Benefits Administration Manual

Consolidated Omnibus Budget Reconciliation Act (COBRA)

406. Leaves of Absence

Unpaid Leave of Absence

When an employee is on an unpaid leave of absence the deductions for benefits cease, at that time the option to direct pay to continue the monthly premiums is offered, not COBRA. If the leave results in a loss of group coverage, then it is a COBRA qualifying event of reduction in hours or termination of employment, and COBRA should be offered. In other words, if the employee does not return to pay status, then COBRA continuation coverage must be offered.

The qualified beneficiary will be required to pay retroactive COBRA premiums to cover the period from the date of loss of coverage with no break in coverage.

It is important to inform employees who go on a leave of absence under these circumstances that if he/she does not return to pay status, then retroactive COBRA continuation coverage will be offered.

Family and Medical Leave Act (FMLA)

The department is required to offer 18 months of COBRA coverage, measured from the date that group plan coverage ends. The COBRA qualifying event of reduction of hours or termination of employment should be determined on the last day that the FMLA leave ends and the employee does not return to pay status. COBRA continuation coverage will not be offered until group coverage is actually lost. It is important to inform employees who go on FMLA leave that if he/she does not return to pay status, then COBRA continuation coverage will be offered at the end of the FMLA leave. It is important to inform employees who go on FMLA leave that if he/she does not return to pay status, then COBRA continuation coverage will be offered at the end of the FMLA leave.

Uniform Services Employment and Reemployment Rights Act (USERRA)

The Uniform Services Employment and Reemployment Rights Act (USERRA) provides (COBRA-Like) group plan continuation coverage rights for employees who take a leave of absence for uniformed service (military call-up). This continuation coverage is different than continuation coverage offered under COBRA.

Under COBRA, the loss of group coverage due to a leave of absence allows continuation coverage for a maximum of 18 months. The "Veterans Benefits Improvement Act of 2004", extended the continuation of group coverage period under USERRA from 18 months to a maximum of 24 months. As a result of this extension, an employee who is called to uniformed service must be offered COBRA continuation coverage for a maximum of 24 months. This extension applies to both the employee and eligible dependents.

Note: Keep in mind that State of California employees are covered under GC Section 19775.17, GC Section 19775.18, and Executive Order D-65-02, this provides a greater benefit than is required under USERRA or COBRA. With this understanding, the Personnel Office should be aware of this extension of continuation coverage enacted through the "Veterans Benefits Improvement Act of 2004". However, this extension will not impact the requirement to offer employees who take a leave of absence for uniformed service (military call-up) the option of continuing group plan coverage as directed in GC Section 19775.17, GC Section 19775.18, and Executive Order D-65-02.

Updated February 14, 2011 at 2:02 PM.