This Section provides information regarding continuation of group coverage for the state's health, dental, and vision insurance plans, as well as the state's FlexElect Medical Reimbursement Account program.
AuthorityFederal Legislation (Public Law 99-272, Title X) Consolidated Omnibus Budget Reconciliation Act of 1985 (enacted July 1, 1986)
Collective bargaining agreements (all twenty-one bargaining units) Legislation enacted - AB 1639, Chapter 926, 1999
The Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985 (enacted July 1, 1986), requires that employers with 20 or more employees, and maintain group plans (including health, dental, vision, and medical reimbursement accounts), offer continuation of benefit coverage to covered employees, spouses or domestic partners (State of California Legislation, not federal law), and dependent children who lose group coverage due to a qualifying event. Plan coverage can be continued for a maximum of 18 or 36 months depending on the qualifying event. Premiums are calculated at 102% of the total group rate and are paid by the enrollee directly to the plan on a monthly basis. HR offices are responsible for providing covered individuals with the three required COBRA notices and provide assistance in completing the COBRA enrollment form, when required. The three required COBRA notices are:
Initial General COBRA Notice - Provides the covered individual(s) with a summary of their rights, options, and notification responsibilities under the COBRA law.
Good Faith Compliance Standard
Each department should operate its COBRA function in good faith compliance with a reasonable interpretation of the statutory standards. To show evidence of good faith compliance, departments must develop standard operating procedures, provide timely notices, retain copies of notices and signed election forms, provide COBRA training to staff, and continuously audit compliance.
A qualified beneficiary is an individual (employee or dependent) that is eligible to continue group coverage due to a COBRA 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. Please note COBRA will only be offered to dependents considered eligible based on Public Employee Medical and Hospital Care Act (PEMCHA) law. A child enrolled in group coverage when ordered by a National Medical Support Notice (NMSN) or Qualified Medical Child Support Order (QMCSO) is deemed a qualified beneficiary under COBRA law, regardless of his or her status as a dependent of the covered employee. The HR office must send an Initial General Notice to the custodial parent or guardian in care of the child, or agency that sent the NMSN or QMCSO (as a substitute, if child's address is unknown). Non-resident aliens (with no U.S. income) are ineligible for COBRA continuation coverage.
The Initial General COBRA Notice provides a summary of the covered individual’s rights, options, and notification responsibilities under the COBRA law. This notice must contain the following information:
*Departments may state “and all dependent children” in lieu of listing each dependent child’s name.
90-Day Notice Period
The HR office must provide the Initial General COBRA Notice to covered individuals within 90 days of the coverage effective date. An exception to the 90 day rule is when a qualifying event occurs before the initial notice is provided to the employee. When this occurs, the HR office must include an initial notice to the employee, along with the election notice and election form.
The HR office must indicate, in the Initial General COBRA Notice, each benefit in which the employee and dependents are enrolled (Health, Dental, and Vision). Medical Reimbursement Accounts (MRA) have a separate initial COBRA notice, containing information specific to the MRA. Adding Dependents or Changing Plans (Including Open Enrollment)
When an employee adds a spouse or domestic partner, or changes plans, an Initial General COBRA Notice must be provided to the employee and newly covered spouse/domestic partner.
Dependent Child: If the HR office receives a court order that requires enrollment of a child to an employee's group coverage, then the HR office must send the Initial General COBRA Notice to each parent (two separate letters) as listed on the court order. If one of the parents’ address is unknown, the HR office must send an Initial General COBRA Notice to the agency that sent the court order. Spouse: If the HR office receives a court order that requires enrollment of an employee’s spouse, the HR office must send the Initial General COBRA Notice to the spouse, or agency that sent the court order (as a substitute, if spouse's address is unknown). Approved Notice Delivery Methods
COBRA law requires that notices must be furnished to covered individuals. The preferred method of delivery is First Class Mail. Proof of receipt is not required if mailed to the last known address. Departments must maintain a copy of each notice sent, along with logging the recipient’s name, address, and date mailed.
Initial General COBRA Notice Log
The Initial General COBRA Notice Log is used to track the date and delivery method used to provide the notice.
A COBRA qualifying event is an event which results in a loss of group coverage. Each qualifying event results in a specific number of months of continuation coverage.
