COBRA - CalHR

​Consolidated Omnibus Budget Reconciliation Act (COBRA)

COBRA Continuation Coverage

The Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985 (enacted July 1, 1986), requires that employers with 20 or more employees and maintain group health plans (includes medical, dental, and vision coverage) offer continuation of benefit coverage for a specific period of time to covered employees, spouses, *domestic partners (*State of California Legislation, not federal law), and dependent children who lose group coverage due to a "qualifying event".

 

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Qualifying Events

Group coverage can be continued under COBRA for 18 months if you lose coverage based on one of the following "qualifying events":

  • Voluntary or involuntary termination of employment, other than for gross misconduct;

  • Reduction of hours; reduction of hours includes:

    • Full-time to part-time

    • Strikes

    • Layoffs

    • Leave of absence (if the leave results in a loss of coverage)

    • Military call-up (24 months of coverage)

    • Permanent Intermittent Employee (who loses coverage based on a non-qualifying control period)

Extensions to the 18-month Period

Social Security Disability Extension to the 18-Month Period

You may extend your 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 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 disabled persons continued coverage for the period of time that it normally takes to become eligible for Medicare. The State calculates your premiums for coverage beyond the initial 18 months at 150% of the State's group coverage premium rate. You continue paying this premium directly to the plan or its designee each month.

 

It is the qualified beneficiary's responsibility to obtain this disability determination from the Social Security Administration and 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 beneficiaries responsibility to notify the plan within 30 days if a final determination is made that they are no longer disabled.

 

Special Medicare Entitlement Rule for Dependents Only

If an employee becomes entitled to Medicare benefits prior to the date of an 18-month qualifying event, then his/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.
 
Example: If an employee becomes entitled to Medicare seven months prior to termination of employment, the dependents are offered 29 months of continuation coverage. The employee is only offered 18 months.
 

SB 761 - Former State Employee Extension to the 18-Month Period (Repealed Effective January 1, 2005)

Another extension to the 18-month continuation period is available to any former State of California employee currently enrolled in COBRA and he/she was 60 years of age and an active employee for at least five prior years on the date that his/her employment ended. The extended COBRA period provides uninterrupted coverage until age 65 or entitlement to Medicare. The spouse or domestic partner may extend the coverage for a period of five years from the date that the former employee's employment ends. Your HR Office calculates the premiums for extended coverage for former employees beyond the initial 18 months at 213% of the State's group coverage premium rate. You continue to pay this premium directly to the plan or its designee each month. To elect, the former employee, spouse, or domestic partner must notify the plan within 30 days prior to the end of the18-month COBRA coverage period.
 

AB 254 Repeals SB 761 - Former State Employee Extension to the 18-Month Period

Under California law AB 254, the provisions of SB 761 were repealed for those individuals who meet the eligibility requirements of SB 761 after January 1, 2005. What this means is that if an employee experiences a qualifying event (i.e., termination of employment) on or after January 1, 2005, then the provisions of SB 761 are not available at the end of the 18-month COBRA continuation coverage.

 

AB 1401 - Extension of the Minimum COBRA Coverage Period

Under this California Law, employer-sponsored medical plans must allow an extension to COBRA coverage for an enrollee who has exhausted their initial 18 month continuation coverage period for up to 36 months from the date that coverage began. This provision only applies to continuation of medical insurance COBRA coverage. In no event will continuation coverage last beyond three years (36 months) from the original date of loss of coverage. Your HR Office calculates the premium for extended coverage for former employees beyond the initial 18 months at 110% of the State's group coverage premium rate. You continue paying this premium directly to the plan or its designee each month.

 

Secondary COBRA Event occurs during the 18-Month Period

If during the 18 months of continuation coverage, a second event takes place (divorce, termination of domestic partnership, legal separation, death, or a dependent child ceases to be a dependent), you may extend the original 18 months of continuation coverage to 36 months from the original date of loss of coverage for eligible dependent qualified beneficiaries. If a second event occurs, it is the qualified beneficiary's responsibility to notify the plan in writing within 60 days of the second event and within the original 18-month COBRA timeline.

