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The California Continuation Benefits Replacement Act (Cal-COBRA) affects nongovernment organizations with two to 19 eligible employees who offer group health insurance coverage but who are not covered by the federal Consolidated Omnibus Budget Reconciliation Act (COBRA). Every health care service plan that provides coverage under a group benefits plan must provide continuation coverage to employees and qualified dependents after a qualifying event occurs.
Cal-COBRA differs from the federal program in the following ways:
Employees (and their dependent spouses and children) of firms who are enrolled in the employer’s employee benefits plans at the time of a qualifying event are known as “qualified beneficiaries” and are eligible for Cal-COBRA, unless the individual meets one of the following criteria:
Individuals who are eligible for Cal-COBRA include the following:
Qualifying events include the following:
Cal-COBRA administration may be handled by either the employer or a third-party administrator, but as the legal obligation still falls to the employer to comply with the law, all employers should make sure these administrative steps are being completed and done so in a timely manner. Cal-COBRA administration requires four basic compliance components:
Ensure a Cal-COBRA General Notice is provided to all eligible group health care participants and their qualified beneficiaries within 90 days of becoming eligible to participate in the group health plan.
Include the General Notice in the Summary Plan Description (SPD) and provide this to the employee, or send by first-class mail to the employee’s home address with the employee’s name and “& Spouse” or “& Family” if applicable.
The General Notice must be presented to both the employee and his or her spouse (if married). Options for providing notice include:
When employees or dependents experience a qualifying event, employers must provide an election notice within 14 days of the notice of qualifying event, notifying them of their eligibility to enroll in Cal-COBRA coverage, the terms and amount of the premium payment, and the beginning and ending dates of coverage. Employers who are also plan administrators have 44 days to provide the election notice to the employee and any eligible dependents. Send by first-class mail and keep a log of letters sent, or obtain a certificate of mailing; avoid certified mailing, as a returned receipt with no delivery acceptance signature proves the participant did not receive the required notice.
Within 30 days of a qualifying event resulting in the termination of the employee’s group coverage, notify the insurance carrier, and let the carrier know that a Cal-COBRA election form has been provided. If Cal-COBRA is elected, insurance will be reinstated as of the date group coverage ended.
If Cal-COBRA coverage is not elected within 60 days of when the election notice was sent, the employer’s obligations end and no further action is required other than to send the Health Insurance Portability and Accountability Act (HIPAA)-required Model Certificate as soon as practicable.
If Cal-COBRA coverage is elected within 60 days of when the election notice was sent, allow 45 days from date of election for the initial premiums owed to be paid. Once received, notify the insurance carrier to reinstate coverage back to the initial end date so there is no gap in coverage. If the employee continues to pay premiums on a timely basis, and no secondary qualifying event or allowable reason for early termination occurs, no further action is needed other than sending the HIPAA-required Model Certificate when Cal-COBRA coverage ends.
Premiums not received. If at any time premiums are not received by the established due date, the employer must allow a 30-day grace period to receive the premium. To cancel coverage, should the premium not be received within the 30-day grace period, the employer must provide a written notice to the Cal-COBRA participant 15 days before the end of the 30-day grace period indicating that coverage will end if payment is not received by the 30th day. If payment is still not received by the end of the 30-day grace period, the employer may cancel coverage and must provide a written Notice of Termination of Coverage and a HIPAA Model Certificate as soon as practicable.
Significant portion of premium received. If the shortfall in payment received is no greater than $50 or 10 percent of the amount due, it must be accepted as payment in full unless the employer sends a notice indicating the amount still due and gives adequate time (30 days) for the shortage to be paid
Early termination of Cal-COBRA is allowed under the following circumstances:
A written Notice of Termination of Coverage and a HIPAA Model Certificate must be provided as soon as practicable to all qualified beneficiaries.
The notice must include each of the following:
Secondary qualifying event. If a secondary qualifying event occurs during Cal-COBRA coverage (for example a qualifying event, triggered by a reduction in hours, followed by the death of the covered employee, triggering a secondary qualifying event), coverage may be extended to a maximum of 36 months from the first qualifying event. This extension is required only if the second qualifying event would have created an entitlement to 36 months’ coverage if it had occurred before the first qualifying event.
Disability extension. An individual may extend his or her 18 months of continuation coverage for an additional 11 months of coverage, to a maximum of 29 months, for all qualified beneficiaries if the Social Security Administration (SSA) determines a qualified beneficiary was disabled according to Title II or XVI of the Social Security Act at the time of the qualifying event or any time during the first 60 days of continuation coverage. This extended period allows people with disabilities continued coverage for the period of time that it normally takes to become eligible for Medicare. It is the qualified beneficiary’s responsibility to obtain this disability determination from the SSA and to provide a copy of the determination to the appropriate plan within 60 days after the date of determination and before the original 18-month COBRA eligibility period expires. It is also the qualified beneficiary’s responsibility to notify the plan within 30 days if a final determination is made that he or she is no longer disabled.
If an employee becomes entitled to Medicare benefits prior to the date of an 18-month qualifying event, then his or her dependents are eligible for 18 months of COBRA continuation coverage, or 36 months measured from the date of the Medicare entitlement, whichever is greater (for example, if an employee becomes entitled to Medicare seven months prior to termination of employment, the dependents are offered 29 months of continuation coverage; employee is only offered 18 months).
Extension for retirees. Employees who are age 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.
Organizations with insurance are required to offer a COBRA extension to retirees and their beneficiaries. This extension is to last up to five years. Former employees must be at least 60 years old and must have worked for at least five years at their previous employer. Coverage must continue until one of the following conditions are met:
A letter indicating the new end date for Cal-COBRA and any new premiums must be sent as soon as practicable.
Requests for Cal-COBRA coverage from those not eligible for Cal-COBRA coverage: Current or former employees not eligible for Cal-COBRA continuation coverage who request Cal-COBRA coverage must be sent a Notice of Unavailability of Continuation Coverage within 14 days of the employer receiving the notice of a qualifying event, explaining the reasons they are not eligible for continuation coverage.
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