Employer-Sponsored Health Coverage

Many employers offer health coverage to their employees. This is known as employer-sponsored health coverage. Sometimes, the employer pays for some, or all, of the premium. For an additional premium, some of these health plans offer coverage to spouses, domestic partners, and dependents. For more information on employer-sponsored health coverage, see DB101’s Private Health Coverage program description.

Continuation Coverage - Keeping Health Coverage When Your Employer-Sponsored Coverage Ends

Your health coverage from your employer may end for a number of reasons. You may, for example, be laid off or quit your job. Your coverage would normally end at that time. There are, however, federal and state laws that may allow you to stay on that same policy for up to 36 additional months. The federal laws are called COBRA and OBRA, and the state law is called Cal-COBRA. See below for more information on the differences between these laws.

Eligibility for Continuation Coverage

The continuation coverage laws only apply to employer-sponsored health coverage. The laws do not apply to individual coverage, or jobs with the federal government or churches, although federal employees have similar protections. If you’re covered under a self-insured plan, you are eligible for federal protections, but not state protections (see below). If you’re covered under an association-sponsored plan, contact the California Department of Insurance or the California Department of Managed Health Care (DMHC) to learn more about your rights.

To be eligible for continuation coverage, you must have lost your employer-sponsored group coverage because of a qualifying event. Many events that cause you to lose your original coverage are considered qualifying events, unless you have been fired for gross misconduct.

For employees, qualifying events include:

• Quitting
• Being fired for a reason besides gross misconduct
• Being laid off
• Having your work hours reduced

If you are covered under your spouse’s employer-sponsored health coverage, you can get continuation coverage if your spouse loses coverage for any of the above reasons or because:

• The employee dies
• There’s a divorce or legal separation
• The employee becomes eligible for Medicare

For domestic partners, eligibility for continuation coverage depends on which law applies. If Cal-COBRA applies, you are treated the same as a spouse. Domestic partners are not eligible for COBRA protections, although many employers offer continuation coverage plans with features similar to COBRA.

If you are covered as the dependent of an employee who has employer-sponsored coverage, and that employee loses coverage for any of the above reasons, you’re eligible for continuation coverage. In addition, most plans have an age limit after which you’re no longer considered dependent. Reaching this age is also considered a qualifying event.

Each eligible individual has an independent right to elect COBRA.

Getting Continuation Coverage

To be eligible for continuation coverage, you have to be on the employer-sponsored health plan on the day before a qualifying event happens. After the qualifying event, your employer has to notify the health plan within 30 days of that event. If you divorce or legally separate from your spouse, or you reach an age when you’re no longer considered a dependent child, you have to tell the health plan within 60 days.

The health plan then has 14 days to send you a notice telling you that you are eligible for continuation coverage. They will send an application along with the notice that explains how much your premium will be. The cost to you will generally be the entire amount of the premium, including what the employer used to pay, plus a small cost for administrative fees. See below for more information.

You have 60 days from the day you qualify to enroll in continuation health coverage. If you get a notice after your qualifying event, you have 60 days from the day you receive the notice. If you don’t get a notice, and think that you should have, contact both the employer and the health plan. Be sure to meet all deadlines for applying and paying premiums. The former employer does not have to send you a bill for the premiums. It’s up to you to remember to pay on time. For COBRA coverage, there is a 30 day grace period on late payments, but providers can cancel your coverage and retroactively reinstate it when they receive the premium. Otherwise the rules are strict and being late may cause your coverage to end. It’s also helpful to keep everything in writing.

If you are on Medi-Cal, the Medi-Cal/Health Insurance Premium Payment (HIPP) program may be able to help you pay continuation coverage premiums.

COBRA, Cal-COBRA, and OBRA – The Different Continuation Coverage Laws

All three of these laws provide for the continuation coverage described above. They apply to different people for different amounts of time. It can be confusing as to when coverage under one law begins and when another one ends. For most Californians, COBRA, Cal-COBRA, or a combination of the two provides 36 months of continuation coverage. There are, however, differences between the laws:

• COBRA is a federal law that covers employees of businesses with 20 or more employees. It allows up to 18 months of continuation coverage for an employee who loses coverage because of a qualifying event. The premium for these 18 months is up to 102% of the premium for current employees with the same plan. The time periods are sometimes different for spouses and dependents. COBRA will last for 36 months if you qualify for continuation coverage because of the employee’s Medicare enrollment, legal separation or divorce, loss of dependent status, or death of the employee.

• Cal-COBRA is a California law that expands on COBRA. It allows 36 months of continuation coverage for employees of businesses with 2-19 employees. For employees of larger businesses who only have 18 months of COBRA, Cal-COBRA also provides an additional 18 months of coverage, bringing their total to 36 months as well. The Cal- COBRA premium is up to 110% of the premium for current employees with the same plan. Unlike COBRA, Cal-COBRA does not apply to self-insured plans, and those already on Medicare cannot qualify for Cal-COBRA. If you are switching from COBRA to Cal-COBRA, the health plan must send you a notice explaining the change in premiums and what you need to do to keep your coverage. If you don’t get a notice, and think that you should have, contact the health plan.

