The David Fluker Health Insurance Agency
Gilroy, California
CA Lic #0B58920
Toll Free 800-509-0659
Fax 408-762-4450
Local 408-847-6139
Gilroy, California
CA Lic #0B58920
Toll Free 800-509-0659
Fax 408-762-4450
Local 408-847-6139
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Request Quotes
Contact Information
Hot Topics
Blog
Client Testimonials
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SHOP FOR COVERAGE
and much more
David J. Fluker, Licensed Life & Health Insurance Agent. California State License # 0B58920
Authorized Independent Agent Serving California Residents.
Web Site ©1999 - 2009 by David Fluker - The David J. Fluker Insurance Agency. All Rights Reserved.
Authorized Independent Agent Serving California Residents.
Web Site ©1999 - 2009 by David Fluker - The David J. Fluker Insurance Agency. All Rights Reserved.
Authorized Independent Agent
Cal-COBRA Continuation Benefits Under AB 1401
California has enacted a new set of rules regarding continuation benefits. In an effort to unify COBRA and Cal-COBRA benefit periods, Governor Davis signed into law Assembly Bill 1401 (AB 1401) effective January 1, 2003. AB 1401 makes significant changes which will effect those going onto COBRA or Cal-COBRA after January 1, 2003.
Click Here To Read The Text Of AB 1401
COBRA AND CAL-COBRA
In California, there are two COBRA programs available depending on the employee population of the company for which you work. If your company has 20 or more employees, it falls under federal COBRA regulations. If you company has 2-19 employees, it falls under a state program called Cal-COBRA.
Federal COBRA is generally administrated for your employer by what is known as a "third-party administrator" or TPA. The TPA handles billing, premium payments and the administrative duties of managing those former employees and dependents who are on COBRA continuation coverage. If you had Blue Cross of California insurance and are on COBRA, the TPA will handle the billing, premium payments and coverage administration.
Cal-COBRA is a state program modeled after the federal program and is administrated by the health insurance company directly. If you had Blue Cross of California insurance and are on CalCOBRA, you would make you payments directly to the carrier who will handle coverage, billing and the other administrative functions.
PREVIOUSLY
Until AB 1401 went into effect, you were able to elect COBRA or Cal-COBRA continuation coverage for yourself and family when you left your job. You were eligible for:
18 months of coverage standard
29 months of coverage if you were disabled and on SSDI
36 months of coverage for divorce, death and other special qualifying events
THE NEW LAW
Under AB 1401, anyone who goes onto COBRA or Cal-COBRA after January 1, 2003 will automatically be eligible for up to 36 months of continuation coverage. The first 18 or 29 months are the same as previously allowed. The additional 7 or 18 months are now optional but available for those who start COBRA/Cal-COBRA after January 1, 2003.
Those on Cal-COBRA may simply continue their coverage for an additional 18 months after they exhaust the first 18 months. Those on federal COBRA will first use the 18 or 29 months of federal COBRA then be shifted to Cal-COBRA for the additional 7 or 18 months.
The new law does not apply to anyone who started COBRA/Cal-COBRA prior to January 1, 2003 nor does is apply to anyone who is insured by a carrier that is not domiciled in the state of California. The law futher does not apply to self-funded employer health programs, only to fully-insured programs.
WHAT IT MEANS TO YOU
The new legislation now allows all qualified Californians who elect COBRA/Cal-COBRA after January 1, 2003 to continue that coverage for a full 3 years with no interruptions. This basically unifies all COBRA/Cal-COBRA benefit periods to 36 months.
Anyone starting COBRA/Cal-COBRA after January 1, 2003 must use all 36 months of eligibility in order to qualify for HIPAA Guaranteed-Issue or Conversion coverage. Previously it was 18 or 29 months depending on whether or not you were disabled. If you fail to elect the additional 7 or 18 months of Cal-COBRA, you lose all of your rights to purchase a guaranteed-issue individual contract. For those with preexisting conditions and health issues, this extends the time that they could buy an individual guaranteed-issue policy.
