2007 California Insurance Code Article 1.7. California Cobra Program

CA Codes (ins:10128.50-10128.59)

10128.50.  (a) This article shall be known as the California
Continuation Benefits Replacement Act, or "Cal-COBRA."
   (b) It is the intent of the Legislature that continued access to
health insurance coverage is provided to employees, and their
dependents, of employers with 2 to 19 eligible employees who are not
currently offered continuation coverage under the Consolidated
Omnibus Budget Reconciliation Act of 1985.



10128.51.  (a) "Continuation coverage" means extended coverage under
the group benefit plan under which an eligible employee or eligible
dependent is currently covered, or, in the case of a termination of
the group benefit plan or an employer open enrollment period,
extended coverage under the group benefit plan currently offered by
the employer.
   (b) "Group benefit plan" has the same meaning as "health benefit
plan" defined in Section 10700, including group policies of
vision-only and dental-only coverage, provided pursuant to Chapter 8
(commencing with Section 10700) to an employer with 2 to 19 eligible
employees, as defined in Section 10700.
   (c) "Qualified beneficiary" means any individual who, on the day
before the qualifying event, is covered under a group benefit plan
offered by a disability insurer pursuant to Article 1 (commencing
with Section 10700) of Chapter 8, and has a qualifying event, as
defined in subdivision (d).
   (d) "Qualifying event" means any of the following events that, but
for the election of continuation coverage under this article, would
result in a loss of coverage under the group benefit plan to a
qualified beneficiary:
   (1) The death of the covered employee.
   (2) The termination of employment or reduction in hours of the
covered employee's employment, except that termination for gross
misconduct does not constitute a qualifying event.
   (3) The divorce or legal separation of the covered employee from
the covered employee's spouse.
   (4) The loss of dependent status by a dependent enrolled in the
group benefit plan.
   (5) With respect to a covered dependent only, the covered employee'
s entitlement to benefits under Title XVIII of the United States
Social Security Act (Medicare).
   (e) "Employer" means any employer that meets the definition of
"small employer" as set forth in Section 10700 and (1) employed 2 to
19 eligible employees on at least 50 percent of its working days
during the preceding calendar year, or, if the employer was not in
business during any part of the preceding calendar year, employed 2
to 19 eligible employees on at least 50 percent of its working days
during the preceding calendar quarter, (2) has contracted for health
care coverage through a group benefit plan offered by a disability
insurer, and (3) is not subject to Section 4980B of the United States
Internal Revenue Code or Chapter 18 of the Employee Retirement
Income Security Act, 29 U.S.C. Section 1161 et seq.
   (f) "Core coverage" means coverage for hospital, medical, or
surgical benefits provided under the group benefit plan that a
qualified beneficiary was receiving immediately prior to the
qualifying event, other than noncore coverage.
   (g) "Noncore coverage" means coverage for vision and dental care.




10128.52.  The continuation coverage requirements of this article do
not apply to the following individuals:
   (a) Individuals who are entitled to Medicare benefits or become
entitled to Medicare benefits pursuant to Title XVIII of the United
States Social Security Act, as amended or superseded.  Entitlement to
Medicare Part A only constitutes entitlement to benefits under
Medicare.
   (b) Individuals who have other hospital, medical, or surgical
coverage, or who are covered or become covered under another group
benefit plan, including a self-insured employee welfare benefit plan,
that provides coverage for individuals and that does not impose any
exclusion or limitation with respect to any preexisting condition of
the individual, other than a preexisting condition limitation or
exclusion that does not apply to or is satisfied by the qualified
beneficiary pursuant to Sections 10198.6 and 10198.7.  A group
conversion option under any group benefit plan shall not be
considered as an arrangement under which an individual is or becomes
covered.
   (c) Individuals who are covered, become covered, or are eligible
for federal COBRA coverage pursuant to Section 4980B of the United
States Internal Revenue Code or Chapter 18 of the Employee Retirement
Income Security Act, 29 U.S.C. Section 1161 et seq.
   (d) Individuals who are covered, become covered, or are eligible
for coverage pursuant to Chapter 6A of the Public Health Service Act,
42 U.S.C.  Section 300bb-1 et seq.
   (e) Qualified beneficiaries who fail to meet the requirements of
subdivision (b) of Section 10128.55 regarding notification of a
qualifying event or election of continuation coverage within the
specified time limits.
   (f) Qualified beneficiaries who fail to submit the correct premium
amount required by subdivision (b) of Section 10128.55 and Section
10128.57, in accordance with the terms and conditions of the policy
or contract, or fail to satisfy other terms and conditions of the
policy or contract.



