• What Is Cal-Cobra?
• Which Employees And Dependents Are Eligible?
• When Does Cal-Cobra Take Effect?
• What Benefit Does Cal-Cobra Provide?
• What Is A Qualifying Event?
• Who Notifies The Carrier Of A Qualifying Event?
• When Does Coverage Terminate Under Cal-Cobra?
• How Much Do Employees Pay For Cal-Cobra?
• Is The Employer Responsible For Administering Cal-Cobra?
• Does The Employer Have Any Responsibilities Under Cal-Cobra?
• Which Benefit Plans Are Covered By Cal-Cobra?
• What Do I Need To Tell My Clients About Cal-Cobra?
• What Happens After Cal-Cobra Benefits Expire?
• What Happens If The Employer Decides To Change Health Plans?
• What Happens To Individual On Cal-Cobra If Their Former Employer Group Becomes Eligible For Federal Cobra?
• If An Employer's Cobra Status Changes Annually, Does The Cobra Participant's Status Change Annually Also?

What is Cal-COBRA?

A California state continuation of coverage program for employees of businesses with between 2 and 19 employees who are not regulated by federal COBRA law. Cal-COBRA was established by the California Continuation of Benefits Replacement Act of 1997, which requires health plans to offer continuation coverage to members in employer groups with 2-19 employees, upon certain "qualifying events", without evidence of insurability and under the same terms and conditions that apply to similarly situated individuals under the group benefit plan.

Which employees and dependents are eligible?

Employees and their dependent spouses and children of these firms who are enrolled in the employer's employee benefit plans at the time of a qualifying even (defined below) are known as "qualified beneficiaries" and are eligible for Cal-COBRA, unless the individual:

• becomes covered under another group benefit plan which does not impose any pre-existing condition limitations affecting the individual;
• becomes eligible for federal COBRA;
• becomes eligible for Medicare;
• becomes eligible for Medi-Cal;
• fails to notify the health plan of a qualifying event in the time specified by the law (generally 60 days); or
• fails to pay their premium on a timely basis.

When did Cal-COBRA take effect?

Beginning January 1, 1998.

What benefit does Cal-COBRA provide?

Cal-COBRA allows member to continue coverage under the health plan for the same time periods as are allowed under federal COBRA, when the individual would otherwise lose group coverage due to a qualifying event.

What is a qualifying event?

A qualifying event is defined the same as under federal COBRA law -- i.e. any of the following events which would result in loss of health coverage under the group benefit plan:

1. The death of the covered employee or subscriber;
2. The termination or reduction of hours of the subscriber's employment, except for termination for gross misconduct;
3. The divorce or legal separation of the covered employee from the covered employee's spouse;
4. The loss of dependent status by a dependent enrolled in the group benefit plan;
5. With respect to dependents only, the subscriber's eligibility for coverage under Medicare.

Who notifies the carrier of a qualifying event?

Qualifying events #s 1, 3, 4 and 5: MEMBER must notify the plan within 60-days of these qualifying events.

Qualifying event #2: EMPLOYER must notify the plan of enrollees who have a qualifying event due to termination or reduction in hours of employment within 31 days of the qualifying event.

When does coverage terminate under Cal-COBRA?

Terms of coverage are substantially the same as under federal COBRA. Continuation of coverage will terminate on the earliest of the following:

1. 18 months from the date continuation coverage began if continuation was extended because of a termination or reduction in hours of employment.
2. 29 months from the date continuation coverage began if coverage was extended because the subscriber was totally disabled for Social Security purposes (Notice of Award) either at the time of the qualifying event or within the first 60 days of continuation coverage. [If the qualified beneficiary ceases to be disabled under Social Security, benefits will terminate on the later of 18 months from date continuation coverage began or the month that begins more than 31 days after the date of final determination by Social Security that the beneficiary is no longer disabled.];
3. 36 months from the date continuation coverage began if coverage ended for a dependent due to other qualifying events (death of covered subscriber, entitlement of subscriber to Medicare, divorce or separation from subscriber, or loss of dependent status);
4. the date that coverage is terminated for failure of qualified beneficiary to make timely payment of premiums;
5. the date the enrollee becomes entitled to Medicare of federal COBRA;
6. the date the enrollee becomes covered under another group benefit plan that does not have any exclusion or limitation with respect to pre existing conditions that would limit coverage for the member;
7. the date the employer ceases to provide any group benefit plan to his/her employees;
8. the occurrence of any other event that justifies termination under the terms of the Group Agreement.
9. After January 1, 1999, employees who are 60 years or older when they become eligible for Cal-COBRA and have worked for the employer for at least five years may continue their coverage even after Cal-COBRA until they turn 65.

