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A Service of OnQue Technologies, Inc. |
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New California Law Will Affect Federal COBRA
Recipients |
January 10, 2003
Santa Rosa, CA |
Because we
continue to receive inquiries regarding the implementation date of California
law A.B. 1401, we want to emphasize these important dates once
again: |
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1) This law becomes effective on September 1, 2003, and |
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2) The extension applies to individuals whose federal COBRA coverage began on
or after
January 1, 2003. |
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New California Law Will Affect
Federal COBRA Recipients
California Assembly Bill (A.B.) 1401 offers an
extension of continuation coverage to individuals in California who have
exhausted their federal COBRA benefits. Under this law, certain individuals who
exhaust continuation coverage under federal COBRA must be offered the
opportunity to continue coverage under Cal-COBRA for up to a total of 36 months
from the start of that person's federal COBRA coverage.
This law applies
to individuals whose coverage under federal COBRA began on or after January 1,
2003. (It also entitles those enrolled under Cal-COBRA on or after January 1,
2003 to 36 months of coverage.) It applies only to group health plans in which
benefits are provided by insurance carriers and HMOs. It is not applicable to
self-funded plans.
It is very important to understand that A.B. 1401 does
not extend benefits under federal COBRA; when one's federal COBRA is exhausted,
his continuation rights under federal law are terminated. Instead, A.B. 1401
affords qualified individuals the opportunity to further extend continuation
coverage under state law to a maximum total continuation period (federal +
state) of 36 months. For example, when a disabled former employee, whose
federal COBRA began on February 1, 2003, exhausts her 29 months of coverage
under federal COBRA (18 months + 11 month disability extension), she may
continue her coverage for an additional 7 months under Cal-COBRA. Another
former employee who exhausts his 18 month federal COBRA continuation coverage,
and is not qualified for an extension under federal law, may continue under
Cal-COBRA for an additional 18 months.
Once effective, employers must
notify eligible COBRA recipients of the availability of the new extension of
coverage in the notice of pending termination of COBRA coverage that is
required to be provided to COBRA beneficiaries. The cost of the continuation
coverage cannot exceed 110 percent of the applicable premium, or 150 percent
for those under a disability extension.
A.B. 1401 applies to full
service plans and those specialized health plans that provide core benefits as
defined under California law, namely hospital, medical or surgical benefits,
and specialized mental health plans that offer group contracts. Excluded are
specialized dental, vision, chiropractic and acupuncture plans, according to a
California Department of Managed Health Care memo, dated December 11, 2002. But
note that full service plans that contract with specialized mental health,
dental, vision, chiropractic and acupuncture plans are required to provide
enrollees the full service and specialized benefits under the continuation
coverage extension.
The law does not change the
existing Cal-COBRA provision, Cal-COBRA Senior, that gives workers who
terminate employment at age 60 or older, and who have at least five years of
employment with that employer, the right to elect continuation coverage for up
to five years from the time of termination.
A.B. 1401 also revises coverage
requirements for converted policies as of September 1, 2003 and extends the
period in which to apply for conversion coverage. We will cover the new
conversion policy requirements in a follow-up tip. |
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This information is provided by
OnQue Technologies, Inc. for educational purposes only and does not constitute
legal advice. If legal advice or other professional assistance is required, the
services of a competent professional should be sought.
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