10128.53.  (a) Every disability insurer, that provides coverage
under a group benefit plan to an employer, including those policies
and contracts that provide vision-only and dental-only benefits, as
defined in Section 10128.51, shall offer continuation coverage,
pursuant to this section, to a qualified beneficiary under the
contract upon a qualifying event without evidence of insurability.
The qualified beneficiary shall, upon election, be able to continue
his or her coverage under the group benefit plan, subject to the
contract's terms and conditions, and subject to the requirements of
this section.  Except as otherwise provided in this section,
continuation coverage shall be provided under the same terms and
conditions that apply to similarly situated individuals under the
group benefit plan.
   (b) Every disability insurer shall also offer the continuation
coverage to a qualified beneficiary who (1) elects continuation
coverage under a group benefit plan as defined in this article or in
Section 1366.21 of the Health and Safety Code, but whose continuation
coverage is terminated under the group benefit plan pursuant to
subdivision (b) of Section 10128.57, prior to any other termination
date specified in Section 10128.57, or (2) who elects coverage
through the disability insurer during any employer open enrollment,
and the employer has contracted with the disability insurer to
provide coverage to the employer's active employees.  This
continuation coverage shall be provided only for the balance of the
period that the qualified beneficiary would have remained covered
under the prior group benefit plan had the employer not terminated
the contract with the previous insurer or health care service plan.
   (c) Every disability insurer shall offer a qualified beneficiary
the ability to elect the same core, noncore, or core and noncore
coverage that the qualified beneficiary had immediately prior to the
qualifying event.
   (d) Any child who is born to a former employee who is a qualified
beneficiary who has elected continuation coverage pursuant to this
section, or a child who is placed for adoption with a former employee
who is a qualified beneficiary who has elected continuation coverage
pursuant to this article during the period of continuation coverage
provided by this article shall be considered a qualified beneficiary
entitled to receive benefits pursuant to this article for the
remainder of the period that the former employee is covered pursuant
to this article, if the child is enrolled under a group benefit plan
as a dependent of that former employee who is a qualified beneficiary
within 30 days of the child's birth or placement for adoption.
   (e) An individual who becomes a qualified beneficiary pursuant to
this article shall continue to receive coverage pursuant to this
article until continuation coverage is terminated at the qualified
beneficiary's election or pursuant to Section 10128.57, whichever
comes first, even if the employer that sponsored the group benefit
plan that is continued subsequently becomes subject to Section 4980B
of the United States Internal Revenue Code of Chapter 18 of the
Employee Retirement Income Security Act, 29 U.S.C. Sec. 1161 et seq.

   (f) A qualified beneficiary electing coverage pursuant to this
section shall be considered part of the group benefit plan and
treated as similarly situated employees for contract purposes, unless
otherwise specified in this article.



