The one idea: When a group is too small for COBRA, state “mini-COBRA” continuation still applies, and because states like Texas publish no model notices, the safest move is to outsource it to a TPA.
Most agents know COBRA cold. But once a fully insured group drops below the 20-employee COBRA threshold, it usually falls under its state’s own continuation law instead, and those are murkier.
COBRA has a lesser-known cousin
Many states have “mini-COBRA” laws (often called state continuation) that apply to fully insured groups not subject to federal COBRA, and in some states continuation also kicks in after COBRA runs out. Every state does it differently, and unlike COBRA there’s often no model notice or clear federal guidance to lean on.
Texas as the example
Texas Insurance Code Chapter 1251 has two continuation tracks: Subchapter F (employees and dependents, when coverage ends) and Subchapter G (dependents only, when eligibility ends due to divorce, death, or retirement). Both require written notices and specific timelines, 60 days to request continuation, written notice within 15 days of events like divorce, and dependent coverage that can run up to three years. The hard part: the state never published usable model notices, so the employer has to figure out what to send, when, and which event triggers which notice.
Why brokers should care
When a group isn’t subject to COBRA, employers often assume “no COBRA” means “no continuation.” That’s how deadlines get missed, notices never go out, and dependents get terminated without their legally required options. You don’t want to be caught in the middle of “who was supposed to notify whom.”
Why a TPA is usually the answer
There’s no tidy DOL template for state continuation. Outsourcing it to a TPA is cheap (usually a small per-event fee), safer for the employer (state regulators can still audit, and the employer stays legally responsible), and cleaner for everyone: the TPA sends the right notices, tracks deadlines, bills premiums, and handles reinstatement.
A script you can use
“Texas requires a state continuation option even when a group is too small for COBRA. The notice rules are similar, but there are no DOL model notices and the state doesn’t publish templates. Because the rules get complex, especially for dependents after divorce or death, we recommend outsourcing it to a TPA. It’s inexpensive, protects you, and makes sure the notices and timelines are handled correctly.”
Why it matters to you
State continuation is invisible until the moment a client needs it, and by then the clock is already running. Knowing it exists, and steering small groups to a TPA, is a quiet way to keep clients out of trouble.
Key takeaways
- Groups too small for COBRA usually owe a state continuation option instead.
- Rules vary by state; many (like Texas) publish no model notices.
- Texas has two tracks: employees+dependents, and dependents-only after divorce/death/retirement.
- Outsourcing to a TPA is cheap insurance against missed notices and audits.
Check yourself
A 12-life fully insured Texas group says “we’re too small for COBRA, so we don’t have to offer continuation.” Right or wrong?
Wrong. They’re too small for federal COBRA, but Texas state continuation (Chapter 1251) still applies, with its own notices and timelines.