Friday, August 17, 2007


The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) affords some very important provisions for many California residents. COBRA requires that group health plans (group health plans with CA companies of 20 or more employees) allow employees and certain beneficiaries to elect to have their current health insurance coverage extended at group rates for up to 36 months following a “qualifying event” that results in the loss of coverage for a “qualified beneficiary”. The definition of group health plans include self funded (self insured) plans, dental plans, discount plans, and prescription plans (although long term care plans are not subject to COBRA rules).

So what does all of this mean to the typical California resident? What is a “qualifying event”? Who is a “qualified beneficiary”? How could all of the COBRA regulations possibly affect you? Let’s take a look at how you can figure out the best option in your particular situation whether it be a COBRA plan, an individual health plan or a combination of the two.

A “qualifying event” is most typically when you or your spouse leaves an employer to pursue another job. This is the most common scenario – although “qualifying event” is also upon the death of a covered employee, the reduction in hours of a covered employee so as to no longer be eligible for the group plan, a divorce, and other specific situations. Typically, the “qualifying event” will be when an employee has left their current job (or been fired – so long as the reason for being fired is not gross negligence then being fired still is considered a “qualifying event”).

A “qualified beneficiary” is defined as any employee, or the spouse or dependent child of the employee, who on the day before the qualifying event was covered under the employee’s group health plan.

So as a California resident you now know what a qualifying event is and also what a qualified beneficiary is. So now how do the COBRA laws come into play?

The COBRA law specifies that a qualified beneficiary is entitled to elect continued coverage without providing evidence of insurability. What this means is that if COBRA is offered to you then you will be able to continue the group coverage for a certain set time (in most cases 18 months but sometimes it can be 36 months).


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