10128.54.  (a) Every insurer's evidence of coverage for group
benefit plans subject to this article, that is issued, amended, or
renewed on or after January 1, 1999, shall disclose to covered
employees of group benefit plans subject to this article the ability
to continue coverage pursuant to this article, as required by this
section.
   (b) This disclosure shall state that all insureds who are eligible
to be qualified beneficiaries, as defined in subdivision (c) of
Section 10128.51, shall be required, as a condition of receiving
benefits pursuant to this article, to notify, in writing, the
insurer, or the employer if the employer contracts to perform the
administrative services as provided for in Section 10128.55, of all
qualifying events as specified in paragraphs (1), (3), (4), and (5)
of subdivision (d) of Section 10128.51 within 60 days of the date of
the qualifying event. This disclosure shall inform insureds that
failure to make the notification to the insurer, or to the employer
when under contract to provide the administrative services, within
the required 60 days will disqualify the qualified beneficiary from
receiving continuation coverage pursuant to this article. The
disclosure shall further state that a qualified beneficiary who
wishes to continue coverage under the group benefit plan pursuant to
this article must request the continuation in writing and deliver the
written request, by first-class mail, or other reliable means of
delivery, including personal delivery, express mail, or private
courier company, to the disability insurer, or to the employer if the
plan has contracted with the employer for administrative services
pursuant to subdivision (d) of Section 10128.55, within the 60-day
period following the later of (1) the date that the insured's
coverage under the group benefit plan terminated or will terminate by
reason of a qualifying event, or (2) the date the insured was sent
notice pursuant to subdivision (e) of Section 10128.55 of the ability
to continue coverage under the group benefit plan. The disclosure
required by this section shall also state that a qualified
beneficiary electing continuation shall pay to the disability
insurer, in accordance with the terms and conditions of the policy or
contract, which shall be set forth in the notice to the qualified
beneficiary pursuant to subdivision (d) of Section 10128.55, the
amount of the required premium payment, as set forth in Section
10128.56. The disclosure shall further require that the qualified
beneficiary's first premium payment required to establish premium
payment be delivered by first-class mail, certified mail, or other
reliable means of delivery, including personal delivery, express
mail, or private courier company, to the disability insurer, or to
the employer if the employer has contracted with the insurer to
perform the administrative services pursuant to subdivision (d) of
Section 10128.55, within 45 days of the date the qualified
beneficiary provided written notice to the insurer or the employer,
if the employer has contracted to perform the administrative
services, of the election to continue coverage in order for coverage
to be continued under this article. This disclosure shall also state
that the first premium payment must equal an amount sufficient to pay
all required premiums and all premiums due, and that failure to
submit the correct premium amount within the 45-day period will
disqualify the qualified beneficiary from receiving continuation
coverage pursuant to this article.
   (c) The disclosure required by this section shall also describe
separately how qualified beneficiaries whose continuation coverage
terminates under a prior group benefit plan pursuant to Section
10128.57 may continue their coverage for the balance of the period
that the qualified beneficiary would have remained covered under the
prior group benefit plan, including the requirements for election and
payment. The disclosure shall clearly state that continuation
coverage shall terminate if the qualified beneficiary fails to comply
with the requirements pertaining to enrollment in, and payment of
premiums to, the new group benefit plan within 30 days of receiving
notice of the termination of the prior group benefit plan.
   (d) Prior to August 1, 1998, every insurer shall provide to all
covered employees of employers subject to this article written notice
containing the disclosures required by this section, or shall
provide to all covered employees of employers subject to this article
a new or amended evidence of coverage that includes the disclosures
required by this section. Any insurer that, in the ordinary course of
business, maintains only the addresses of employer group purchasers
of benefits, and does not maintain addresses of covered employees,
may comply with the notice requirements of this section through the
provision of the notices to its employer group purchases of benefits.

   (e) Every disclosure form issued, amended, or renewed on and after
January 1, 1999, for a group benefit plan subject to this article
shall provide a notice that, under state law, an insured may be
entitled to continuation of group coverage and that additional
information regarding eligibility for this coverage may be found in
the evidence of coverage.
   (f) Every disclosure form issued, amended, or renewed on and after
July 1, 2006, for a group benefit plan subject to this article shall
include the following notice:
   "Please examine your options carefully before declining this
coverage. You should be aware that companies selling individual
health insurance typically require a review of your medical history
that could result in a higher premium or you could be denied coverage
entirely."