Length of Continuation Coverage
*Reduction of hours includes:
**Retirement is considered a termination of employment
If 120-day death benefits apply, COBRA provisions are applicable after CalPERS determination of survivor benefits. The COBRA qualifying event is "death of employee", and the COBRA election notice and form must be sent within 14 calendar days from the date that the 120-day (calendar) death benefit ends. COBRA coverage becomes effective once the 120-day death benefit ends.1
When the terms and conditions of a retiree benefit plan are different than the terms and conditions that are in place for active employees (e.g. an increase in required premiums, a reduction of benefits, etc.), that plan is considered alternate coverage. COBRA law requires an offer of COBRA continuation coverage in these situations.
Delta Dental PPO plus Premier Enhanced
Upon retirement, an excluded employee enrolled in the Delta Dental PPO plus Premier Enhanced plan, may elect to retain the Premier Enhanced plan through COBRA continuation coverage. Otherwise, the employee must elect to change their coverage to the Delta Dental PPO plus Premier Basic plan.
Unpaid Leave of Absence
HR offices must offer COBRA continuation coverage to employees enrolled in a medical reimbursement account (MRA) while on an unpaid leave of absence.
Uniform Services Employment and Reemployment Rights Act (USERRA)
When an employee is called to active duty, HR offices must offer up to 24 months of COBRA continuation coverage to employees and their dependents.
State employees are permitted to delete their spouse, domestic partner, or dependent children from group coverage based on a voluntary action (dependents are not allowed to enroll as a dependent on another state employee’s group coverage after a voluntary action until the following open enrollment). These types of deletions are not COBRA qualifying events and the HR office will not offer COBRA continuation coverage. However, if an employee removes their dependent from group coverage in anticipation of a divorce, legal separation, or termination of a domestic partnership, then the deletion cannot be processed until the qualifying event passes, and COBRA coverage must be offered from the first day of the month following the COBRA qualifying event.
Example: An employee wants to delete their spouse prior to divorce. If the divorce process has been initiated, the deletion would be done in anticipation of a COBRA qualifying event and therefore should not be allowed. COBRA coverage must be offered at the time the divorce is finalized. The Initial General COBRA Notice informs employees of their responsibility to report these events to their HR office.
The HR office is required to provide an election notice and election form to covered employees and their qualified beneficiaries within 14 calendar days of a COBRA qualifying event or when the HR office is notified, whichever comes first. The election notice informs covered individuals that they have the right to elect COBRA continuation coverage.
Departments should customize the COBRA election notice to inform the qualified beneficiary of their current benefit plans that are eligible to be continued through COBRA, length of continuation coverage, and the names of any other applicable qualified beneficiaries.
Each covered person whether an employee, spouse, domestic partner, or dependent child has independent election rights, regardless of whether the employee elects COBRA continuation coverage.
The HR office must provide the COBRA Election Notice and Election Form to qualified beneficiaries within 14 days from the date of the qualifying event or loss of coverage, or when the HR office is notified, whichever comes first.
The Election Form must be signed and returned to the HR office by the date reflected in the Election Notice/Election Form to confirm that COBRA continuation coverage has been elected. If the election form is not returned by the date reflected in the notice/form, then all rights to elect COBRA continuation coverage will end.
Approved Notice Delivery Methods
The COBRA disclosure regulations require that notices must be furnished using measures reasonably calculated to ensure actual receipt of the material. The following are examples of acceptable distribution methods:
HR offices are strongly encouraged to use first class mail, when possible, for tracking purposes.
Single Notice Rule
The HR office sending a single notice to the last known address of the qualified beneficiary, is considered good faith compliance. The notice must be addressed to the employee and spouse or domestic partner. Notification to the covered spouse or domestic partner is deemed notification to the covered dependent children who reside at the same address (including any dependent children covered in the future). The parent or legal guardian of minor children can elect on their behalf. A separate notice is required when the HR office is aware that qualified beneficiaries reside at a different address. Keep a copy in file of the actual notice sent.
To prove that the notice was sent, the HR office should maintain a copy of the notice actually sent (reflecting the name and address where the notice was sent) and maintain evidence that the mailing practice was followed for each notice sent.
COBRA Election Notice Log
HR Offices must use the COBRA Election Notice Log to document the date as well as the address where the Election Notice was mailed.
If a COBRA qualifying event occurs, and the HR Office determines that an individual is not entitled to elect continuation coverage (i.e. gross misconduct or failure of the employee to notify the HR office within 60 days of a qualifying event), the HR Office must provide a Notice of Unavailability of Continuation Coverage within 14 days of receiving notification. This notice explains why the individual is not entitled to elect continuation coverage. The HR office must keep a copy in the employee’s OPF.
