When an employer offers a group health insurance plan, such as medical, dental, or vision insurance, the employee and covered dependents (“Qualified Beneficiaries”) are provided an opportunity to continue their current plan at the individual/family’s expense when they have a qualifying event. Qualified events may include termination or reduction of hours of the covered employee’s employment for other than gross misconduct; divorce or legal separation from a covered employee; the loss of dependent status by overage dependent; the covered employee becomes eligible for Medicare; or the death of the covered employee. The continuation of group coverage option is known as either “Federal COBRA” or “Cal-COBRA.”
Listed below are some highlights of Federal COBRA vs. Cal-COBRA:
|Employer size||20 or more employees more than 50% of the previous calendar year||2-19 employees|
|Who is eligible?||Covered Individual and covered spouse/dependents at the time of the qualifying event||Covered Individual and covered spouse/dependents at the time of the qualifying event|
|Who sends the COBRA Notice to the individual and qualified beneficiaries?||Either the employer or a third-party administrator sends the COBRA notice within 30 days of the qualifying event.||Employer must notify the insurance carrier and the carrier is responsible for sending out the Cal-COBRA notifications to the individual and qualified beneficiaries.|
|How long do they have to elect the COBRA/Cal-COBRA coverage?||Employee and/or qualified beneficiary must elect coverage within 60 days of the qualifying event.||Employee and/or qualified beneficiary must elect coverage within 60 days of the qualifying event.|
|How much does it cost to continue coverage?||Cost is 102% of the regular premium for 18 months.NOTE: premium may change within that period, depending on plan year and renewal rates with insurance carriers.||Cost is 110% of the regular premium for 18 months.NOTE: premium may change within that period, depending on plan year and renewal rates with insurance carriers.|
|Duration of Coverage Continuation||Generally extends health coverage for 18 months. Individuals with certain qualifying events may be eligible for a longer extension (i.e. 29 or 36 months).||Cal-COBRA allows individuals to continue their group coverage for up to 36 months. For individuals covered under Federal COBRA, Cal-COBRA may also be used to extend health coverage for a combined period of up to 36 months.|
We typically recommend that employers with 20 or more employees outsource the COBRA administration to one of our preferred third-party administrators (TPA), as COBRA requires a number of plan notifications to take place at different stages in the COBRA process. Some of the notifications include:
- COBRA General Notice
- Notice of Qualifying Event
- COBRA Election Notice
- COBRA Notice of Unavailability of Continuation Coverage
- COBRA Notice of Early Termination of Continuation Coverage
The other option for Insurance coverage for individuals and qualified beneficiaries may be to elect Individual coverage, either “on” or “off-Exchange” plans, providing it is within their “Special Enrollment” period. If it is not “open enrollment” for individual coverage for on or off-Exchange plan and they had a qualifying event (as seen above), then they have up to 60 days to enroll under the special enrollment period. See blog post: Help…I lost my job…Should I take COBRA or Covered California (Exchange)?
For more information, please do not hesitate to contact MNJ Insurance Solutions at (714) 716-4303.
Additional COBRA Information:
- An Employer’s Guide to Group Health Continuation Coverage Under COBRA
- Fact Sheet: Consolidated Omnibus Budget Reconciliation Act (COBRA)
- Continuation of Health Coverage- COBRA
- FAQs for Employees About COBRA Continuation Health Coverage
This material is for informational purposes only and not for the purpose of providing legal advise. You should always contact your attorney to determine if this interpretation is appropriate for your particular situation.