment window when those requirements are typically relaxed.
Certificate of coverage
Group health and life plans must give covered employees a certificate of coverage summarizing the plan.
| Element | Purpose |
|---|---|
| Benefits summary | What the plan covers |
| Eligibility rules | Who is covered |
| Effective dates | When coverage begins and ends |
| Conversion / continuation rights | How to keep coverage |
| Claims and appeal procedures | How to file and appeal |
| Contact information | Insurer and administrator |
A federal Summary of Benefits and Coverage (SBC) is also required for health plans, in a standardized format for easy comparison.
Mental-health parity and dependent coverage
Mental-health parity
Colorado requires parity between behavioral-health and medical/surgical benefits in group plans. Mental-health and substance-use-disorder benefits must use the same financial requirements (copays, deductibles, out-of-pocket limits) and treatment limitations as comparable medical benefits — no more restrictive visit limits or prior-authorization barriers.
Dependent coverage to age 26
Colorado follows the federal standard: adult children may stay on a parent's plan until age 26, regardless of marital status, student status, financial dependence, residence, or access to their own employer coverage.
Colorado permits but does not mandate domestic-partner coverage; if offered, benefits mirror spousal coverage though tax treatment may differ.
Coordination of benefits and the birthday rule
When a person is covered by more than one plan, coordination-of-benefits rules decide which pays first.
| Situation | Primary plan |
|---|---|
| Employee's own plan vs. spouse's plan | The person's own plan is primary for them |
| Child covered by both parents | Birthday rule applies |
| Divorced/separated parents | Court order, otherwise specific COB rules |
The birthday rule makes the plan of the parent whose birthday (month and day, not year) falls earlier in the calendar year the primary plan for the children. If both parents share the same birthday, the plan in force the longest is primary.
Continuation: COBRA vs. state continuation
| Feature | Federal COBRA | Colorado state continuation |
|---|---|---|
| Employer size | 20+ employees | Fewer than 20 employees |
| Authority | Federal (DOL/IRS) | Colorado DOI (C.R.S. 10-16-108) |
| Duration | 18-36 months | 18 months |
Exam tip: Tie employer size to the right rule: 20+ employees → federal COBRA; under 20 → Colorado state continuation for 18 months.
Eligibility, waiting periods, and enrollment
Group health plans use eligibility rules to define the insured class and prevent adverse selection.
| Rule | Standard |
|---|---|
| Waiting period | May not exceed 90 days for new employees |
| Eligible class | Defined by employment status (for example, full-time) |
| Initial enrollment | A set window when first eligible |
| Special enrollment | Triggered by qualifying life events |
| Open enrollment | Annual window to add or change coverage |
A new full-time employee generally cannot be made to wait more than 90 days for coverage to begin. Coverage is typically non-contributory (employer pays all) or contributory (employee shares premium); contributory plans usually require higher participation to qualify for guaranteed issue.
Exam tip: Remember the 90-day maximum waiting period. It is a frequently tested ACA-aligned rule that Colorado follows for group health plans.
How long do employees have to convert group life insurance to an individual policy in Colorado?
Effective January 1, 2026, what is Colorado's small-group market size?
An employee dies during the 31-day group life conversion period without having applied to convert. What happens?
Under the birthday rule for coordinating children's coverage, whose plan is primary?