How much do employees pay for Cal-COBRA?

Under most circumstances, 110% of the cost of their group coverage. However, qualified beneficiaries who are totally disabled as determined by the Social Security Administration can continue their coverage up to an additional 11 months beyond 18 months by paying 150% of the premium.

Is the employer responsible for administering Cal-COBRA?

Although employers are responsible for administering federal COBRA, health plans have primary responsibility for administering Cal-COBRA. However, health plans may contract with the employer or a third party administrator to perform this function.

Does the employer have any responsibilities under Cal-COBRA?

Yes, and they are important ones. For example, employers must inform health plans of qualifying events and must tell employees about their Cal-COBRA rights. If an employer fails to notify the health plan of a qualifying event in time, the health plan is under no obligation to offer the employee Cal-COBRA coverage. Further, employers must notify qualified beneficiaries of changes or termination of their group benefit plans 30 days prior to making such changes.

Which benefit plans are covered by Cal-COBRA?

Health, dental and vision plans are covered. However, if a carrier offers a package of these benefits it cannot be required to offer only the dental and/or vision components under Cal-COBRA.

What do I need to tell my employees about Cal-COBRA?

You should tell them about the new law and clearly explain their responsibilities. These include:

• Notifying departing employees of their COBRA rights.
• Contacting the carrier about employees and/or dependents experiencing a qualifying event.
• Informing Cal-COBRA beneficiaries of changes to their benefit plans.

Then, you should tell them what their carrier is doing to implement the law. For example:

Blue Cross: Once Blue Cross of California is notified of a qualifying even from an employer, they will notify the individual of their Cal-COBRA rights. These individuals will be separately billed. Blue Cross will handle the paperwork and administration free of charge.

Lifeguard: Lifeguard will provide the qualified beneficiary the necessary benefits information, premium information, enrollment forms and instructions for enrolling in Cal-COBRA within 14 days of receiving notice of a qualifying event. Member must elect coverage by submitting a written request (COBRA Questionnaire enrollment form) to Lifeguard within the 60-day period following the later of (1) the qualifying event; (2) the date notice is provided of the ability to continue coverage; or (3) the date coverage under the employer's prior group benefit plan terminates.

Members must submit a change form to Lifeguard regarding the loss of coverage (for qualifying event #s 1, 3, 4 and 5). For qualifying event #2, employers are required to use the "Termination Notification" to inform Lifeguard of a qualifying event due to reduction of hours of employment. Notifications should be sent to:

Lifeguard, Inc.
Attn.: COBRA Administration
Membership Accounting Department
P.O. Box 5506
San Jose, CA 95150-5506

or fax to 408-383-4331 to the attention of COBRA Administration, Membership Accounting Department.

What happens after Cal-COBRA benefits expire?

Under most circumstances, the individual will be eligible to enroll in an individual policy on a guarantee issue basis under HIPAA (the Health Insurance Portability and Accountability Act of 1996).

What happens if the employer decides to change health plans?

The employer must notify qualified beneficiaries of their right to receive continuation coverage through a successor plan a minimum of 30 days prior to a termination of a prior carrier.

What happens to individuals on Cal-COBRA if their former employer group becomes eligible for federal COBRA?

The individual stays with Cal-COBRA until this coverage is exhausted.

If an employer's COBRA status changes annually, does the COBRA participant's status change annually also?

Yes and no. If the employer's status is Cal-COBRA one year, and changes to federal COBRA the next year, so will the participants. However, if the employer's status is federal COBRA and changes to Cal-COBRA, the participant remains under federal COBRA.

If you have any more questions and you need answers fast, give us a call. And, if we don't know the answer, we'll research it for you. Call CJB Consulting, Inc. at 800.608.7278 or email your question to cjb@cjbconsulting.net

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