 

In no event will continuation coverage last beyond three years (36 months) from the original date of loss of coverage.

 

Group coverage can be continued under COBRA for 36 months if you lose coverage based one of the following "qualifying events":

  • Death of employee;

  • Divorce, legal separation, or *termination of domestic partnership; or

  • Child ceases to be a dependent (i.e., child turns 26)

* (State of California legislation)

Qualified Beneficiary

The term "qualified beneficiary" means, an individual that is eligible to continue group coverage because of a qualifying event. The individual must have been covered under the plan before the qualifying event date. If the individual was not covered, he or she is not eligible for COBRA.

Premium Payments

If COBRA is elected, the cost for coverage is 100% of the total premium, plus a 2% administration fee which is paid monthly by the enrollee to the plan or its designee. The plan or its designee is not required to send a monthly bill. The department is not required to pay a share of the COBRA premium.
Once COBRA is elected, the enrollee has 45 calendar days from the date of election to pay all retroactive premiums to the plan or its designee. The retroactive premium payment is the premium to cover the period from the date of loss of coverage to the date of election. All claims occurring during the months of retroactivity are held pending premium payment being made.
 
Once you pay the retroactive premium, future monthly premiums are due by the first of each following month. While due on the first, the enrollee has a maximum thirty day grace period following the due date in which to make these premium payments. All claims occurring during the month are held pending premium payment being made. If the applicable payment is not made within the grace period, then coverage is cancelled back to the end of the prior month in which a premium payment had been made. Once COBRA coverage is cancelled due to nonpayment of COBRA premiums the enrollee will not be reinstated.

Partial Premium Payment Not Significantly Less

If the plan receives a partial monthly premium that is not significantly less than the premium due, the plan or its designee will notify the enrollee of the amount of the deficiency and allow a 30-day period for payment of the deficiency amount. All claims occurring during the month are held pending receipt of the deficiency amount. COBRA premiums are paid directly to plan or its designee.

Health Insurance Premium Payment (HIPP) Program

For Persons Eligible for Medi-Cal

The Health Insurance Premium Payment (HIPP) Program may pay COBRA premiums in certain cases for persons eligible for Medi-Cal. You may e-mail your questions to the Department of Health Care Services at: HIPP@dhcs.ca.gov
 

For Persons Disabled by HIV/AIDS

Under the Comprehensive AIDS Resources Emergency (CARE) Act of 1990, the Health Insurance Premium Payment (HIPP) Program may pay COBRA premiums for persons unable to work because of a disability due to HIV/AIDS. You may e-mail your questions to the Department of Health Care Services at: HIPP@dhcs.ca.gov

Trade Adjustment Assistance (TAA) Program

The Trade Adjustment Assistance (TAA) Program is a federal program. The TAA Program provides aid to workers who lose their employment or whose hours of work and wages are reduced as a result of increased imports or shifts in production out of the United States. Under provisions of the TAA Program, an eligible individual can receive a health coverage tax credit (HCTC) or advance payment for 80% of the applicable monthly premium to pay for COBRA continuation coverage. A special second COBRA election period is also available to eligible individuals. This aid only applies to COBRA premiums to pay for medical insurance. For more information contact the Health Care Tax Credit Customer Contact Center at toll-free 1-866-628-4282 (TTD/TTY callers may call toll-free at 1-866-626-4282).

Alternative Trade Adjustment Assistance (ATAA) Program

The Alternative Trade Adjustment Assistance (ATAA) Program is a federal program. The ATAA Program provides aid to workers age 50 or older who lose their employment as a result of increased imports or shifts in production out of the United States and retraining may not be suitable. Under provisions of the ATAA Program, an eligible individual can receive a health coverage tax credit (HCTC) or advance payment for 80% of the applicable monthly premium to pay for COBRA continuation coverage. A special second COBRA election period is also available to eligible individuals. This aid only applies to COBRA premiums to pay for medical insurance. For more information contact the Health Care Tax Credit Customer Contact Center at toll-free 1-866-628-4282 (TTD/TTY callers may call toll-free at 1-866-626-4282).

