WORKPLACE LAW -
Unfortunate Reduction in Force Employee
Question:
I am about to lose my job because of a reduction in force. Given my age and the fact that there are very few job openings in my field, I anticipate being out of work for a long period of time. I have had health issues in the past, and am concerned about being able to continue with my health insurance. I have received conflicting information from co-workers regarding how long I can continue my health insurance through COBRA. What are the current rules?
Answer:
The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) is the federal law that provides eligible employees and qualified beneficiaries the right to continue to participate in their former employer’s group health insurance programs following certain “qualifying events.” The federal COBRA law applies to employers who provide health insurance benefits to their employees and have 20 or more employees. Under federal law, benefits can be continued for 18-36 months, depending on the “qualifying event” applicable to the employee’s termination. Normally, the employee must pay the full cost of the continuation coverage under COBRA, which, under most circumstances, can be no more than 102% of the actual premium charged to the employer.
California has it own laws governing continuation of health insurance coverage that apply primarily to smaller employers who provide health insurance to their employees, and have fewer than 20 employees. The California COBRA program is called Cal-COBRA, and generally mirrors the provisions of COBRA. On September 22, 2002, Governor Davis signed AB 1401 into law, which provided that all qualified beneficiaries covered by Cal-COBRA who begin receiving continuation coverage under Cal-COBRA on or after January 1, 2003, will receive continuation coverage for 36 months.
A "qualifying event" under COBRA is an event that would otherwise result in the loss of coverage by a “ qualified beneficiary.” Under COBRA, six different circumstances can constitute "qualifying events" if they result in loss of coverage. These six events and the length of continued healthcare coverage they trigger are:
- Death of the covered employee (coverage for up to 36 months);
- Termination (other than by reason of the employee's gross misconduct) or reduction of hours of the covered employee's employment (coverage for up to 18 months, extended up to 36 months under Cal- COBRA);
- Divorce or legal separation from a covered employee spouse, through whom the coverage was initially obtained (coverage for up to 36 months);
- The covered employee becomes entitled to benefits under Medicare (coverage for up to 36 months);
- A dependent child ceases to be a dependent under the requirements of the plan (coverage for up to 36 months); and
- An employer's bankruptcy, but only as it relates to health care coverage for retirees and their dependents (coverage for up to 36 months).
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