COBRA or the Consolidated Omnibus Budget Reconciliation Act is a federal law extending current group health insurance of an employee when he experiences a qualifying situation like employment termination or reduction of part-time work. The coverage can be as long as 18 months extension period.
To be eligible for COBRA, an employee’s group policy must have 20 or more employees covered during more than 50% of his company’s business days in the previous calendar year. HMOs, PPO’s, indemnity policies and self-insured plans qualify for COBRA extension too. The following however is not covered like Federal government Health plans or Church health insurance plan members and federal government employees. Individual health insurance which has been purchased is also exempt from COBRA extension. Seeing the restrictions make it one reason to participate in group health plans.
Cal-COBRA on the other hand is a California state law with provisions similar with that of federal COBRA. With Cal-COBRA the group policy must be active for 2-19 employees insured over at least 50% of its working days during the last complete calendar year, or the preceding calendar quarter if the employer was not in business during the earlier months of that year.
Unlike COBRA, self-insured plans are not qualified but church health insurance plans are covered under Cal-COBRA. It is important to remember that both COBRA and Cal-COBRA do not apply to individual health insurance.
Starting January 1, 2003, Cal-COBRA extension period has been lengthened from 18 to 36 months. This would mean that you can still enjoy the full benefits of your health insurance for the next 36 months although you have not made any updates on your account. After January 1, 2003, employees will enjoy the benefit of complete 36-month coverage under Cal-COBRA instead of the prior 18-month coverage extension.
California Insurance Code (CIC) Section 10128.59 stipulates a similar extension under Cal-COBRA for employees finishing 18 months coverage under federal COBRA provided the total extension does not exceed 36 months. For the extension under Cal-COBRA to apply, the employee must be eligible for COBRA after January 1, 2003, and the employer’s group master policy is issued in the state of California. If the group master policy did not originate in California, the employer must be employing 51% or more of its workforce in California and have its actual business address in California.
Salient Points to note about COBRA and Cal-COBRA:
• COBRA is a federal law extending employees’ active group health coverage after a qualifying situation or condition. Individual health plans do not qualify under COBRA.