Since the second half of your continuation program falls under Cal-COBRA, this means that health insurance carriers are going to have to bring in extra staff starting in the early summer of 2004 to handle all of the new Cal-COBRA continuees. Everyone in California who goes on COBRA or Cal-COBRA will end up on CalCOBRA for 7 or 18 months. This will increase the workload on the insurance carriers substantially. It is more than likely that increased staffing and administration will cause our health insurance premiums to increase to cover this.
AB 1401 Recap & Additional Changes for Californians in 2003
Effective September 1, 2003, anyone who began federal COBRA or Cal-COBRA continuation benefits after January 1, 2003, will be able to remain on continuation for 36 months in California*.
Below is a summary of other important changes and requirements set out under AB 1401 for Californians which go into effect on September 1, 2003.
Conversion Plan Changes in California
AB 1401 requires conversion plans to conform to standardized benefits and rates. The benefits differ depending on whether or not the health plan markets individual & family coverage in California.
If the health plan participates in the individual & family market, it will be required to offer as a conversion plan one of the two products it offers under HIPAA, pursuant to all provisions of the Act.
If the health plan does not market individual & family plans in California, the plan must either offer its most popular HMO or the most popular PPO product as reported to the Department of Managed Health Care by health plans that do offer individual plans.
The number of days from the date of termination from the employer-sponsored plan that the individual has to apply for conversion coverage has increased from 31 to 63 days. If the written application and first premium payment for the conversion contract are received within the 63-day time period, coverage will be effective on the day following the termination of coverage under the group contract.
Major Risk Medical Insurance Program (MRMIP)
The four-year pilot program for changes to the Major Risk Medical Insurance Program (MRMIP) begins on September 1, 2003 and runs until September 1, 2007. Under this program, enrollment in the MRMIP will be limited to 36 months. At the end of the 36-month period, individual health insurance plans will be required to offer MRMIP "graduates" a benefit plan identical to one of the plans available under the MRMIP. The premium for this plan can be no more than 10% higher than that of the MRMIP. The calendar year benefit maximum will be $200,000 (an increase from the current $75,000) and the lifetime benefit maximum will be $750,000. Benefits received under the MRMIP will not be included in the "graduate" plan benefit maximums.
* California residents are protected under the COBRA and Cal-COBRA extension provision as long the their group health insurance carrier is a Knox-Keene licensed carrier doing business in the state of California. Employees covered under a group health plan that does not do business in California and operates in a state other than California may not be eligible for AB 1401 continuation protections. In these cases, often the employer is domiciled in another state and that other state's rules would apply to that employer's California employees. Also, employees of self-funded or self-insured programs are not eligible for the extension under AB 1401
Click Here To Read The Text Of AB 1401
Click Here To Read The Text Of AB 1401
COBRA AND CAL-COBRA
In California, there are two COBRA programs available depending on the employee population of the company for which you work. If your company has 20 or more employees, it falls under federal COBRA regulations. If you company has 2-19 employees, it falls under a state program called Cal-COBRA.
Federal COBRA is generally administrated for your employer by what is known as a "third-party administrator" or TPA. The TPA handles billing, premium payments and the administrative duties of managing those former employees and dependents who are on COBRA continuation coverage. If you had Blue Cross of California insurance and are on COBRA, the TPA will handle the billing, premium payments and coverage administration.
Cal-COBRA is a state program modeled after the federal program and is administrated by the health insurance company directly. If you had Blue Cross of California insurance and are on CalCOBRA, you would make you payments directly to the carrier who will handle coverage, billing and the other administrative functions.
PREVIOUSLY
Until AB 1401 went into effect, you were able to elect COBRA or Cal-COBRA continuation coverage for yourself and family when you left your job. You were eligible for:
18 months of coverage standard
29 months of coverage if you were disabled and on SSDI
36 months of coverage for divorce, death and other special qualifying events
THE NEW LAW
Under AB 1401, anyone who goes onto COBRA or Cal-COBRA after January 1, 2003 will automatically be eligible for up to 36 months of continuation coverage. The first 18 or 29 months are the same as previously allowed. The additional 7 or 18 months are now optional but available for those who start COBRA/Cal-COBRA after January 1, 2003.
