California State law provides an expansion of continuation of benefits coverage for Federal COBRA beneficiaries enrolled in California health plans. Cal-COBRA's extension of Federal COBRA coverage applies to employers who have 2 to 19 employees, or "small group employers."
Pursuant to California Health Safety Code §§ 1373.62, 1373.6, and California Insurance Code § 12671 the California law extends benefits to former employees who lose their healthcare coverage in:
The federal Consolidated Omnibus Budget Reconciliation Act (COBRA) generally requires group health plans sponsored by employers with 20 or more employees in the prior year to offer employees and their families the option to continue benefits for limited periods of time when coverage under the plan would otherwise end due to certain qualifying events. These events include voluntary or involuntary job loss, reduction in hours worked, death, divorce, and other life events.
COBRA sets rules for how and when continuation coverage must be offered, how employees and their families may elect COBRA, and what circumstances justify terminating coverage. The length of time for which continuation coverage must be made available depends on the type of qualifying event. For termination of employment or a reduction in hours, the maximum period of COBRA is generally 18 months. Up to 36 months of coverage may be available due to other qualifying events, or if a second qualifying event occurs during the initial period of COBRA coverage.
Please review our COBRA Steps to Success to understand the key areas involved in implementing COBRA for your company. Most states also have laws (commonly referred to as "mini-COBRA" laws) which require that group health plans provide COBRA-like continuation of benefits for certain employees and their families.
Cal-COBRA requires employers with 2 to 19 employees to allow individuals who would otherwise lose group health plan coverage due to certain events ("qualified beneficiaries") to continue coverage for up to 36 months. For employers with 20 or more employees, Cal-COBRA may extend continuation coverage for an additional 18 months (up to 36 months total) for individuals who exhaust federal COBRA.
Continuation coverage must be offered upon the occurrence of the following qualifying events, which would otherwise result in a loss of coverage under the group benefit plan:
Cal-COBRA also provides an extension of coverage for those who have exhausted their 18 months on federal COBRA (or longer in special circumstances) for a combined total of 36 months of continuation coverage.
Continuation coverage under Cal-COBRA is not required for those individuals who:
"Please examine your options carefully before declining this coverage. You should be aware that companies selling individual health insurance typically require a review of your medical history that could result in a higher premium or you could be denied coverage entirely."
Employers may require a qualified beneficiary electing continuation coverage to pay not more than 110% of the applicable rate, on or before the due date of each payment, but not more frequently than on a monthly basis. In the case of a qualified beneficiary who is determined to be disabled, the qualified beneficiary may be required to pay an amount no greater than 150% of the group rate after the first 18 months of continuation coverage. The first premium payment must be delivered within 45 days of the date the qualified beneficiary provided written notice of the election to continue coverage.
Continuation of benefits may be terminated before the end of 36 months for the following reasons:
Under the federal Patient Protection and Affordable Care Act (Health Care Reform), beginning with plan years starting on or after September 23, 2010, group health plans that offer dependent coverage must make the coverage available until a child reaches the age of 26. There is a temporary exception for grandfathered group health plans, which may exclude adult children who are eligible to enroll in an employer-sponsored health plan other than the group health plan of the parent. This exception will no longer be available for plan years beginning on or after January 1, 2014.
Individual states may have requirements that are more favorable to plan participants. For information about your state, please click here and contact your state insurance department for guidance.
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