Providing CaliforniaChoice health insurance to your employees and their dependents is crucial for their ongoing health and well-being. Equally, understanding their eligibility and maintaining coverage is key to ensuring your organization’s financial wellness.
COBRA versus Cal-COBRA
Before we get into the details, here’s a high-level look at when COBRA and Cal-COBRA apply:
- COBRA generally applies to private-sector groups with at least 20 employees and an employer-sponsored health plan. COBRA also applies to plans sponsored by state and local governments. It does not apply to federal government employees or to churches and certain church-related organizations.
- If COBRA does not affect your group, you could be subject to the state-equivalent known as Cal-COBRA. It applies to employers and group health plans with 2-19 employees.
- Both full- and part-time employees are counted to determine whether COBRA or Cal-COBRA applies to your group.
- COBRA and Cal-COBRA allow qualifying individuals to continue their group health insurance when it would otherwise end due to certain events.
Who’s Entitled to COBRA Continuation?
Covered employees, former employees, spouses, former spouses, and dependent children may be eligible for COBRA continuation in the event of:
- A covered employee’s job loss or reduction in hours (and eligibility for insurance)– for reasons other than gross misconduct
- A covered employee becomes entitled to Medicare
- A covered employee’s divorce or legal separation
- A child’s loss of dependent status under the plan (and loss of coverage)
- A covered employee’s death
The eligibility for COBRA depends on the type of qualifying event. This includes situations like employer bankruptcy, and it can apply to retirees, their spouses, former spouses, or dependent children. Additionally, those who become qualified beneficiaries could be children born to or adopted by the employee during the coverage period, as well as independent contractors and directors enrolled in the employer’s group health plan.
Typically, COBRA doesn’t cover job loss due to “gross misconduct.”
Length of COBRA Continuation
The length of time you can keep your coverage after losing employer-sponsored benefits varies—it can last from 18 to 36 months, depending on what set the change in motion. One thing to keep in mind, if you or a family member is navigating disability, you might qualify for an additional 11-month COBRA extension.
An event that qualifies for 18 months can be extended another 18 months for California-based employers, making it 36 months under Cal-COBRA. This only covers medical, not dental or vision.
COBRA Costs and Alternatives
Employers might pay for COBRA coverage, but usually, they ask individuals or families to pay for it themselves. If you have to pay the premium, it won’t be more than the total insurance cost plus a 2% admin fee.
Many employees and their dependents might not know that other available coverage options could be cheaper than COBRA continuation.
For instance, individuals or families could qualify for health plans through an Affordable Care Act (ACA) Marketplace. Covered California, the state’s ACA Marketplace, notes that in 2024, 90% of those who sign up get financial assistance. On average, members receive $5,000 annually to lower their health insurance costs. This means more than half of Californians could end up paying less than $10 per month for their insurance.
Another option may be a “special enrollment” in other group health coverage. For example, if an employee loses group health insurance through a spouse, the employee may be able to enroll in an employer-sponsored plan.
If an individual is 65 or older, or younger with a disability or End-Stage Renal Disease, enrollment in Medicare is a third option. For details, employees should visit the U.S. Department of Health and Human Services website.
COBRA Billing Services
At CaliforniaChoice, we offer our employers the Business Solutions Suite – a little something extra for their business. The Business Solutions Suite gives you access to complimentary Cal-COBRA or Federal COBRA billing services based on your group size. Want more information? Contact your employee benefits broker or give CaliforniaChoice Customer Service a call at 800-558-8003. We’re here to help!