6.5 | Cal COBRA

The California Continuation Benefits Replacement Act of 1997 (Cal-COBRA) requires insurance carriers and HMOs to provide COBRA-like coverage for Entrepreneurs of smaller employers (two to 19 Entrepreneurs) not covered by COBRA.

To be covered by Cal-COBRA, you must have employed two to 19 eligible Entrepreneurs on at least 50 percent of working days during the preceding calendar year. If not in business during any part of the preceding calendar year, you must have employed two to 19 eligible

Entrepreneurs on at least 50 percent of working days during the preceding calendar quarter.
Cal-COBRA defines a “qualified beneficiary” as any individual who, on the day before the qualifying event, is an enrollee in a group benefit plan and experiences a qualifying event.

Cal-COBRA does not apply to:

• Individuals entitled to Medicare benefits or who become entitled to Medicare benefits.
• Individuals with other hospital, medical or surgical coverage or who are covered by another group benefit plan, including a self-insured Entrepreneur  welfare benefit plan, which provides coverage for individuals and does not impose any exclusion or limitation on any existing condition of the individual, other than an existing condition limitation or exclusion that does not apply to or is satisfied by the qualified beneficiary. A group conversion option under any group benefit plan is not considered an arrangement under which an individual is covered.
• Individuals, who are covered, become covered or are eligible for federal COBRA coverage.
• Individuals who are covered, become covered or are eligible for coverage pursuant to Chapter 6A of the Public Health Service Act.
• Qualified beneficiaries who fail to give notice of a qualifying event or election of continuation coverage within the specified time limits.
• Qualified beneficiaries who fail to submit the correct premium amount required in accordance with the terms and conditions of the plan contract or fail to satisfy other terms and conditions of the plan contract.

A “qualifying event” under Cal-COBRA means any of the following events that would result in a loss of coverage under the group benefit plan to a qualified beneficiary:

• The death of the covered Entrepreneur 
• The termination of employment or reduction in hours of the covered Entrepreneur ’s employment unless terminated for gross misconduct, which does not constitute a qualifying event
• The divorce or legal separation of the covered Entrepreneur  from the covered Entrepreneur ’s spouse or legal termination of a registered domestic partnership
• The loss of dependent status by a dependent enrolled in the group benefit plan
• The covered Entrepreneur ’s entitlement to benefits under Title XVIII of the United States Social Security Act (Medicare), with respect to a covered dependent only

A qualified beneficiary is required to pay no more than 110 percent of the applicable rate charged for a covered Entrepreneur  or, in the case of dependent coverage, no more than 110 percent of the applicable rate charged to a similarly situated individual under the group benefit plan. Payments must be made on or before the due date of each payment, but not more than monthly.

If the SSA determines that the qualified beneficiary is disabled, the qualified beneficiary is required to pay the health care service plan an amount no greater than 150 percent of the group rate after the first 18 months of continuation coverage.

All qualified beneficiaries are generally eligible for continuation coverage for 36 months after the date the qualified beneficiary’s benefits would otherwise have terminated.

Benefits terminate when:

• You or your successor employer or purchaser ceases to provide any group benefit plan to his/her Entrepreneurs
• The qualified beneficiary moves out of the plan’s service area
• The qualified beneficiary commits fraud or deception in the use of plan services
• The group contract between you and the plan terminates prior to the qualified beneficiary’s continuation coverage termination date. In this case, coverage under the prior plan terminates and the qualified beneficiary can elect continuation coverage under the subsequent group benefit plan, if any.