Those on Cal-COBRA may simply continue their coverage for an additional 18 months after they exhaust the first 18 months. Those on federal COBRA will first use the 18 or 29 months of federal COBRA then be shifted to Cal-COBRA for the additional 7 or 18 months.
The new law does not apply to anyone who started COBRA/Cal-COBRA prior to January 1, 2003 nor does is apply to anyone who is insured by a carrier that is not domiciled in the state of California. The law futher does not apply to self-funded employer health programs, only to fully-insured programs.
WHAT IT MEANS TO YOU
The new legislation now allows all qualified Californians who elect COBRA/Cal-COBRA after January 1, 2003 to continue that coverage for a full 3 years with no interruptions. This basically unifies all COBRA/Cal-COBRA benefit periods to 36 months.
Anyone starting COBRA/Cal-COBRA after January 1, 2003 must use all 36 months of eligibility in order to qualify for HIPAA Guaranteed-Issue or Conversion coverage. Previously it was 18 or 29 months depending on whether or not you were disabled. If you fail to elect the additional 7 or 18 months of Cal-COBRA, you lose all of your rights to purchase a guaranteed-issue individual contract. For those with preexisting conditions and health issues, this extends the time that they could buy an individual guaranteed-issue policy.
Since the second half of your continuation program falls under Cal-COBRA, this means that health insurance carriers are going to have to bring in extra staff starting in the early summer of 2004 to handle all of the new Cal-COBRA continuees. Everyone in California who goes on COBRA or Cal-COBRA will end up on CalCOBRA for 7 or 18 months. This will increase the workload on the insurance carriers substantially. It is more than likely that increased staffing and administration will cause our health insurance premiums to increase to cover this.
AB 1401 Recap & Additional Changes for Californians in 2003
Effective September 1, 2003, anyone who began federal COBRA or Cal-COBRA continuation benefits after January 1, 2003, will be able to remain on continuation for 36 months in California*.
Below is a summary of other important changes and requirements set out under AB 1401 for Californians which go into effect on September 1, 2003.
Conversion Plan Changes in California
AB 1401 requires conversion plans to conform to standardized benefits and rates. The benefits differ depending on whether or not the health plan markets individual & family coverage in California.
If the health plan participates in the individual & family market, it will be required to offer as a conversion plan one of the two products it offers under HIPAA, pursuant to all provisions of the Act.
If the health plan does not market individual & family plans in California, the plan must either offer its most popular HMO or the most popular PPO product as reported to the Department of Managed Health Care by health plans that do offer individual plans.
The number of days from the date of termination from the employer-sponsored plan that the individual has to apply for conversion coverage has increased from 31 to 63 days. If the written application and first premium payment for the conversion contract are received within the 63-day time period, coverage will be effective on the day following the termination of coverage under the group contract.
Major Risk Medical Insurance Program (MRMIP)
The four-year pilot program for changes to the Major Risk Medical Insurance Program (MRMIP) begins on September 1, 2003 and runs until September 1, 2007. Under this program, enrollment in the MRMIP will be limited to 36 months. At the end of the 36-month period, individual health insurance plans will be required to offer MRMIP "graduates" a benefit plan identical to one of the plans available under the MRMIP. The premium for this plan can be no more than 10% higher than that of the MRMIP. The calendar year benefit maximum will be $200,000 (an increase from the current $75,000) and the lifetime benefit maximum will be $750,000. Benefits received under the MRMIP will not be included in the "graduate" plan benefit maximums.
* California residents are protected under the COBRA and Cal-COBRA extension provision as long the their group health insurance carrier is a Knox-Keene licensed carrier doing business in the state of California. Employees covered under a group health plan that does not do business in California and operates in a state other than California may not be eligible for AB 1401 continuation protections. In these cases, often the employer is domiciled in another state and that other state's rules would apply to that employer's California employees. Also, employees of self-funded or self-insured programs are not eligible for the extension under AB 1401
Click Here To Read The Text Of AB 1401
| Note: As a rule, the following carrier plans are generally exempt from the Cal-COBRA extension: *Aetna PPO and Aetna NAP PPO plans *Cigna PPO *UHC PPO These health plans are not domiciled in California and are considered "national PPO" plans not subject to state regulation. |