Each qualified beneficiary has 60 calendar days from the date of loss of coverage or from the date of the COBRA Election Notice to elect COBRA continuation coverage, whichever date is later. Each qualified beneficiary has independent election rights. The HR Office must identify the last date to elect COBRA continuation coverage on the Election Notice.
If an election period ends on a Saturday, Sunday, or Holiday, then the election period will be extended to the next regular workday.
No Coverage During COBRA Election Period
The qualified beneficiaries are not covered under the plan during the election period. Any claim for services occurring on or after the date group coverage ceases will not be paid. However, if COBRA is elected and retroactive premiums are paid as detailed in section 413, COBRA Premiums, then coverage will be retroactive back to the date coverage ceased and any claim for services occurring on or after that date will be processed.
Extension of COBRA Election Timeline
If a qualified beneficiary is mentally or physically incapacitated to the extent that the person cannot complete the required actions to elect continuation coverage, then the COBRA election period will be extended. This means that the specific timeline is put on hold until such time as the incapacity is resolved or a legal guardian can be named to act on behalf of the beneficiary. The HR Office must consult with its legal counsel for each case prior to making a decision.
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. Such extensions are managed by the carrier, and HR offices must refer the inquiring qualified beneficiary to the health carrier for more information.
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), then the original 18 months of continuation coverage can be extended to 36 months from the original date of loss of coverage for eligible dependent qualified beneficiaries. In no event will continuation coverage last beyond 36 months from the original date of loss of coverage. 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.
If COBRA is elected, the cost for coverage will be 100% of the total premium, plus a 2% administration fee which is paid monthly by the enrolled qualified beneficiary to the plan carrier or its designee. The plan carrier or its designee is not required to send a monthly bill. The department is not required to pay a share of the COBRA premium. If there is a change in future premium rates, the carrier will notify the enrolled qualified beneficiary prior to the new premium rates going into effect.
Retroactive Premium Payment
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 received. The employee is responsible for paying the retroactive premium payment directly to the carrier. The department shall not collect and submit the initial payment for them.
Future Monthly Premiums
Once the enrollee pays the retroactive premium, future monthly premiums are due by the first of each following month (Please see Section 421 - Carrier Contact Information). 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. All claims occurring during the month are held pending premium payment being received. 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 received. Once COBRA coverage is cancelled due to nonpayment of COBRA premiums the enrollee will not be reinstated.
Extension of COBRA Payment Timeline
If an enrollee is mentally or physically incapacitated to the extent that the person cannot pay the required premium, then the COBRA payment timeline will be extended. This means that the specific timeline is put on hold until such time as the incapacity is resolved or a legal guardian can be named to act on behalf of the enrollee. The HR office should refer all inquiries to the plan or its designee.
The HR office should direct inquiries regarding partial payments or other potential payment options to the plan or its designee. For more information, the HR office should refer employees to the employee COBRA page: http://calhr.ca.gov/employees/Pages/cobra.aspx
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 or by fax at 916-440-5676.
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 or by fax at 916-440-5676.
If the termination from employment is due to gross misconduct, then the department should not offer COBRA coverage. While providing this exception to offering COBRA, the statute and IRS have not provided a definition for employers to use. The HR office must consult with their legal counsel if they believe a gross misconduct exception is appropriate for an employee.
Departments should not make judgments or decisions independent of the COBRA law. IRS has authority to audit COBRA Programs. Departments are subject to audits and fines imposed by the Internal Revenue Service (IRS) Excise Tax, and subject to lawsuits under the Employee Retirement Income Security Act (ERISA), and Public Health Service Act (PHSA) for failure to comply with COBRA requirements.
Departments must ensure that the following items are maintained and/or accomplished to limit the prospect of COBRA violations:
There is no expressed statute of limitation on COBRA violations. Departments are to maintain COBRA documentation for at least six years.
All termination of COBRA coverage notices will be provided by the plan.
An Individual Conversion Policy is an alternative to COBRA or can follow COBRA coverage. If a qualified beneficiary loses their CalPERS health benefits or COBRA coverage, they can request an Individual Conversion Policy through their prior health plan. They must request this new policy within 30 days of losing coverage. All CalPERS health plans offer this Individual Conversion Policy option, but the cost and benefits will differ from previous coverage.
