Insurance through COBRA and CalCOBRA
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COBRA and CalCOBRA
COBRA is a federal law which allows you to continue your group health benefits when your benefits might otherwise end. Benefits under COBRA are the same benefits you had from the employer plan. Employers must have at least 20 employees before this law applies.
CalCOBRA provides the same protection under California state law for workers of employers with 2 to 19 employees. If you take advantage of COBRA or CalCOBRA, you must pay the full amount of the premium, plus an administrative fee.
Certain events trigger eligibility for COBRA or CalCOBRA benefits. The plan administrator must notify the employee and the covered spouse of their right to continue coverage within 44 days of the event, except in the case of legal separation or divorce. In those cases, the individual must first notify the plan administrator of the separation or divorce, and then the administrator has 14 days to notify them of their COBRA rights. The individual must then notify the administrator that s/he wants COBRA benefits within 60 days after s/he receives his/her COBRA notice.
The chart below shows the events that trigger these benefits, and the period of time during which you may purchase COBRA or CalCOBRA coverage. The length of time you can keep COBRA benefits when you retire depends on how long you continued working after turning 65-years-old (when you were eligible for Medicare).
| Qualifying Event COBRA (or CalCOBRA) | Person Covered | Maximum Length of Coverage |
|---|---|---|
| Employment ends, or hours are reduced | Employee, spouse, and dependent child | 18 months* |
| Employee entitled to Medicare Divorce or legal separation Death of a covered employee |
Spouse and dependent child | 36 months |
| Loss of Dependent Child Status | Dependent child | 36 months |
| Bankruptcy of former employer | Former retired employee, spouse, and dependent child | Lifetime & Additional 36 months after death of former employee |
* California law requires companies to extend COBRA benefits for a total of 36 months when a person is entitled to fewer than 36 months of federal COBRA coverage.
Note: There are special rules when a person becomes disabled or when a person has more than one “qualifying event.” Contact the U.S. Department of Labor when this occurs.
If the employer changes the group health benefits, your benefits will also change. If the employer decides to stop offering group health benefits, your coverage will end. If you lose your employer-sponsored continuation coverage, or you can no longer afford to keep it, contact your local HICAP office for help with any options you may have for obtaining other coverage.
Medicare and COBRA
If you have Medicare before becoming eligible for COBRA, you can have both Medicare and the continuation coverage. This rule does not apply to CalCOBRA. You cannot get CalCOBRA if you already have Medicare, and you cannot stay on CalCOBRA if you become eligible for Medicare.
Note: If you are already on COBRA and then become eligible for Medicare, your entitlement to continuation coverage will usually end. However, your spouse may be entitled to additional months of coverage even though your coverage will end because of your Medicare eligibility.
If you have Medicare and become eligible for COBRA benefits, you can choose between COBRA and a Guaranteed Issue Medigap policy. See our section Your rights to buy a Medigap policy. Since benefits from COBRA coverage are generally more generous, many Medicare beneficiaries who have high medical expenses may choose to purchase COBRA coverage.
If you have Medicare and choose to continue COBRA coverage, Medicare is the primary insurer and COBRA the secondary insurer, paying after Medicare has paid. If you choose COBRA coverage, make sure that your health care providers understand they will now have to bill Medicare first instead of the employer health plan.
People with end stage renal disease (ESRD) who have Medicare and employer health coverage have an exception. COBRA pays first (as the primary) during a 30-month coordination period and then Medicare pays second.
COBRA Premiums
If you have health coverage through COBRA, CalCOBRA, or an extended continuation coverage, you will have to pay for the premiums yourself. With COBRA, you will pay 102% of the premium that the employer pays and with CalCOBRA, you will pay 110%. If you are eligible for extended continuation coverage, the amount you will pay depends on how your employer calculates the premiums for each employee. If the premium charged to the employer is based on the age of each employee, you will pay a maximum of 102% or 110% of what your employer is paying. If each employee’s premium is NOT based on his/her age, you will pay a maximum of 213% of the group rate, which is the total premium the employer pays divided by the number of employees. Your premium will change each time the employer’s premium changes regardless of the method used to calculate your premium. The premium for individual health insurance is set by each company and depends on the policy you have, your age, and other factors.
Note: COBRA is not considered health insurance from current employment. If you do not already have Part B, you have an 8-month period from when your employment ends to enroll in Part B. If you do not enroll during this 8-month special enrollment period, you may have to pay a penalty when you do decide to enroll in Part B later, and the effective date of your benefits will be delayed. See our section Coverage while you or your spouse works.