• OBRA is a federal law that is meant to extend COBRA for a longer period of time to people with disabilities. If you are on COBRA for 18 months and Social Security determines that you are disabled within the first 60 days of your continuation coverage, you can extend your coverage for an additional 11 months. The idea is to protect health coverage during the period between becoming disabled and qualifying for Medicare. The premium can increase to up to 150% of the premium for current employees with the same plan.

Getting Help Paying COBRA Premiums

In March of 2009, the federal and California governments passed laws that drastically decrease COBRA and Cal-COBRA premiums for people who recently lost their jobs. You may be eligible if you have involuntarily lost your job between September 1, 2008 and December 31, 2009. People who qualify only have to pay 35% of their COBRA or Cal-COBRA premiums. That means that someone who would normally pay $400 a month for health coverage through COBRA could get the same coverage for $140.

The reductions are for COBRA or Cal-COBRA coverage that started after February 16, 2009. It lasts for a maximum of 9 months. The U.S. Department of Labor has an excellent website that gives all of the details about the premium reduction. You can get the information in alternate formats by calling 202-693-8664 (Voice); 202-501-3911 (TTY).

Benefits Under Continuation Coverage

When you continue coverage, you’re on the same policy you were previously on and will have the same benefits as other employees on the plan. If your employer increases premiums for those currently on the plan, your premiums will increase accordingly. If your employer offers current employees an opportunity to switch plans, you will have that opportunity as well. For both COBRA and Cal-COBRA coverage, you can also choose to continue coverage you had for dental and vision benefits. If you are switching from COBRA to Cal-COBRA, the employer doesn’t have to give you the opportunity to continue these types of supplemental policies.

Continuation Coverage Ends

The 36 month time limit described above is the maximum amount of time you can continue coverage in California. It can end earlier for a number of reasons:

• You fail to pay your premiums on time or miss other deadlines.
• You get health coverage through another plan, including Medicare. If that plan has a service wait or a period of time when it doesn’t cover pre-existing conditions, you can keep your continuation coverage until that period ends or you have passed the time limit for continuation coverage.
• The employer who sponsored your health coverage no longer offers a plan to any of its employees.
• You are on COBRA for the maximum amount of time, but aren’t eligible for the Cal-COBRA extension.
• You move out of the area that your plan covers.

If you’re on COBRA and the employer who sponsored your health coverage has a plan that covers the new area, you must be offered coverage in the new area. For Cal-COBRA, your employer is not required to offer continuation coverage even if they have a plan that covers the new area.

Other Options

If you have lost your employer-sponsored health coverage, there may be other ways to get health coverage besides continuation coverage. These may also be options if your continuation coverage ends and you don’t have new health coverage.

You may be able to convert your employer-sponsored policy into an individual one. You could also buy individual coverage yourself. Although it may be difficult to get an individual policy if you have a pre-existing condition, a law called HIPAA, along with similar California laws, may guarantee your right to buy individual coverage. For more information, see DB101’s descriptions of Private Health Coverage and HIPAA & California Protections.

If you have a disability that prevents you from working at a certain level, you may be eligible for Supplemental Security Income (SSI) or Social Security Disability Insurance (SSDI). If you qualify for SSI, you get Medi-Cal right away. If you qualify for SSDI, you get Medicare roughly two years later.

If you are eligible for Medi-Cal, but are earning too much to qualify for free coverage, you may be eligible for the 250% California Working Disabled program. You pay a monthly premium for Medi-Cal coverage that ranges from $20 to $250 (for individuals) and is based on your countable income.

If you can’t get coverage through individual policies because of a health condition and have used up your continuation coverage, there’s a program in California called the Major Risk Medical Insurance Program (MRMIP), commonly referred to as “Mister MIP”. It offers 36 months of coverage, followed by guaranteed coverage after that time period is up. To be eligible, you have to be a California resident, be ineligible for Medicare Part A and B (unless you have end-stage renal disease), have used up or be ineligible for COBRA or Cal-COBRA, and prove that you can’t get adequate coverage. You can apply for the program if you’re currently on COBRA or Cal-COBRA but know that it is ending soon. For more information, see the MRMIP Application and Handbook.

Filing a Complaint

If you have problems with your continuation coverage, you should first contact your former employer or the health plan. If the problem continues, you can file a complaint. The California Department of Insurance can answer questions and help you file a complaint. Contact them here.

Sources

The following links are provided for those who want detailed information on Continuation Coverage. For those looking for more general information, please go to DB101’s Continuation Coverage Resources page.

The U.S. Department of Labor (DOL) has a page that lists DOL resources on COBRA.

The California Department of Managed Health Care has pages dedicated to COBRA and Cal-COBRA.

The code governing Cal-COBRA can be found in section 1366.20 to 1366.29 of the California Health and Safety Code.