The Consolidated Omnibus Budget Reconciliation Act (COBRA) is federal law that extends your current group health insurance when you experience a qualifying event such as termination of employment or reduction of hours to part-time status. The extension period is 18 months and some people with special qualifying events may be eligible for a longer extension. To be eligible for COBRA, your group policy must be in force with 20 or more employees covered on more than 50 percent of its typical business days in the previous calendar year.
Indemnity policies, PPOs, HMOs, and self-insured plans are all eligible for COBRA extension; however, federal government employee plans and church plans are exempt from COBRA. Individual health insurance is also exempt from COBRA extension.
California Insurance Code (CIC) Section 10128.59 provides extension under Cal-COBRA for those who have exhausted their 18 months on federal COBRA (or longer in special circumstances) for a total extension that cannot exceed 36 months. For the special Cal-COBRA extension to apply, you must have become eligible for COBRA after January 1, 2003, and the employer's master policy must be issued in California. If the group master policy is not issued in California, then the employer must employ 51% or more of its employees in California and have its principal place of business in California for their California employees to take advantage of Cal-COBRA.
COBRA is regulated by the U.S. Department of Labor, Employee Benefits Security Administration (DOL-EBSA).
Cal-COBRA is California law that has similar provisions to federal COBRA. With Cal-COBRA the group policy must be in force with 2-19 employees covered on at least 50 percent of its working 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.
Eligibility for Cal-COBRA extends to indemnity policies, PPOs, and HMOs only. Self-insured plans are not eligible. Unlike COBRA, church plans are eligible under Cal-COBRA. Cal-COBRA does not apply to individual health insurance.
As of January 1, 2003, the extension period for Cal-COBRA has been changed from 18 months to 36 months. If you become eligible for Cal-COBRA after January 1, 2003, you will have the benefit of Cal-COBRA coverage for a full 36 months instead of the prior 18-month coverage extension.
Cal-COBRA is jointly regulated by the CDI and the DMHC depending upon the type of group coverage (indemnity or HMO).
In 1996 the federal government passed into law the Health Insurance Portability and Accountability Act (HIPAA). HIPAA law provides eligible individuals who have recently lost their employer sponsored group health plan the opportunity to purchase health insurance coverage even if they have a preexisting health condition. If you meet the definition of an eligible individual, all health insurance companies who sell individual plans must offer you health insurance regardless of your medical history. This requirement to issue insurance is called "guaranteed issue." You may not be declined coverage based on medical reasons.
In order to qualify as an eligible individual you must meet the following conditions:
- You have 18 or more months of prior creditable coverage. Your most recent health care coverage must be under an employer sponsored group health plan, which includes COBRA or Cal-COBRA continuation coverage. This prior 18-month coverage is referred to as "creditable coverage."
- All available COBRA or Cal-COBRA continuation coverage has been elected and exhausted. Note: When an employer terminates its existing group health plan entirely, COBRA or Cal-COBRA coverage ends and is considered exhausted.
- You are not eligible under a group health plan, Medicare, Medi-Cal, and/or do not have other health insurance coverage.
- You did not lose your most recent health coverage due to nonpayment of premium or fraud.
Once COBRA or Cal-COBRA has been exhausted, you have 63 days to file an application to purchase a guaranteed issue HIPAA policy with an insurance company or health plan. All carriers that sell individual health care policies must offer their two most marketed individual plans to HIPAA eligible individuals regardless of your health status. If you accept a conversion policy or a short-term policy after exhausting COBRA or Cal-COBRA, you give up the HIPAA eligibility. It is important to note that a conversion policy is not a HIPAA policy.
When applying for a HIPAA policy, you can present a Certificate of Creditable Coverage from your insurance company or health plan as part of the application process. The Certificate of Creditable Coverage is a written statement from the insurance company or health plan showing the length of time you have been covered. The Certificate can be used as proof of your 18 months continuous creditable coverage when applying for a HIPAA policy.
HIPAA is jointly regulated by the CDI and the DMHC depending upon the type of coverage (indemnity or HMO).
A Health Savings Account (HSA) is a tax-exempt trust or custodial account that you set up with a qualified HSA trustee to pay or reimburse certain medical expenses you incur.
A qualified HSA trustee can be a bank, an insurance company, or anyone already approved by the IRS to be a trustee of IRAs or MSAs. CDI has no jurisdiction over HSAs, even though the HSA may accompany an insurance product.
HSAs have lower deductible requirements and higher out-of-pocket limits than MSAs, making the accounts more flexible and accessible.
HSAs have separate out-of-pocket maximum for services provided outside the network.
HSAs, unlike MSAs, may be offered as part of an employer's cafeteria plan.
HSA contribution limits are greater than MSAs.
An employer and employee are both permitted to contribute to an HSA in the same year.
HSAs allow "catch-up" contributions for persons between the ages of 55 and 65.
Additional information regarding HSAs can be obtained from U.S. Department of the Treasury's Web site at www.ustreas.gov.