10128.55.  (a) Every group benefit plan contract between a
disability insurer and an employer subject to this article that is
issued, amended, or renewed on or after July 1, 1998, shall require
the employer to notify the insurer in writing of any employee who has
had a qualifying event, as defined in paragraph (2) of subdivision
(d) of Section 10128.51, within 30 days of the qualifying event.  The
group contract shall also require the employer to notify the
insurer, in writing, within 30 days of the date when the employer
becomes subject to Section 4980B of the United States Internal
Revenue Code or Chapter 18 of the Employee Retirement Income Security
Act, 29 U.S.C. Sec. 1161 et seq.
   (b) Every group benefit plan contract between a disability insurer
and an employer subject to this article that is issued, amended, or
renewed after July 1, 1998, shall require the employer to notify
qualified beneficiaries currently receiving continuation coverage,
whose continuation coverage will terminate under one group benefit
plan prior to the end of the period the qualified beneficiary would
have remained covered, as specified in Section 10128.57, of the
qualified beneficiary's ability to continue coverage under a new
group benefit plan for the balance of the period the qualified
beneficiary would have remained covered under the prior group benefit
plan.  This notice shall be provided either 30 days prior to the
termination or when all enrolled employees are notified, whichever is
later.
   Every disability insurer shall provide to the employer replacing a
group benefit plan policy issued by the insurer, or to the employer'
s agent or broker representative, within 15 days of any written
request, information in possession of the insurer reasonably required
to administer the notification requirements of this subdivision and
subdivision (c).
   (c) Notwithstanding subdivision (a), the group benefit plan
contract between the insurer and the employer shall require the
employer to notify the successor plan in writing of the qualified
beneficiaries currently receiving continuation coverage so that the
successor plan, or contracting employer or administrator, may provide
those qualified beneficiaries with the necessary premium
information, enrollment forms, and instructions consistent with the
disclosure required by subdivision (c) of Section 10128.54 and
subdivision (e) of this section to allow the qualified beneficiary to
continue coverage.  This information shall be sent to all qualified
beneficiaries who are enrolled in the group benefit plan and those
qualified beneficiaries who have been notified, pursuant to Section
10128.54 of their ability to continue their coverage and may still
elect coverage within the specified 60-day period.  This information
shall be sent to the qualified beneficiary's last known address, as
provided to the employer by the health care service plan or,
disability insurer currently providing continuation coverage to the
qualified beneficiary.  The successor insurer shall not be obligated
to provide this information to qualified beneficiaries if the
employer or prior insurer or health care service plan fails to comply
with this section.
   (d) A disability insurer may contract with an employer, or an
administrator, to perform the administrative obligations of the plan
as required by this article, including required notifications and
collecting and forwarding premiums to the insurer.  Except for the
requirements of subdivisions (a), (b), and (c), this subdivision
shall not be construed to permit an insurer to require an employer to
perform the administrative obligations of the insurer as required by
this article as a condition of the issuance or renewal of coverage.

   (e) Every insurer, or employer or administrator that contracts to
perform the notice and administrative services pursuant to this
section, shall, within 14 days of receiving a notice of a qualifying
event, provide to the qualified beneficiary the necessary premium
information, enrollment forms, and disclosures consistent with the
notice requirements contained in subdivisions (b) and (c) of Section
10128.54 to allow the qualified beneficiary to formally elect
continuation coverage.  This information shall be sent to the
qualified beneficiary's last known address.
   (f) Every insurer, employer or administrator that contracts to
perform the notice and administrative services pursuant to this
section shall, during the 180-day period ending on the date that
continuation coverage is terminated pursuant to paragraphs (1), (3),
and (5) of subdivision (a) of Section 10128.57, notify a qualified
beneficiary who has elected continuation coverage pursuant to this
article of the date that his or her coverage will terminate, and
shall notify the qualified beneficiary of any conversion coverage
available to that qualified beneficiary.  This requirement shall not
apply when the continuation coverage is terminated because the group
contract between the insurer and the employer is being terminated.




10128.56.  A qualified beneficiary electing continuation coverage
shall pay to the disability insurer, on or before the due date of
each payment but not more frequently than on a monthly basis, not
more than 110 percent of the applicable rate charged for a covered
employee or, in the case of dependent coverage, not more than 110
percent of the applicable rate charged to a similarly situated
individual under the group benefit plan being continued under the
group contract.  In the case of a qualified beneficiary who is
determined to be disabled pursuant to Title II or Title XVI of the
United States Social Security Act, the qualified beneficiary shall be
required to pay to the insurer an amount no greater than 150 percent
of the group rate after the first 18 months of continuation coverage
provided pursuant to this section.  In no case shall an insurer
charge an employer an additional fee for administering Cal-COBRA
other than those incorporated in the risk adjusted employee risk rate
as provided for in subdivision (t) of Section 10700.




10128.57.  (a) The continuation coverage provided pursuant to this
article shall terminate at the first to occur of the following:
   (1) In the case of a qualified beneficiary who is eligible for
continuation coverage pursuant to paragraph (2) of subdivision (d) of
Section 10128.51, the date 36 months after the date the qualified
beneficiary's benefits under the contract would otherwise have
terminated because of a qualifying event.
   (2) The end of the period for which premium payments were made, if
the qualified beneficiary ceases to make payments or fails to make
timely payments of a required premium, in accordance with the terms
and conditions of the policy or contract.  In the case of nonpayment
of premiums, reinstatement shall be governed by the terms and
conditions of the plan contract.
   (3) In the case of a qualified beneficiary who is eligible to
continuation coverage pursuant to paragraph (1), (3), (4), or (5) of
subdivision (d) of Section 10116.51, the date 36 months after the
date the qualified beneficiary's benefits under the contract would
otherwise have terminated by reason of a qualifying event.
   (4) The requirements of this article no longer apply to the
qualified beneficiary pursuant to the provisions of Section 10128.52.