 

COBRA Premiums

 

Termination of Coverage

Your COBRA coverage remains in effect for the specified time or until one of the following events terminates the coverage:
  • Employer ceases to provide group plans;
  • Enrollee fails to pay required premiums in a timely manner;
  • Enrollee becomes covered under another employer's plan (that does not contain any exclusion or limitation with respect to any preexisting health condition);
  • Enrollee extended COBRA coverage due to an approved disability and is no longer disabled;
  • Enrollee becomes covered under Medicare while enrolled in COBRA;
  • Enrollee notifies the plan to cancel continuation coverage;
  • For cause, on the same basis that the plan terminated the coverage of similarly situated non-COBRA participants.
 
All termination of COBRA coverage notices are provided by the plan.

COBRA Forms 

 

COBRA administrators can find Word versions of COBRA forms on HR Net.

 

Frequently Asked Questions

What is COBRA?

The Consolidated Omnibus Budget Reconciliation Act (COBRA) is a federal law. The COBRA statute requires employers to offer continuation of group coverage (e.g., medical, dental, and vision) to covered employees, spouses, *domestic partners, and eligible dependent children who lose group coverage due to a qualifying event. These individuals are known as "qualified beneficiaries". The terms and timeframes are set by the Department of Labor and Internal Revenue Service (IRS).
Federal Legislation (Public Law 99-272, Title X)
Consolidated Omnibus Budget Reconciliation Act of 1985 (effective July 1, 1986)
(*State of California Legislation)

What does the term "qualified beneficiary" mean?

The term "qualified beneficiary" means, an individual that is eligible to continue group coverage because of a qualifying event. The individual must have been covered under the plan before the qualifying event date. If the individual was not covered, he/she is not eligible for COBRA.
 
Exception: Newborn or Child Placed for Adoption (deemed a qualified beneficiary, although not covered at time of the qualifying event).
A National Medical Support Notice (NMSN) and Qualified Medical Child Support Order (QMCSO) judgment, decree, or order that requires that a child receive benefits under group coverage. A child enrolled in group coverage when ordered by a NMSN or QMCSO is deemed a qualified beneficiary under COBRA law, regardless of his/her status as a dependent of the covered employee.

When do I receive COBRA information?

Once you and your dependents (if any) are covered under "group coverage" your HR Office is required to provide you and your eligible dependents with an Initial General COBRA Notice of your rights under COBRA within 90 days after coverage begins. This notice includes information on COBRA Qualifying Events and your responsibility to report certain events when they occur.

What is a Qualifying Event? When do I become eligible for COBRA continuation coverage?

A "qualifying event" is an event that occurs which results in a loss of group coverage. Here is a list of qualifying events that make you eligible for COBRA continuation coverage:
  • Voluntary or Involuntary Termination of Employment* or Reduction of Hours;
  • Divorce or Legal Separation**;
  • Child Ceases to be a Dependent (e.g., child turns age 26);
  • Death of Employee; and
  • Employee Becomes Entitled to Medicare.
 
* If the termination from employment is due to "gross misconduct", your department is not required to offer COBRA coverage. When a covered employee is terminated for gross misconduct, there is no qualifying event for the covered employee, spouse, domestic partner, or dependent children. None of these individuals are offered COBRA continuation coverage.
 
**Termination of Domestic Partnership. The State considers a covered domestic partner as a qualified beneficiary and may continue group coverage under COBRA.

How long may I be covered under COBRA?

Depending on the type of qualifying event you may continue group coverage for the maximum periods shown below.
Qualifying Event: Voluntary or Involuntary Termination of Employment or Reduction of Hours (which causes loss of coverage)
Length of Eligibility: 18 months
 
Qualifying Event: Divorce or Legal Separation*
Length of Eligibility: 36 months
 
Qualifying Event: Child Ceases to be a Dependent (e.g., child turns age 23, child marries)
Length of Eligibility: 36 months
 
Qualifying Event: Death of Employee
Length of Eligibility: 36 months
 
Qualifying Event: Employee Becomes Entitled to Medicare** (Under Part A, Part B, or both)
Length of Eligibility: 36 months
 
* Termination of Domestic Partnership. The State considers a covered domestic partner as a qualified beneficiary and may continue group coverage under COBRA.
 
