(download PDF documents here)


The Health Insurance Portability and Accountability Act of 1996, also known as HIPAA, became effective on your plan's anniversary date after June 30, 1997. This new law requires all employers that sponsor a group health plan with at least two employees to notify their employees of these important changes in the law. There are three important items that you must be communicating to your employees to comply with this new law
    First, all employees must be informed of their enrollment rights. This notice must be provided at the time the participant initially enrolls in the plan and details the specific situations that allow an employee and their dependents to enroll in the plan if they decline coverage initially. Since HIPAA prohibits medical underwriting for late entrants, most insurance companies are becoming very strict in when they will allow plan participants to enroll after their initial enrollment period. Your enrollment notice should spell out these rights and should be given to the plan participants at enrollment and during their open enrollment period each year. (download notice at bottom of page)

    Second, all employees must be given notice of the pre-existing conditions exclusion (if your plan has one). HIPAA prohibits the exclusion of pre-existing conditions under specific situations and allows certain employees who were covered by a health plan previously to enroll in a plan without the pre-existing condition limitation applying. All plans need to communicate this provision to all eligible participants and describe exactly how the plan defines a pre-existing condition. This notice may be incorporated in your notice of enrollment rights or provided under a separate notification.

    Third, all employers subject to COBRA must amend their COBRA Notification to include the changes under HIPAA. These changes include the Disability Extension, Definition of a Qualified Beneficiary and Definition of the Duration of COBRA Continuation Coverage. The old "Very Important Notice" form provided by the Department of Labor years ago needs to be changed to accommodate for the plan participant's new rights under HIPAA. Sample COBRA Notice years ago needs to be changed to accommodate for the plan participant's new rights under HIPAA. Sample COBRA Notice

In order to help you comply with these new requirements under HIPAA and COBRA, we are pleased to provide you with model forms. We recommend you consult with your legal counsel or carrier before distributing these forms, but they should provide your employees with the necessary information to insure that you are complying with the law.

(download documents here)



What is Cal-COBRA?
    COBRA (the Consolidated Omnibus Budget Reconciliation Act of 1989 is a federal law that allows for temporary continuation of employer health insurance for employees and their dependents when that insurance would otherwise end. Under COBRA, companies with 20 or more employees must allow qualified employees and dependents to continue group health coverage at their own expense for a least 18 months after some "qualifying event" such as employment termination or divorce.

    Cal-COBRA provides COBRA-like coverage to small business employees, dependent spouses and their children. It applies to small groups, which don't qualify for COBRA (those which employed between 2 and 19 eligible employees on at least 50% of work days in the prior calendar year or in the preceding calendar quarter, if they were not in business during the prior year). Because federal COBRA counts part-time employees in determining group size, a group with 18 full-time and 4 part-time employees, for example, would be subject to federal COBRA, not Cal-COBRA.

Who is eligible for Cal-COBRA?

    Employees and dependents enrolled in employee benefit plans at the time of a "qualifying event" as listed below:

    Qualifying Events for Employees:

    Employment termination for any reason other than gross misconduct or Reduction in work hours below the threshold for normal group eligibility

    Qualifying Events for Insured Dependents:

    • Death of the covered employee
    • Divorce or legal separation from the covered employee
    • Child's loss of dependent status or
    • Employee's eligibility for Medicare

    Beneficiaries are not eligible if they:

    • Obtain coverage from another group plan without preexisting condition limitations
    • Become eligible for federal COBRA
    • Become eligible for Medicare
    • Become eligible for Medi-Cal
    • Fail to submit required premiums or
    • fail to notify the health plan of a qualifying event
What happens to a Cal-COBRA member of the employer becomes eligible for COBRA?
    The individual stays with Cal-COBRA until this coverage is exhausted.

What are employer responsibilities under Cal-COBRA?

    Employers are responsible for notifying the health plan of two kinds of qualifying events - employee termination for reasons other than gross misconduct or a reduction in hours that disqualifies an employee from group coverage. The employer must notify the plan in writing within 31 days of the qualifying event and must clearly specify that a "qualifying event" has taken place and give the date of the event. Simply crossing an employee off a bill is not sufficient notification to initiate Cal-COBRA. If the health plan does not receive complete and timely notice of the qualifying event, the health plan has no obligation to provide Cal-COBRA coverage.

    In addition, the employer must notify beneficiaries of changes or termination of their group plan 30 days in advance or when all enrolled employees are notified, whichever is later.

What are employee responsibilities under Cal-COBRA?

    Employees must notify the health plan in writing of all other qualifying events (death, divorce, loss of dependent status or eligibility for Medicare) within 60 days of the qualifying event. Employees must clearly specify in their notification the qualifying event and the date of the qualifying event to initiate Cal-COBRA. If the health plan does not receive complete and timely notice of the qualifying event, the health plan has no obligation to provide Cal-COBRA coverage.

Who administers Cal-COBRA coverage and how does it work?

    Carriers have primary responsibility for administration but may contractually shift this burden to employers. Blue Cross, for example, handles administration and paperwork for their members at no charge, notifying individuals of their Cal-COBRA right after a qualifying event, and billing then separately. If clients change carriers, the group or the new health plan may be responsible for administration.

    Employers have 31 days from the date of reduction in hours or employment termination to give written notification to the health plan. A subscriber has 60 days from any other qualifying event to give the health plan written notification. These written notices must specifically state the nature and date of the qualifying event.

    Within 14 days of notification, Blue Cross, for example, extends the Cal-COBRA coverage to the beneficiary in writing at the beneficiary's last known address. The member has 60 days from the date of notification to elect Cal-COBRA coverage in writing. If the premium is included Blue Cross institutes Cal-COBRA coverage with no lapse in coverage. If the premium is not included, Blue Cross bills the member, who has 45 days from the billing date to remit all premiums due. Coverage will not be activated until the required premiums are received.. Please note that all rights to HIPAA guarantee issue coverage will be lost if Cal-COBRA is not elected and all available benefits exhausted.

Which benefit plans are covered by Cal-COBRA?

    Health, dental and vision plans are covered. However, if a carrier offers a package of these benefits, it cannot be required to offer only dental and/or vision under Cal-COBRA. Continuation coverage is the same coverage in effect at the time of the qualifying event and is subject to any subsequent changes in that coverage.
How long does Cal-COBRA coverage last?
    If the qualifying event is an employment termination or reduction in hours, eligible beneficiaries can maintain coverage for up to 18 months. If the beneficiary becomes totally disabled (as determined by the Social Security Administration) within 60 days of one of these qualifying events, Cal-COBRA can be extended another 11 months (a total of 29 months). After January 1, 1999, employees who have worked for the employer at least five years and are at least 60 years old at the time of the qualifying event can continue Cal-COBRA coverage to age 65. To continue coverage, employees must submit a written request to extend coverage within 31 days of the end of their Cal-COBRA continuation period.

    For all other qualifying events, Cal-COBRA coverage lasts up to 36 months.

What happens after Cal-COBRA benefits expire?

    Some individuals are eligible for an individual policy through guarantee issue under HIPAA. Blue Cross sends Cal-COBRA members a notice 90 days prior to the end of Cal-COBRA coverage, with information on conversion options.

What does Cal-COBRA cost?

    Most employees pay 110% of their group premium. Beneficiaries with total disabilities (as determined by the Social Security Administration) can continue coverage for 11 more months at 150% of the group premium. Subscribers are responsible for premium payments; failure to make a timely payment can result in discontinuation of coverage with no reinstatement option.