COBRA Health Insurance California Coverage Info

COBRA is a health insurance policy option that covers employees after they suffer a loss of health insurance coverage that was provided by their employer. COBRA insurance stands for the Consolidated Omnibus Reconciliation Act. Congress passed it in 1985. The Department of Labor oversees COBRA health insurance plans. This Act gives the right to employees to continue their insurance coverage by assuming the full cost of the insurance policy.

What is Cal-COBRA?

COBRA Health Insurance California (Cal-COBRA) is California’s version of Federal COBRA coverage.

Who is Covered by Cal-COBRA?

If a person enrolls in their employer’s health insurance coverage, they are eligible to receive Cal-COBRA coverage upon leaving that job. However, the employer’s plan must be enrolled under Cal-COBRA regulations.

It is available to:

  • Employees leaving their job.
  • Retirees.
  • Spouses of covered employees.
  • Dependents of covered employees.

If an employee is fired or quits without wrongdoing, they can elect to enroll in Cal-COBRA coverage. Cal-COBRA, like the Federal program, is designed to give qualified beneficiaries an insurance option while they search for another insurance policy. Through another job, private insurance, or Medicare, Cal-COBRA is designed to provide continuation coverage to prevent any lapses in coverage.

Is Cal-COBRA Different than Regular COBRA?

There are a couple of differences between the Federal COBRA coverage and Cal-COBRA.

First, Federal law requires COBRA to offer health insurance coverage to companies that employ 20 or more people. Cal-COBRA will offer coverage to companies with 2-19 employees. This increases the number of people who qualify for COBRA Health Insurance California.

Like the Federal COBRA program, certain qualifying events trigger Cal-COBRA coverage. These can include:

  • The death of a covered employee.
  • Termination of employment.
  • Divorce.
  • Separation.

The Cal-COBRA plan will contact eligible individuals within 60 days of a qualifying event with more information. It is then up to the insured party to decide if they want to accept or decline coverage. Since you have to elect coverage, there are no Open Enrollment Periods.

In cases of divorce or separation, the covered employee must contact the Plan Administrator to report the separation or divorce. In this instance, the administrator has 14 days to contact both parties to discuss their health coverage options through Cal-COBRA. Both parties will have 60 days from the time the Plan Administrator contacts them to decide whether they want to accept Cal-COBRA coverage.

Another difference with COBRA Insurance California is that State law requires most companies to extend an individual’s Cal-COBRA coverage to 36 months. This allows additional time for people to gain insurance. For instance, as they wait for an employer’s probationary period to be eligible for coverage or waiting for Medicare eligibility.

In any case, the initial payment for a COBRA Insurance California plan must be made within 45 days of electing the option for coverage.

Medicare and Cal-COBRA

If an individual has COBRA Health Insurance California before becoming eligible for Medicare, the day they do become eligible for Medicare, the COBRA coverage usually ends.

If an individual already has Medicare when they become eligible for COBRA Insurance California, they can keep it. In this case, Medicare can be used as the primary health insurance source; Cal-COBRA can be used as the secondary source.

Spouses of employees with Medicare who also qualify for their job’s health insurance plan could still receive Cal-COBRA coverage.

If an employee becomes eligible for Medicare due to End-Stage Renal Disease, they can have both Medicare and Cal-COBRA coverage. There is a period of 30-months called the Coordination of Benefits Period. During this time frame, Cal-COBRA will be used as the primary insurance provider; Medicare will be secondary. After these 30 months, it changes. Medicare becomes the primary health insurance provider; Cal-COBRA will be secondary.

What Does Cal-COBRA Cost?

When an employee no longer works for a company and is eligible for Cal-COBRA coverage, they become responsible for paying the full policy premium themselves. This includes the portion they were paying from their paycheck, the portion the employer was paying, as well as any Administration Fee.

For example: Under Federal COBRA, if you pay $300 per month for your group health plan, and the portion your employer pays is $400, your new monthly premiums would be the full $700. Plus, whatever the current Administration Fee is. Generally, it’s 2-5%. So, at 5% that payment would be $735 per month.

However, premium costs for Cal-COBRA are slightly different than that of the Federal COBRA plan. Cal-COBRA recipients can expect to pay about 110% of the premium if their employer’s plan was age-based. Making that same payment $770 per month. If it was based on the number of employees, then the recipient can expect a premium of up to 213% depending on the change in number of employees. This can dramatically affect the cost or your policy.

Premiums for Cal-COBRA policies are subject to change, typically on a 12-month cycle.

Also, individuals with COBRA coverage may also be qualified to receive the Health Coverage Tax Credit (HCTC). This credit can be claimed on an annual income tax form.

Can Benefits Change for COBRA Insurance California?

We have seen above that the cost of your health insurance can change. As far as benefits are concerned, they will remain the same as you had when you were employed, but that does not mean they will stay that way.

Benefits through Cal-COBRA can change if:

  • An employer elects to discontinue what their health insurance offers.
  • An employer chooses a different group health plan.
  • An employer elects to discontinue their health insurance benefits altogether.

In the case of complete benefit termination, Cal-COBRA will no longer be available to the covered individual.

For additional information on Cal-COBRA and how it differs from Federal COBRA, contact us at 1-855-614-5057. Our licensed California COBRA insurance experts will be happy to answer any questions you have.