Fourteen Employees and a Resignation

• Federal COBRA: applies to employers with 20 or more employees in the prior year. With 14 full-time employees, the restaurant is not a COBRA employer - the owner is right about COBRA but wrong about the conclusion.
• Florida small-employer continuation (F.S. 627.6692): Florida fills this gap for employers with fewer than 20 employees that have a Florida-issued group health policy. It gives eligible employees and covered dependents the right to continue the same group coverage for a limited period (up to 18 months for termination of employment, longer for disability), at the group rate plus the administrative charge the statute allows, with no evidence of insurability.
• Procedure drives the right: the employer/insurer must give written notice; she must elect in writing and pay within the statutory deadlines. Missing the election deadline forfeits the right - this is the single most common way people lose it.
• Alternative: loss of coverage is a HIPAA/ACA special enrollment event, giving her 60 days to enroll in an ACA marketplace plan, and voluntary resignation still qualifies as loss of eligibility for special enrollment. Compare the full group premium against a marketplace premium net of any premium tax credit.
• In Florida, which did not expand Medicaid, a household with little current income may fall below 100% of the federal poverty level and be ineligible for marketplace subsidies - eligibility must be checked before assuming the marketplace is cheaper.

Options:

• The conversion privilege lets her convert to an individual policy within 31 days of termination without evidence of insurability, at her attained age - typically whole life with a premium far above the group rate.
• If she dies during the 31-day window, the group policy generally still pays the group amount, so there is no gap while she decides.
• The convertible amount may be capped (commonly the lesser of the group amount or a stated maximum).

Tax:

• Employer-paid group term life is excluded from income only up to $50,000 of coverage. The excess is imputed income under IRC 79 at Table I rates.
• Excess coverage: $150,000 − $50,000 = $100,000 = 100 units of $1,000.
• At ages 45–49 the Table I rate is $0.15 per $1,000 per month: 100 × $0.15 = $15 per month = $180 of W-2 income per year. At ages 50–54, $0.23 gives $276 per year.
• That imputed amount is also subject to Social Security and Medicare tax.
• If she converts and pays the premium herself, the premiums are paid with after-tax dollars and the death benefit is still income-tax-free under IRC 101(a).

• If she continues the group plan: it is the same plan, so the $1,100 already applied carries forward. She owes $1,900 more of deductible, then coinsurance until the out-of-pocket maximum. Prenatal care, delivery, and newborn care are covered as any other condition; pregnancy cannot be treated as pre-existing.
• If she moves to a marketplace plan: the new plan starts a fresh deductible and out-of-pocket maximum, so the $1,100 credit is lost and she pays the new plan's full deductible during the highest-claim year of her life.
• The decision is total cost, not premium alone: compare (a) continuation premium × months of coverage plus $1,900 plus coinsurance, against (b) marketplace premium net of any subsidy plus the full new deductible and out-of-pocket maximum.
• Timing: she must make the continuation election within the statutory deadline even if she is still shopping; missing it is irreversible, while electing and later dropping coverage is not.
• Document the comparison. An agent recommending against continuation should record why, including the deductible reset, because the client will remember it at delivery.