For employees in Bargaining Unit 5, COBRA enrollment forms for dental coverage should be sent to the California Association of Highway Patrolmen (CAHP) Dental Trust. Contact CAHP for COBRA dental premium information. Unit 5 employees have vision coverage through the state-sponsored Vision Service Plan (VSP) and COBRA enrollments for their vision coverage should be sent to the vision plan.
For employees in Bargaining Unit 6, COBRA enrollment forms should be sent to the California Correctional Peace Officers Association (CCPOA) Benefit Trust. The HR Office should assist employees, spouses, domestic partners, and dependent children with the completion of the COBRA enrollment forms and submit forms to CCPOA. Contact CCPOA for COBRA dental and vision premium information.
Delta Dental Plans - Delta Premier and Delta Preferred Provider Option (PPO)
The Dental Plan Enrollment Authorization form (STD. 692) will serve as the COBRA continuation enrollment form for all COBRA enrollments in the Delta Premier and Delta Preferred Provider Option (PPO) plans. Instructions are provided below. The HR office should contact the eligible employee, spouse or domestic partner, or children to obtain the information necessary to complete the form. Wolfpack Insurance Services, Inc., a company that provides administrative COBRA services, handles COBRA enrollments for Delta Dental (Delta). Eligible beneficiaries may electronically elect COBRA continuation coverage here: https://www.dvins.com/COBRA.html. The Client ID for the PPO plan is 91015-xxxxx (Department’s Division number). Note: Dependents of rank and file employees have a lower level of coverage under the Delta Premier - Basic Plan and pay a lower COBRA premium for dependent only coverage. The HR Office should reflect the dependent only COBRA premium when completing the STD. 692.
PrePaid Dental Plans - DeltaCare USA, SafeGuard, Premier Access, and Western Dental
The Dental Plan Enrollment Authorization form (STD. 692) will serve as the COBRA continuation enrollment form for all COBRA enrollments in the Premier Dental plans. Instructions are provided below. The Personnel Office should contact the eligible employee, spouse, or domestic partner, to obtain the information necessary to complete the form.Wolfpack Insurance Services, Inc., a company that provides administrative COBRA services, handles COBRA enrollments for DeltaCare USA. SafeGuard, Premier Access and Western Dental. Eligible beneficiaries may electronically elect COBRA continuation coverage for Delta Care USA here: https://www.dvins.com/COBRA.html. The Client ID for the Delta Care USA plan is 92015-xxxxx (Department’s Division number).
If the employee elects coverage and enrolls his/her family members at the same time, then only one form listing all family members is required. The HR office shall send the original form to the carrier, retain one copy in the OPF, and send one copy to the employee.
The Vision Plan Enrollment Authorization form (STD. 700) will serve as the COBRA continuation enrollment form for COBRA enrollments in the basic vision plan. Instructions are provided below. The HR Office should contact the eligible employee, spouse, or domestic partner, to obtain the information necessary to complete the form.
The Premier Vision Plan Enrollment Authorization form (STD. 774) will serve as the COBRA continuation enrollment form for COBRA enrollments in the Premier Vision plan. Instructions are provided below. The HR Office should contact the eligible employee, spouse, or domestic partner, to obtain the information necessary to complete the form.
Please mail completed CalHR 774 form to VSP's mailing address or fax to VSP at (916) 463-9031 for processing. See Section 421 for the address to send the CalHR 774 to VSP.
Under the 120-day death benefit, departments are required to continue to pay full premiums to continue coverage for a covered employee's spouse, domestic partner and/or other eligible family members for 120 days following an employee's death. The 120-day period is to provide the family a grace period while CalPERS determines if the spouse, domestic partner or other family members are eligible for a survivor's benefit. In implementing this benefit, departments will use the process used for an employee on an unpaid leave of absence (STD. 696.) Under this process, the deceased employee's department will pay four months of both the employer and employee contributions directly to the plan carriers. An eligible spouse, domestic partner and/or other eligible dependent(s) who is determined to be an eligible survivor and receives a continuing allowance from CalPERS may continue coverage as annuitants. If CalPERS determines that the spouse, domestic partner and/or other eligible family member(s) is not eligible for survivor benefits, then the department should notify the spouse, domestic partner and/or other eligible family member(s) of COBRA eligibility within sixty days from the date CalPERS makes this determination. Upon notice of COBRA eligibility by the department, it is the responsibility of the spouse, domestic partner, or other eligible family member(s) to elect and pay monthly premiums directly to the plan(s) in the manner prescribed in the COBRA Election Notice.