Frequently Asked COBRA Questions

We have had a few questions that have come up quite a bit lately since the new COBRA law was passed. We would like to take this time to address these questions.



WHAT IS THE DIFFERENCE BETWEEN COBRA AND CAL-COBRA?

COBRA is federal health coverage protection that requires employers of 20 or more employees to provide their employees, and their dependants, the right to continue health insurance benefits when a qualifying event occurs.

Cal-COBRA is California health coverage protection that requires employers of 2 to 19 employees to provide their employees (and their dependants) the right to continue health insurance benefits when a qualifying event occurs.



THE NEW COBRA LAW, ARRA, REFERS TO "INVOLUNTARY TERMINATIONS" WHEN TALKING ABOUT THOSE WHO MAY BE ELIGIBLE. WHAT DOES "INVOLUNTARY TERMINATION" MEAN?

Involuntary termination is "severance from employment due to the independent excercise of the unilateral authority of the employer to terminate the employment, other than due to the employee's implicit or explicit request, where the employee was willing and able to continue performing services."



Involuntary Terminations include:

• A termination elected by the employee in return for a severance package (a "boy-out") wherein the employer indicates that after the offer period for the severance package, a certain number of remaining employees in the employee's group will be terminated.


• A resignation as the result of a material change in the geographic location of employment for the employee.


• An involuntary termination for cause. Note: if the termination of employment is due to gross misconduct of the employee, the termination is not a qualifying event for the purposes of Federal COBRA continuation.


• Retirement, if the facts and circumstances indicate that, absent retirement, the employer would have terminated the employee's services and the employee had knowledge of the impending termination.


• An employer's action to end an individual's employment while the individual is absent from work due to illness or disability. Note: mere absence from work due to illness or disability before the employer has taken action to end the individual's employment status is not considered an involuntary termination for purposes of Federal COBRA continuation.


• A lay-off period with a right of recall or a temporary furlough period resulting in a loss of health coverage is considered an involuntary termination for purposes of Federal COBRA continuation.

Involuntary Terminations do not include:

• Divorce/Separation


• Dependent child ceasing to be a dependent child under the generally applicable requirements of the plan


• Death of an employee


• Absence from work due to illness or disability


• Reduction in hours


• A work stoppage as the result of a strike initiated by employees or their representatives

We hope the information provided here helps you when you are determining if a Qualified Beneficiary's termination is vountary or involuntary.