From the Hotline: California COBRA Length and Termination

Question: How long can a terminated employee remain on COBRA in California?

Answer: The answer depends upon the employer size, and the maximum amount of time for a terminated employee in California is 36 months.

California’s Continuation Benefits Replacement Act (Cal-COBRA) applies to employers and group health plans that cover from 2 – 19 employees. To be covered by Cal-COBRA, an employer’s policy must be in force with 2 – 19 employees covered on at least 50 percent of the business days during the preceding calendar year (or the preceding calendar quarter if the employer was not in business during any part of the preceding calendar year). Cal-COBRA also applies to an employer with more than 20 employees when an employee has exhausted his or her 18 months of federal COBRA benefits (more on that below).

Cal-COBRA allows individuals to continue their group health coverage for up to 36 months. For individuals covered under federal COBRA, Cal-COBRA may be used to extend health coverage for a combined period of up to 36 months. For example, if an individual has used up 18 months of federal COBRA, Cal-COBRA then allows the individual to maintain coverage for up to 18 more months for a combined period of 36 months.

For larger employers, the health benefits continuation coverage under the federal Consolidated Omnibus Budget Reconciliation Act (COBRA) applies to group health plans for employers with 20 or more employees on more than 50 percent of its typical business days in the previous calendar year. Both full- and part-time employees are counted to determine whether a plan is subject to COBRA. Each part-time employee counts as a fraction of an employee, with the fraction equal to the number of hours that the part-time employee worked divided by the hours an employee must work to be considered full-time. The law does not apply, however, to plans sponsored by the federal government or by churches and certain church-related organizations.

The length of coverage under federal COBRA is determined by the type of qualifying event. Depending on the reason for COBRA coverage, the employee or dependent will have access to coverage for 18, 29, or 36 months.

Eighteen-Month Events

Eighteen-month events apply to employees and may be characterized by the following:

  • Any voluntary or involuntary termination other than for gross misconduct.
  • Reduction in hours to below the minimum required to participate in the employer’s plan.
  • Labor strike.
  • Leave of absence.
  • Military leave.

Twenty-Nine-Month Events

Twenty-nine-month events apply to disabled employees, covered spouses, and dependents and may be characterized by the following:

  • Any qualified beneficiary who is considered disabled according to Social Security guidelines.
  • Individuals must be considered disabled by Social Security at the time of the event, not when COBRA is initiated. However, employers may make exceptions to this rule, as applications for Social Security disability insurance are often initiated after the qualifying event to be retroactive to the qualifying event.

Thirty-Six-Month Events

Thirty-six-month events apply to covered spouses and dependents and may be characterized by the following:

  • Employee’s death.
  • Employee’s entitlement to or activation of Medicare, resulting in the family’s exclusion from the employer’s plan.
  • Divorce or legal separation from a covered employee.
  • Family member no longer considered a dependent under the employer’s plan (for example, a covered dependent child attaining age 26).

If a 36-month event occurs during an 18-month event, COBRA benefits may be extended to the 36th month from the original event date for dependents and spouses only.