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Assembly Bill 1401 – Expanded COBRA and CalCOBRA
AB 1401 is intended to allow persons who continue coverage either through federal COBRA or state CalCOBRA (for employer groups of 2-19 employees) to maintain their coverage for a maximum of 36 months in all cases.
The provision in AB 1401 that extends continuation coverage to 36 months will affect your employees who elect federal COBRA on or after January 1, 2003. The additional continuation will be priced at the CalCOBRA rate of 110% of that for covered employees. To illustrate, employees who terminate employment and elect COBRA are eligible for a continuation coverage for up to 18 months at 102% of the premium for covered employees. If they elect the additional continuation mandated by AB 1401, they may remain covered for an additional 18 months at 110% of the employee rate
One important thing to note is that AB 1401 does not amend federal COBRA. Disability extensions and second qualifying events are still factors. So if someone is disabled, is so certified by Social Security, and reports it to you within the required time frames, their federal COBRA will extend up to 11 months after the first 18 at 150% of the premium. After this 29-month period is over, the 150% rate would still apply for the remaining seven months of continuation available under AB 1401.
Another provision in AB 1401 stipulates that any conversion plans offered to employees who terminate after September 1, 2003 must be one of the carrier’s HIPAA Guaranteed Issue individual plans. Qualified applicants must make written application and initial premium payment within 63 days of termination of their group coverage rather than 31 days.