** Active State employees do not lose their State-sponsored group dental and vision coverage at age 65 or entitlement to Medicare. The qualifying event "Medicare Entitlement" is listed under federal COBRA law, however, it will not have an affect on active employees State-sponsored dental and vision coverage. However, if a former State employee becomes covered under Medicare while enrolled in COBRA continuation coverage, then his/her COBRA coverage is terminated. COBRA continuation coverage for any covered dependents will not terminate for this reason.

When I retire from State service CalPERS continues my medical and dental coverage. Are State employees offered vision coverage under COBRA at the time of retirement?

Your HR Office is required to offer you COBRA to continue your active employee vision plan. The COBRA qualifying event is a voluntary or involuntary termination of employment.
 
The State also offers a Retiree Vision Program to employees that retire from State service. The Retiree Vision Program is fully paid by the retiree and a monthly deduction is taken from your retirement check.

If I don't want COBRA for myself may I elect continuation coverage for my dependents?

Each covered person whether an employee, spouse, domestic partner, or dependent child has independent election rights. If you don't want to elect COBRA, then the covered spouse, domestic partner, or dependent child have independent rights to elect COBRA continuation coverage.

How do I elect COBRA coverage?

When a covered individual experiences a "qualifying event", your department provides you and your eligible dependents a COBRA Election Notice and Election Form. The COBRA Election Notice informs covered individuals of their rights to elect continuation coverage because they are no longer covered under a group plan.

How does my HR Office become aware of a "Qualifying Event"?

Your HR Office is responsible to monitor timelines for COBRA elections and coverage continuation periods and ensure that eligible employees, spouses, domestic partners, and dependent children are provided required notices and advised of their COBRA rights and responsibilities.
 
HR pros are usually aware when a covered employee has died, voluntarily or involuntarily terminated employment, or reduced hours. However, the covered employee, spouse, and domestic partner has responsibility to notify the HR Office when a divorce, termination of domestic partnership, legal separation, or a child ceases to be a dependent occurs (e.g., child turns 26). At the time that one of these qualifying events occurs, the HR Office must receive notification within 60 days from the date of the qualifying event or the date on which coverage is lost.
 
If notification is provided timely, then a COBRA Election Notice and Election Form is provided to qualified beneficiaries. This notice is sent to qualified beneficiaries to explain their rights to elect COBRA continuation group coverage. If notice to the HR Office is not provided timely, the department is not required to offer COBRA continuation coverage.

How long do I have to elect COBRA continuation coverage?

Each qualified beneficiary has a maximum 60 day election period to elect continuation coverage. The last date to elect continuation coverage is reflected in the COBRA Election Notice. Each qualified beneficiary has independent election rights.

How much is the monthly COBRA premium? When is the premium due?

If COBRA is elected, the cost for coverage is 100% of the total premium, plus a 2% administration fee which is paid monthly by the enrollee to the plan or its designee. The plan or its designee is not required to send a monthly bill. Your department is not required to pay a share of the COBRA premium. You should contact your HR Office for the applicable premiums, plan names, and addresses where to send the monthly premiums.
 
Once COBRA is elected, the enrollee has 45 calendar days from the date of election to pay all retroactive premiums to the plan or its designee. The retroactive premium payment is the premium to cover the period from the date of loss of coverage to the date of election. All claims occurring during the months of retroactivity are held pending premium payment being made.
 
Once the retroactive premium is paid, future monthly premiums are due by the first of each following month. While due on the first, the enrollee has a maximum thirty (30) day grace period following the due date in which to make these premium payments. HR pros hold all claims occurring during the month pending premium payment being made. If the applicable payment is not made within the grace period, then coverage is cancelled back to the end of the prior month in which a premium payment had been made. Once COBRA coverage is cancelled due to nonpayment of COBRA premiums the enrollee is not reinstated.

Where can I get more information?

If you need more information, check with your HR Office. 
 

Updated 2/24/2014