   (5) In the case of a qualified beneficiary who is eligible for
continuation coverage pursuant to paragraph (2) of subdivision (d) of
Section 10128.51, and determined, under Title II or Title XVI of the
Social Security Act, to be disabled any time during the first 60
days of continuation coverage, and the spouse or dependent who has
elected coverage pursuant to this article, the date 36 months after
the date the qualified beneficiary's benefits under the contract
would otherwise have terminated because of a qualifying event.  The
qualified beneficiary shall notify the insurer, or the employer or
administrator that contracts to perform administrative services, of
the social security determination within 60 days of the date of the
determination letter and prior to the end of the original 36-month
continuation coverage period in order to be eligible for coverage
pursuant to this subdivision.  If the qualified beneficiary is no
longer disabled under Title II or Title XVI of the Social Security
Act, the benefits provided in this paragraph shall terminate on the
later of the date provided by paragraph (1), or the month that begins
more than 31 days after the date of the final determination under
Title II or Title XVI of the United States Social Security Act that
the qualified beneficiary is no longer disabled.  A qualified
beneficiary eligible for 36 months of continuation coverage as a
result of a disability shall notify the insurer, or the employer or
administrator that contracts to perform the notice and administrative
services, within 30 days of a determination that the qualified
beneficiary is no longer disabled.
   (6) In the case of a qualified beneficiary who is initially
eligible for and elects continuation coverage pursuant to paragraph
(2) of subdivision (d) of Section 10128.51, but who has another
qualifying event, as described in paragraph (1), (3), (4), or (5) of
subdivision (d) of Section 10128.51, within 36 months of the date of
the first qualifying event, and has notified the insurer, or employer
or administrator under contract to provide administrative services,
of the second qualifying event within 60 days of the date of the
second qualifying event, the date 36 months after the date of the
first qualifying event.
   (7) The employer, or any successor employer or purchaser of the
employer, ceases to provide any group benefit plan to his or her
employees.
   (8) The qualified beneficiary moves out of the insurer's service
area, or the qualified beneficiary commits fraud or deception in the
use of benefits.
   (b) If the group benefits contracts between the insurer and the
employer is terminated prior to the date the qualified beneficiary's
continuation coverage would terminate pursuant to this section,
coverage under the prior plan shall terminate and the qualified
beneficiary may elect continuation coverage under the subsequent
group benefit plan, if any, pursuant to the requirements of
subdivision (b) of Section 10128.53 and subdivision (c) of Section
10128.54.
   (c) The amendments made to this section by Assembly Bill 1401 of
the 2001-02 Regular Session shall apply to individuals who begin
receiving continuation coverage under this article on or after
January 1, 2003.


10128.58.  A disability insurer subject to this article shall not be
obligated to provide continuation coverage to a qualified
beneficiary pursuant to this article if an insured fails to make the
notification required by Section 10128.54, or if the employer of the
insured fails to comply with Section 10128.55.



10128.59.  (a) A health insurer that provides coverage under a group
benefit plan to an employer shall offer an insured who has exhausted
continuation coverage under COBRA the opportunity to continue
coverage for up to 36 months from the date the insured's continuation
coverage began if the insured is entitled to less than 36 months of
continuation coverage under COBRA.  The health insurer shall offer
coverage pursuant to terms of this article, including the rate
limitations contained in Section 10128.56.
   (b) Notification of the coverage available under this section
shall be included in the notice of the pending termination of COBRA
coverage that is required to be provided to COBRA beneficiaries and
that is required to be provided under Section 10128.54.
   (c) For purposes of this section, "COBRA" means Section 4980B of
Title 26 of the United States Code, Sections 1161 et seq. of Title 29
of the United States Code, and Section 300bb of Title 42 of the
United States Code.
   (d) This section shall not apply to accident-only, specified
disease, hospital indemnity, CHAMPUS supplement, long-term care,
Medicare supplement, dental-only, or vision-only insurance policies.

   (e) This section shall become operative on September 1, 2003, and
shall apply to individuals who begin receiving COBRA coverage on or
after January 1, 2003.