Actually, 50 employees is considered a small business in most states. In some states, anything under 100 employees is considered a small business. I am using the term, small business, in reference to group health insurance terminology.
While it's a little strange, I can't see that there is anything illegal in their only offering insurance to employees who will sign a one-year contract, as long as they amend their plan description toi reflect that. In Maine, as in all other states except Hawaii, there is no statutory requirement that they offer health insurance at all, and since any employee, regardless of race, gender, national origin etc., has the option of signing that one-year contract, it would not be considered discriminatory. They are not singling out people to NOT get insurance on the basis of any protected group; any employee who wants the insurance can sign the one-year contract; likewise, any employee who signs the one-year contract is eligible for insurance. If there is an employee who refuses the insurance because she doesn't want to sign the contract, it's not the fault of the employer. She'll just have to find her own insurance. Nothing in the law says that the employer is responsible for seeing that all employees are insured.
Not offering COBRA, however, is a different matter. ANY employer who has more than 20 employees MUST offer COBRA. You don't say how long ago this happened, however, and it may be that they just haven't done the paperwork yet. COBRA does not have to be offered on the same day the coverage ends; the company has either 14 or 44 days (depending on whether they self-administer their COBRA or use a third party) to send out the paperwork. IF it has been less than 44 days since the coverage was terminated, that is most likely the answer. If it has been more than 44 days, affected employees are free to file a complaint with the Federal DOL.
NOTE: COBRA is ONLY available, in this instance, to those employees who were on the insurance plan and had it withdrawn because they refused to sign the contract. It would NOT be available to any employee who was never on the plan in the first place, and it would NOT be available to any new hires who choose not to sign the contract/take the insurance.
