Most employers are familiar with the federal COBRA law. However, many may not be aware that most states have also passed their own version of COBRA, popularly called mini-COBRA laws. While many of these laws are similar to federal COBRA, there can be important differences.
What employers have to comply with Cal-COBRA?
Cal-COBRA applies to employers with two to 19 employees that are not covered by federal COBRA. The law applies to group health, vision-only, and dental-only plans. Employers that offer self-funded ERISA plans do not have to comply. Employers subject to federal COBRA may also have to comply with parts of Cal-COBRA. If an employee had less than 36 months of continuation coverage under federal COBRA, they may use Cal-COBRA to extend their coverage to 36 months.
What are the qualifying events?
Cal-COBRA qualifying events are similar to federal COBRA and include:
- Termination of employment (except for gross misconduct)
- Death of the employee
- Reduction in hours causing the employee to lose coverage
- Divorce or legal separation of an employee from their spouse
- Loss of dependent status by an enrolled dependent
- Loss of dependent coverage because the employee is entitled to Medicare
Who is a qualified beneficiary?
A qualified beneficiary is anyone who was covered by the group health plan on the day before a qualifying event. A child born to, or placed for adoption with, a former employee while they are on Cal-COBRA is also considered a qualified beneficiary if the child is enrolled within 30 days of placement or birth. Qualified beneficiaries cannot be charged more than 110 percent of the applicable rate for similarly situated individuals.
Are there notice requirements?
The group insurance carrier must include a Cal-COBRA notice with the plan document. Employers must notify the insurer within 30 days when the qualifying event is termination or reduction in hours that causes the employee to lose coverage. For all other qualifying events, the qualified beneficiary must notify the insurer or employer in writing within 60 days. The insurer or employer then has 14 days to provide the qualified beneficiary with an enrollment information. Qualified beneficiaries have 60-days to enroll. The first premium is due within 45 days of enrollment.
Employers must also provide a notice of termination of coverage during the 180-day period before coverage ends. Large employers must also provide this notice to employees whose federal COBRA coverage is ending, explaining that they have the right to continue coverage under Cal-COBRA for up to 36 months from the date of their qualifying event.