California COBRA (Cal-COBRA)

[Guest Ray Goetz]

Has anyone worked with the rules known as California COBRA (or Cal-COBRA)?

California has "state COBRA" rules that are unique. In addition to providing employees with continuation coverage from employer health plans that are not subject to ERISA, they also provide for continuation coverage from employer plans that ARE subject to ERISA, after the federal COBRA coverage for a person has expired. These rules are in Section 1373.621 of the California Health and Safety Code.

The quick analysis of these Cal-COBRA rules would seem to be that they are preempted by ERISA, to the extent that they impose added benefits or administrative requirements upon an employer or an employer's ERISA plan. But I can find no authority on this.

Does anyone have any thoughts on:

1. whether Cal-COBRA is preempted by ERISA?

2. whether Cal-COBRA applies to a self-funded health plan?

3. whether any sanctions have been imposed under Cal-COBRA?

4. whether anyone actually attempts to follow the Cal-COBRA rules?

5. where there is a resource/authority explaining these rules?

[Mary C]

The original Cal-COBRA passed in 1995 applied to employers and plans and was preempted by ERISA. A replacement version was effective in 1996 and included in the state insurance regulations. It puts all responsibility for administering Cal-COBRA on the insurers and carriers, not the employers or plans and is therefore NOT preempted by ERISA. The plan/COBRA administrators are only responsible for notifying participants they may be eligible for continuing coverage if they meet certain criteria. The carriers may charge up to 213% of the applicable group premium for continuing coverage. All of our carriers in California, HMO and POS inlcuding Blue Shield, comply with the regs and list them in their certificates of coverage.

[Guest Ray Goetz]

Thank you, that is helpful.

It seems that the current Cal-COBRA rule requiring employers to give a notice could also be preempted by ERISA, since it is a direct intrusion on the administration of the employer's ERISA plan. Opinion?

Do employers actually provide such notices? Is there a model notice? Is there a sanction for not providing the notice?

Also, the current Cal-COBRA rules state that they apply to a "contract" for a "health care service plan." And a health care service plan is defined as any entity that arranges for health care services in return for a fee. On its face, this seems to apply to TPAs for self-insured programs, as well as to insurers and HMOs. But this application to TPAs (directly changing the benefits provided in a self-insured ERISA plan, and the employer's costs for those benefits) would seem to be preempted by ERISA. Opinion?