COBRA Health Insurance California

COBRA is probably one of the most difficult laws for employers and employees to understand. The Consolidated Omnibus Reconciliation Act of 1986 mandates that employers who offer group health insurance allow employees to continue their medical insurance coverage after an employee or dependent is no longer eligible to stay on the plan.

California has a complementary COBRA system, referred to as Cal-COBRA. Cal-COBRA extends the Federal group health insurance protections to companies with 2 to 19 employees. Federal COBRA only applies to companies with 20 or more employees. CalCOBRA also extends the beneficiary period to 36 months for all qualifying events. Participants must pay 110 percent of the premium under California COBRA versus 102 percent under COBRA.

COBRA defines the situations under which an employee or dependent is eligible to continue health insurance coverage. COBRA requires employers to send out notifications of eligibility after certain “qualifying events,” such as termination of employment, divorce, overage dependent child. COBRA specifies the number of days in which the employer must send out the “qualifying event notices,” and the number of days in which a “qualified beneficiary” has to “elect” COBRA coverage. It is VERY complicated and the penalties are severe for an employer who messes up.

Thankfully, in 2004 (and updated in 2014) the U.S. Department of Labor, Employee Benefits Security Administration published the Employer’s Guide to Group Health Continuation Coverage under COBRA. This easy to read document helps employers make sense of this complicated Federal law.

The DOL EBSA web site is also full of other useful information regarding COBRA compliance including the model general notice for single employer health plans. Employers can use this document to notify qualified beneficiaries of their rights.  The model notice should help employers defend themselves against a lawsuit for improper notification.

If you’re an employer who must comply with Federal COBRA; then, the best thing to do is to hire a Third Party Administrator (TPA) to manage everything.  The TPA will send out the required notices; keep track of the deadlines; and bill and collect monthly premiums from “qualified beneficiaries who elect COBRA” (i.e., your former employees or family members who want to continue their coverage.)   Handing off the COBRA administration to the TPA allows you to focus on your business while staying in compliance with the law.    Give us a call 800-746-0045 if you want more information and you’d like Benefits Cafe to become your agent.